Market slumps on global sell-off, dips 1,061 points for the week

Both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) markets slumped further for the second consecutive week following a massive sell-off in overseas stock markets triggered by spike in global bond yields.

Overseas, US stock-market indexes did an about-face in late Friday, booking sharp gains for the session, but recording the worst weekly losses in about two years, during one of the most frenetic stretches of trading on Wall Street.

Climbing bond yields and higher inflation have been partly to blame for igniting once-dormant volatility in the market.

Frantic capital outflows against the grim backdrop of a scary fall in domestic equities largely weighed on trading front even as fears deepened over US Federal Reserve rising short-term interest rates near-term.

Foreign investors remained net sellers and sold shares worth whopping Rs 7,380.26 crore during the week as the turmoil in global stock markets saw traders shun equities in favour of perceived safe havens.

Back home, trading for the week started on a dismal note a sell-off in global markets hit sentiments on domestic bourses which are already reeling under budget woes, after finance minister Arun Jaitley had announced bringing the long term capital gains (LTCG) tax in Union Budget 2018.

As widely expected, Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel decided status-quo on interest rate at 6 per cent and maintained the reverse repo rate at 5.75 per cent Wednesday, while lowered the economic growth projection for 2017-18 to 6.6 per cent, flagged concerns over wider fiscal deficit.

The market incurred losses after RBI decision dragged down mostly rated sensitive banking and financial stocks.

Stocks advanced as bargain hunting emerged Thursday after seventh-straight sessions of sell-off in the wake of a combination of domestic and global factors. Lesser hawkish stance of the Reserve Bank of India (RBI) in its monetary policy meeting also supported the gains on the bourses.

In the week ended Friday, the Sensex slumped 1,060.99 points or 3.03 per cent to finish at 34,005.76, its lowest closing level since 4 January 2018. The Nifty 50 index tumbled 305.65 points or 2.84 per cent to end at 10,454.95, its lowest closing level since 3 January 2018. (The Sensex and Nifty dropped by 2,044.68 points or 5.76 per cent and 614.70 points or 5.63 per cent, respectively during past two week sessions)

All the sectoral indices got severely punished led by banking, capital goods, IT, Teck, FMCG, Oil&Gas, Auto, Consumer Durables and PSU sectors.

The broader midcap and small cap shares were resilient to selling pressure, recovered smartly to outperform the Sensex.

Meanwhile, foreign portfolio investors (FPIs) and foreign institutional investors (FIIs) sold shares worth Rs 7,380.26 crore during the week, as per Sebi’s record including the provisional figure of February 09, 2018.

Broader market, however, was resilient to selling pressure. The S&P BSE Mid-Cap index rose 60.21 points or 0.36 per cent to end at 16,634.91 and the S&P BSE Small-Cap index climbed 325.45 points or 1.82 per cent to close at 18,172.98.

Both these indices outperformed the Sensex.

Among sectoral and industry indices, bankex dipped by 35.67 percent followed by capital goods 3.51 percent, IT 3.02 per cent, Teck 2.73 per cent, FMCG 1.48 per cent, Oil&gas 0.80 per cent and Auto 0.67 per cent. Realty climbed by 2.13 per cent, Healthcare 1.99 per cent and IPO 1.22 per cent.

Among the 31-share Sensex pack, 25 stocks fell and remaining six stocks rose during the week.

Index losers were Yes Bank 6.99 per cent followed by HDFC 6.84 per cent, Larsen 6.01 per cent, TCS 5.62 per cent, Wipro 5.44 per cent, IndusIndBank 5.74 per cent, HDFC bank 4.94 per cent, Adaniport 4.29 per cent, Tata Motors 3.87 per cent, Bajaj Auto 3.63 per cent, TataMtrDvr 2.90 per cent, Infosys 2.62 per cent, ONGC 2.44 per cent, Mahindra and Mahindra 2.41 per cent, ICICI Bank 2.40 per cent, HindUnilever 2.38 per cent, HeroMotoCo 2.14 per cent and ITC 1.45 per cent.

However, SunPharma rose by 5.72 per cent, Dr Reddy 3.43 per cent, Coal India 2.84 per cent and Tata Steel 2.08 per cent.

The total turnover during the week on BSE eased to Rs 24,106.99 crore as against last weekend’s level of Rs 28,417.25 crore and NSE moved down to 1,76,449.69 crore compared to Rs 1,96,972.94 crore previously.

Slackened demand hits gold

After its eight straight weekly gains, gold witnessed selling pressure for the week due to slackened demand from jewellers stockists and traders, the yellow-metal cracked below the Rs 30,000-mark at the domestic bullion market during the week triggered by a fall in international markets.

Silver followed suit and slumped below the Rs 38,000-mark due to reduced offtake by industrial units and coin makers.

Traders said apart from a weak trend overseas, tepid demand from local jewellers and retailers at prevailing levels at domestic market mainly led to decline in gold prices.

Gold slipped as tumbling equity markets, a firmer dollar and worries about rising global interest rates weighed, though the metal remained underpinned by its appeal as a safe haven asset in times of market turmoil.

