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
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