Rupee and Syrian worries spook markets

Indian equities had a nightmarish session today. Sensex lost over 650 points to close at 18235 and Nifty was down 209 points closing the day at 5341. The markets after a three days of bounce back and just when most of the market participants were of the opinion that, for now the worst is over markets had other plans. 

Our markets were hit by a barrage of bad news. When we started the day Syrian fears had resurfaced. Through the day the food bill got passed at Rajya Sabha and markets got worried on higher CAD. By the time the day was getting to a close S&P had warned of a down grade and that broke the markets' back. Amidst all this mayhem, Rupee was also losing ground consistently through the day and ended sharply lower at 67.63 weakening over 3% in the session. 

The fall in the markets was led by heavy weights with Reliance and ITC losing over 6%. Banks across the board resumed the down trend with HDFC and ICICI bank losing over 5% each. Consumption story related stocks like Asian Paints also had a forgettable day. 

The US markets ave opened in the green and were trading substantially higher. Microsoft's Nokia buy dominated all the news desks. European indexes were trading flat with a negative bias. 

It is now left to be seen where the indian markets go from here. After a three days of relief the markets have resumed their downward trend. 

-----Harish Sridharan

Rupee sinks as Syria worries take the markets world over lower

Nothing seems to be going our markets’ way. At a time when the equities and the rupee have been trying to battle the existing woes, they have been thrown another challenge to contend with – Syria. Markets across asset classes around the globe had a rough day with emerging market currencies taking it on the chin. Rupee was among the worst hit losing over 3% in a single session and its worst ever single day fall. The partially convertible currency was down 1.94 today closing at 66.24 its weakest closing ever. However, Syria was not the only one to be blamed. The food security bill had an equal contribution to the currency’s weakness.

Equities did not want to feel left behind. Even the front line indexes closed over 3% apiece lower. Nifty is perched right on top of its long time 5280 support and Sensex was down close to 600 closing just below 18000. The sectors that cracked today may not raise any eyebrows but the entrants in the biggest losers list would definitely have instilled fear even in the minds of most optimistic bulls (if any such bull has still not been taken to the gallows). HDFC twins – HDFC and HDFC Bank were both down close to 8%. Both ICICI bank and Reliance have whittled down to Rs. 800. If such names have not been spared, then what happened to the rest of the market is best left to the imagination of the readers. 

The US markets have also opened sharply lower and Gold and Crude have registered handsome at the time of writing this. All major European indexes are also trading over 2%. With nifty registering a close at its 5280 support and in the light of what is happening in the global markets, tomorrow can take the nifty below the support. With a long term floor for the nifty cracking it is then anybody’s guess where the markets would likely go from here, though the direction is not too hard to predict.

Only hope that can keep our markets afloat is the expectation that the Govt will fire the last of the silver bullets it has, if at all any such bullet is left in the Govt’s repertoire. Fasten your seat belt folks; the journey ahead is going to be a very turbulent one.

----- Harish Sridharan

Short Covering takes markets and Rupee higher

Indian equities gained for second consecutive day. After bouncing off the 5280 support the markets have run over 200 points from Wed lows. Today the index closed 61 points up at 5472 and the Sensex closed 207 points up at 18519. All major sectors baring realty had a field day, but aviation and infrastructure stocks stood out gaining anywhere between 5 and 10%. Banks and IT also had a good day apart from Reliance.

Rupee also had a short covering. Though the rupee opened flat with a negative bias in the morning, flirting with the Rs. 65 mark, the last one hour the pull back was ferocious. The rupee ended cover 2% stronger at 63.20. Taking a cue from the stabilising rupee bond yields also cooled down. The 10 Yr G-sec ruled at 8.26 sharply lower from the decade high of 9.48 on Wednesday.

This pull back was in the offing especially after the extremely oversold levels the indian equities and the currency moved into. It is now left to be seen where this short covering will take the markets to. However there is no reason why markets will have to go significantly high from these levels. The story is the same for the currency as well.

----- Harish Sridharan

Markets and Rupee bounce off lows but not out of the woods yet

Both the benchmark indexes – Sensex and Nifty bounced off the lows that the markets started the trading day with. Nifty closed just over 5400 after touching a low of 5306 in the first ten minutes of the trade. The nifty had lost close to 8% in just over two sessions by then. Sensex after a 1000 point fall in two days, started over 300 points down before closing down 61 points at 18246.

Equities were not the only one that had a bad start. Rupee had an identical start with the currency losing close to 1 Re to the dollar touching an all time low of 64.13 before bouncing off the lows and ended the day at 63.25 down 12ps over yesterday. Some market participants believed that RBI had sold dollars thru PSU banks which led to the pull back in the Rupee. Bond yields also shot up in tandem with the weakening rupee. The 10 Yr G-sec ended the day at 9.27 up 4 bps (100 bps is 1%) after touching an intraday high of 9.48%, a level not seen in close to a decade.

Banks, after the carnage of the last couple of sessions ended in the green after the bond yields cooled. Infra and Realty stocks were the other stars in today's market. However IT and auto stocks were not as lucky. Oil and Gas also had a good session in anticipation of the Govt taking some action by way of Diesel price hike.