In worldwide trade, gold declined to suffer from their largest weekly loss in two months, as investors eyed volatility in global stocks and a leading dollar index aimed for its best weekly performance in more than a year.

April gold settled at USD 1,315.70 an ounce after tapping a high of USD 1,325.

Gold futures logged a weekly decline of about 1.6 per cent, the largest since the week ended Dec 8.

March silver shed 20.2 cents, or 1.2 per cent, to USD 16.139 an ounce, for a loss of 3.4 per cent on the week.

In the New York Comex trade, gold for April delivery dropped to settle at USD 1,315.70 an ounce compared to last weekend’s close of USD 1,337.30, while March silver contract fell to finish at USD 16.139 an ounce from USD 16.709 earlier.

On the domestic front, standard gold (99.5 purity) resumed lower at Rs 30,205 per 10 grams from last Friday’s closing level of Rs 30,485 and hovered in a range of Rs 30,525 and Rs 29,855 before settling at Rs 29,980, revealing a loss of Rs 505, or 1.66 per cent.

Pure gold (99.9 purity) also commenced lower at Rs

30,355 per 10 grams compared to preceding weekend level of Rs 30,635 and moved in a range of Rs 30,675 and Rs 30,005 before concluding at Rs 30,130, revealing a fall of Rs 505 per 10 grams, or 1.65 per cent.

Silver ready (.999 fineness) opened lower at Rs 38,355 per kilo gram from last Friday’s closing level of Rs 39,270, later it drifted further to finish at Rs 37,920, showing a sharp loss of Rs 1,350 per kilo, or 3.44 per cent.

Rupee dips

Unnerved by ferocious sell-off in the financial markets and heightened global currency volatility, the rupee ended at a fresh two-month low of 64.40 against the US dollar, wiping out all gains made this year so far.

Stamping its second straight week drubbing, the home currency depreciated by 34 paise, or 0.53 per cent.

It has lost a staggering 85 paise in the two-week roller coaster ride.

A slew of distrubing macro-economic events including the brutal fall in global equity markets along with RBI policy outcome largely highlighted trading momentum.

Frantic dollar demand from importers and banks in the midst of fresh foreign fund outflows predominantly weighed on the forex sentiment.

The panic-driven capitulation in domestic bourses following the spill-over from wobbly Asian markets also took its toll on currency market amid speculation that US Federal Reserve and other major central banks would act quicker to raise interest rates.

In the meantime, The Reserve Bank kept the interest rate unchanged as widely expected but lowered economic growth projection to 6.6 per cent for 2017-18 from 6.7 per cent on higher inflation expectations.

However policy statement from the central bank calmed nervous bond market to some extent.

A sustained slide in crude oil prices and country’s strong macro-economic fundamentals as well as abundant forex reserves limited further losses in rupee.

Meanwhile, foreign investors signalled that it is kicking into reverse global buying spree against the grim backdrop of global market turmoil.

Foreign funds and overseas investors turned net sellers and sold shares worth USD 939.53 million during the week.

The rupee opened the week substantially lower at 64.20 from weekend close of 64.06 at the Interbank Foreign Exchange (forex) market due to sustained dollar pressure amid firm greenback overseas.

It later swung widely between 64.01 and 64.44 in the absence of any firm direction before ending the week at 64.40, revealing a loss of 34 paise, or 0.53 per cent – the lowest closing since December 13, last year.

The RBI, meanwhile fixed the reference rate for the dollar at 64.3686 and for the euro at 78.8902.

In the meantime, the country’s foreign exchange reserves swelled by USD 4.12 billion to a new high of USD 421.914 billion on a healthy increase in the core currency assets and uptick in the gold stock, the RBI said.

In the international energy front, the rout in global crude prices remained unabated as a steep surge in US crude output added to concerns about a global supply glut also impacted by higher production plan from the OPEE member Iran within the next four years.

Friday marked the biggest one-week plunge since January 2016, and the worst daily fall since last July with brent, the international benchmark crashing nealy 9 per cent on the week to close at USD 62.79.

On the global front, the American currency rebounded sharply to mark its strongest week against a basket of currencies in nearly 15 months as some traders piled into the greenback in a week of tremendous swings felt in stock and bond markets around the world.

The US currency recovered further from a three-year low set two weeks agoas sentiment turned buoyant after the US Senate approved a budget deal including stopgap government funding bill, which was too late to prevent a federal shutdown that was already underway.

The dollar index, which measures the greenback’s value against a basket of six major currencies, was higher at 90.22 as against 88.69 last week.

In cross-currency trade, the rupee staged a spirited recovery against the euro after its recent spell of intense selling and ended at 78.84 from 80.02 and the British Pound also recouped recent steep losses to settle at 89.37 per pound compared to 91.12 last weekend.

The local unit, however fell back against the Japanese yen to finish at 59.07 per 100 yens from 58.30.

In the forward market, premium for dollar continued its down trend owing to sustained receiving from exporters.

The benchmark six-month forward dollar premium payable for July dropped to 136.50-138.50 paise from 143.145 paise and the far-forward contract maturing in January 2019 also slipped to 273-275 paise from 282-284 paise last Friday. (PTI)

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