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Markets slipped lower in noon deals with local currency precariously close to 60 levels on back of massive selling by overseas investors in the equity markets.
Global risk appetite was hampered after Federal Reserve Chairman Ben Bernanke hinted towards tapering off the bond-buying programme popularly known as ‘quantitative easing’ sooner-than-expected once US economy shows sustainable signs of recovery.
At 1300 hrs, the 30-share Sensex dropped 385 points at 18,859 and the 50-share Nifty shed 126 point at 5,696 levels.
“We expect the economy to re-accelerate in Q4 after the fiscal landscape has cleared up. That should induce the Fed to slow down its asset purchases at the turn of the year and terminate QE3 altogether in 2014,” a note from Rabobank Financial Markets Research showed.
Meanwhile, the rupee weakened against the dollar in early trades on Thursday tracking weakness in the equity markets.
The currency rupee was trading at Rs 59.61 compared with previous close of Rs 58.72. It opened at Rs 59.70 and has already hit a low of Rs 59.94 so far.
The street is expecting the rupee to breach the Rs 60 per dollar mark today.
Globally, Asian stocks traded lower amid looming uncertainty over the Federal Reserve’s bond-buying plans.
The Nikkei dropped 1.7% to 13,014, Singapore Straits Times declined 2% to 3,149, Hong Kong’s Hang Seng declined 2.7% to 20,416 while China’s Shanghai Composite index was down nearly 3% at 2,085.
European markets too started in the red with CAC, DAX and FTSE starting off 1-2% lower.
Rate sensitive sectors were amongst the most hit in early trades on worries that the rising rupee would force the Reserve Bank of India to defer reduction in key policy rate going forward.
Realty index was the top loser among the sectoral indices on the BSE down 4.5% followed by Metal, Bankex, Capital Goods, Bankex, Power, PSU, Oil and Gas, Consumer Durables all down over 2% each.
In the financial segment, ICICI Bank was down 4% while HDFC, HDFC Bank and SBI were down over 2-3.5%.
Among the index heavyweights ITC and Reliance Industries were both down 2-2.5%.
the only gainers among the Sensex-30 were Wipro was trading higher by 1% at Rs 346 in otherwise extremely weak market on reports that the company has won a $500 million (Rs 2,900 crore) outsourcing contract from Citigroup. Sun Pharma, Baja Auto and Cipla gaining 0.2-2% were the only other scrips in green.
The broader markets traded negatively with mid-caps and small-caps falling 1.4% each on the BSE.
The market breadth was negative. Out of 2,105 stocks traded so far, 1,482 stocks declined while 510 advanced on the BSE.