Though today may not go down as a very bad day in the current scheme of things the over all direction in which the markets have been trending gives no comfort on what is in store for our markets. The minor pull back is far from enough to lift the markets from the hole they have crawled into. It is totally concievable that the currency may pull back another 50ps to 1 Re or even a bit more in the immediate term owing to the fact that the currency looks extremely over sold in the immediate short term but there is no long term justification for the currency to go anywhere significantly up from here.

The fall in the currency is not scary but the pace with which the markets have cracked is what has scared the day lights out of most of the participants. The level of Rs. 64 to a dollar was a level the experts were expecting by the end of Dec'14, but the level has come as early as Aug' 13. The currency has lost 6% in little over couple of sessions. Such fall is a par for the course in the life of an equity market but these are not the norm for currencies. But the fact that there are not many things that the Govt can do from here it would be too adventurous to try and call a bottom. Any rise is only going to serve as a shorting opportunity for the bears. A snap back rally is very much given but is not going to be sustainable.

The biggest wory therefore is that the equities will continue to fall and that the bond yields will continue to raise until the fall in the currency subsides. So it is tough to imagine what is in store for us in the next few weeks and months, especially once the Fed starts to taper the bond buying programme.

Meanwhile the US markets have opened in a strong note after four consecutive days of weak closing. The EURO has also strengthened by 0.64% hitting 1.342 to a dollar, a level not seen in the last six months. This should also give a leg up to our currency tomorrow.

Well thats for today folks. Lets see what unfurls tomorrow.

----- Harish Sridharan

Markets in a tailspin as Rupee nosedives; Bond Yields Sky rocket

Indian equities end one more trading day with deep cuts. Sensex ended the day down 291 points at just over 18300. In two days Sensex has lost over 1000 points. For a considerable time the Nifty was trading well below 5400, but finally ended the day 93 points lower at 5415 pulling sharply from the day’s lows. However the way the 5500 support gave way effortlessly confirms that the markets are now in the grip of the bears.

Rate sensitive stocks from the banks and autos sectors led the fall. This was the result of a 3.5% rally on 10 Yr G-Sec yield after a 4.5% rally on the 10 Yr G-sec yield on Friday. The G-Secs ended the day at 9.24%, a level not seen over the last two years.

Rupee had the worst ever session in 18 years and was down 2.4% in a single session at 63.13. No level on the currency has held out. Some of the brokerage houses came out in support of the Rupee and said that the currency was in over sold territory. Market participants are expecting a minor pullback in the rupee in the immediate term. Though there is no real reason for the currency to strengthen, it has come down too much too soon and this can trigger a pull back. But unfortunately any pull back will only run into major selling once again.

RBI and the Finance ministry have put in quite a few steps to contain the volatility but it has only got worse with time. Not sure how many more silver bullets the Govt still has in its arsenal.

Today the Govt banned getting LCD and LED TVs in the air baggage in the duty free route. But sadly though these kind of steps are too small to create any dent in the rupee’s fall. The markets are staring down the barrel and the market regulators will have to pull a rabbit out of the hat to slow down the carnage.

----- Harish Sridharan

Indian markets roiled as Rupee touches 62, Gold sizzles

Indian equity markets had a nightmarish session with both the benchmark indexes losing 4% with over Rs. 2.20 lakh Crore of investor wealth eroded in a single trading session. Sensex recorded its largest single day fall in four years. No single sector was spared. All sectoral indexes had deep cuts by the time the markets closed today. Today’s fall not only gave up all the gains the markets and individual stocks notched up the last four trading sessions but has actually slid past the previous lows. Markets are now firmly in the grip of the bears.

Its not the fall that worried the markets today but the pace of the fall that roiled the markets. Blue chip stocks like BHEL, JP Associates and Axis Bank were all down 10% a piece. Banks, Metals and Realty stocks were the worst hit. Surprise addition to the list were the cement stocks. Bond markets weren’t spared either with 10Yr G-Sec yield inching all the way up to 8.89%.


Markets started off with a slight negative bias with rupee opening flat. However irrespective of how much effort the FM and the RBI have put behind the currency, the currency began to weaken and that blew the day lights off the markets. Rupee hit a fresh life low of 62.01 intraday. Late in the day state owned banks sold dollars pulling the rupee off the lows. The Rupee closed at 61.65 a fresh closing low for the partially convertible currency.


Yesterday Gold and Silver rallied in the international markets, adding to it was our own currency weakness, now a regular phenomenon, gave a push to our commodity markets. Gold is now at a six month high as gold beached 30500 mark today and is close to all time highs. This is after the metal has lost over 30% from its peak in dollar terms.


After today’s fall markets are firmly in the grip of the bears and we will have to wait and see what is in store for us the next few days and weeks.



—– Harish Sridharan

Profit booking hits global equities but Silver sizzles

All major global indexes lost anywhere between 1% and 3% as profit booking sets in. Asian markets closed with about 1% losses and the European markets closed with close to 2% cuts. US markets fall for second running and the DOW is currently trading over 200 poits down. S&P and Nasdaq are also trading close to 1.5% lower. US markets cracked after Walmart reported its numbers and cut its forecast, which lead to dampening of sentiment.

On the contrary Gold and Silver are trading very strong. Gold is up 2% while silver is up over 5%. With rupee likely to open with a slight negative bias tomorrow the commodities are expected to have a field day. After having rallied close to 4% over the past three trading sessions, the Indian equities are likely to come under pressure tomorrow.



----- Harish Sridharan