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Markets pared losses in the morning session this Tuesday on back of some buying witnessed in banking shares, however, sentiments remained dovish on concerns over depreciating rupee that hit a fresh life-time low today.
At 10:30AM, 30-share Sensex fell 159 points to trade at 18,148 and the 50-share Nifty shed 48 points at 5,366 levels.
Risk appetite dampened after government imposed new restrictions on foreign exchange outflows and gold imports on Wednesday in a new attempt to prop up the rupee, were also seen hampering an already slowing economy.
Meanwhile, JP Morgan has downgraded Indian shares to "neutral" from "overweight", citing strain in balance of payments, while upgrading China shares to "neutral" from "underweight".
The brokerage adds it is late in downgrading India, but if the rupee continues to slide it would continue to underperform.
Foreign institutional investors sold Rs 6.80 billion of cash shares on Monday, exchange data showed, while domestic institutions were net buyers of Rs 3.72 billion of shares.
The broader markets dropped with mid-caps and small-caps falling 0.2-0.6 per cent on the BSE.
The market breadth was negative. Out of 1,540 stocks traded, 856 stocks declined while 604 stocks advanced on the BSE.
RUPEE
Despite recent measures from the central bank and the government to defend it, the rupee on Monday breached the 63-a-dollar barrier to close at 63.13, down 2.36 per cent from its previous close. This was the currency’s biggest single-day fall since September 22, 2011.
The partially convertible currency traded at 63.69 against the dollar in early trades on the Interbank Foreign Exchange market.
GLOBAL MARKETS
Globally, Asian stocks dropped on fear that the roll-back of US stimulus could spark selling pressure by the overseas investors in the equity space.
Japan’s Nikkei was down 0.5% to 13,864, Singapore’s Straits Times fell 0.5% to 3,157, China’s Shanghai Composite index rose 0.4% at 2,094 while Hong Kong’s Hang Seng shed 0.7% to 22,292 today.
Asian economies are struggling to ignite growth, fuelling pessimism in markets already concerned the Federal Reserve, which publishes minutes of its July meeting tomorrow, will start reducing bond purchases in September.
STOCK MOVERS
Domestically, all the key sectoral indices dropped with realty, bankex, PSU, Healthcare, capital goods sectors leading the fall on the BSE.
The gainers included IT shares such as Wipro rising 0.2%, Sterlite Industries gained 0.2%, Jindal Steel added 0.5% while ICICI Bank rose 0.7% on the BSE.
The laggards were Sun Pharma slumped 5%, Mahindra & Mahindra dropped 3.6%, Tata Motors shed 3.6% while Maruti Suzuki was down 2% on the BSE.
