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Global jolt to stocks, rupee

Mumbai, Aug. 1: Stocks today suffered their worst fall in over three weeks with benchmarks Sensex plunging 414 points and Nifty 119 points on weak global cues and continuing geo-political tensions. The rupee, too, was not spared. Weakness in the global stock markets and a strong dollar pulled down the Indian currency by 63 paise to over a four-month low of 61.18.

The fall in domestic equities came on a day the country continued to see better macro-economic data. Yesterday, core sector growth had hit a nine-month high in June at 7.3 per cent. The HSBC India Manufacturing Purchasing Managers’ Index, a measure of factory production, today revealed manufacturing growth jumped to a 17-month high in July.

These positive data, however, failed to enthuse the stock markets. Besides news of Argentina’s debt default, investors were jittery because of talks of a rise in US jobless claims.

It is feared that any strong data could see the US Fed start raising its interest rates earlier than planned. The hikes are due late next year.

In Asia, the key indices of China, Hong Kong, Japan, Singapore, South Korea and Taiwan closed down between 0.15 per cent and 0.91 per cent.

European markets, too, were trading sharply lower in late afternoon trade as the threat of a conflict between Russia and Ukraine was starting to affect the Eurozone economy, with the bloc’s manufacturing growth easing in July.

The BSE 30-share Sensex resumed marginally lower at 25753.92 and remained in the negative throughout the day. It came under intense selling pressure in the last hour of trade with the benchmark ending at 25480.84, a fall of 414.13 points, or 1.60 per cent. This is its biggest drop since July 8, when it tanked 518 points.

The 50-issue NSE Nifty fell 118.70 points, or 1.54 per cent, to 7602.60 — its worst decline since the 163.95-point loss on July 8 after the rail budget.

“Today’s fall was largely on account of global factors. A correction of this nature was due in our markets,” an analyst with a foreign brokerage said.

The analyst added that the the outlook for equities remains optimistic because of the improvement in the monsoon, better macro-economic numbers and various reform measures by the Centre.

Selling was seen across-the-board as all the 12 BSE sectoral indices closed in the red, registering losses between 0.9 per cent and 3.27 per cent. Consumer durables, oil & gas, capital goods, power and IT were laggards.

Currency roiled

The rupee crashed after importers and some banks bought dollars and short-sellers covered their positions on hopes of further hike in the dollar value after the US Fed recently trimmed its monthly stimulus by $10 billion.

The rupee sentiment was also hit after foreign institutional investors pulled out Rs 1,654.86 crore yesterday.

At the forex market, the domestic currency opened weak at 60.75 a dollar from the last close of 60.55 and immediately touched a high of 60.69.

It later tumbled to a low of 61.19 before ending at 61.18, a fall of 63 paise or 1.04 per cent. This is its weakest closing since 61.34 on March 20. In absolute terms, this 63-paise fall is the biggest since January 24 (73 paise).

Vigil on listed firms

Concerned over the flouting of listing norms by companies and lack of good governance practices, Sebi today asked stock exchanges to step up their vigil to identify any errant behaviour, including while holding AGMs.

The regulator said there had been cases when corporate groups with multiple listed companies had wrapped up various AGMs within 15 minutes without giving enough discussion time to shareholders, numbering over a lakh.

“Such a practice affects the rights of investors to seek clarifications and appears to be prejudicial to the interest of the investors,” Sebi said in a circular to the bourses.

 
 
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