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Indian stocks slumped nearly 2% in the truncated week ended August 8 weighed down by a weakening rupee and sell off in global stocks on worries that the US Fed may prune its stimulus measures earlier than expected.
The Bombay Stock Exchange's 30-share Sensex slipped 375 points or 1.96% to close at 18,789 and the National Stock Exchange's 50-share Nifty slumped 112 points or 1.98% to end at 5,566.
The rupee slumped to a new life time low of Rs 61.81 during the week on dollar demand from importers and weakness in equities. It may be recalled that the RBI had recently initiated measures to stem the fall in the rupee.
Speculative activities in the forex market should be curbed and short-term measures are needed to take corrective action to arrest the fall in the rupee, which hit an all-time low today, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said on Wednesday.
Raghuram Rajan, Chief Economic Advisor in the Ministry of Finance, who on Wednesday was appointed as the next RBI Governor, said: "The government will take some more measures to stabilise the rupee soon."
The rupee ended at Rs 60.88 to the dollar on Thursday.
Meanwhile, the central bank late Thursday decided to drain out more liquidity from the money market to make the carry cost of rupee expensive.
The central bank will auction Rs 22,000 of government cash management bills every Monday, it said in a statement, without specifying for how many weeks the sales would last. The duration of cash management bill sale will be announced one day before the auction, it said.
RBI will auction 35 days and 34 days cash management bills on Monday and Tuesday for a notified amount of Rs 11,000 each. The auctions will be conducted using multiple price auction method.
Financials ended lower on worries that the central bank may impose fresh measures to squeeze liquidity and may continue to remain status quo on key policy rates.
HDFC ended down 7.7%, SBI eased 1.1%, ICICI Bank fell 1.3% and HDFC Bank ended 3.1% lower.
Capital goods shares were the worst performers in the week and continued to remain under selling pressure after BHEL's net profit slumped nearly 50% to Rs 465 crore in the first quarter. BHEL plunged 21.3% while L&T ended down 6%.
Auto shares witnessed mixed trend with Maruti Suzuki up 3.5%, M&M rose 1% while Tata Motors ended down 4% after its net profit for the Apr-Jun quarter fell 23% to Rs 1,726 crore despite encouraging numbers from JLR.
FMCG shares continued to exhibit a weak trend amid profit taking at higher levels on the back of stretched valuations. ITC ended down 2.3% and Hindustan Unilever eased 2.6%.
However, metal shares bucked the weak trend last week after better-than-expected trade data from China, the world's largest consumer of copper and aluminium.
Sterlite Industries jumped 5.5%, Tata Steel surged 8%, Hindalco gained 5% and Jindal Steel zoomed 11%.
Among other shares, Financial Technologies and MCX continued to remain under selling pressure after group company National Spot Exchange decided to suspend trading of all agriculture-related contracts and defer the settlement sparked fears of cash crunch and default of payment.
Ranbaxy surged nearly 33% with 28% of the gains on Thursday after second quarter results showed an improvement in business growth in the US despite overall revenues slipping 17.8% to Rs 2,633 crore.
WEEK AHEAD
The rupee, key macroeconomic data, first quarter earnings of key companies and FII investments would dictate the trend in the week ahead.
Sun Pharma and Cipla, whose results will be announced on Friday, August 9 when the markets are closed, will be in action next week.
Other key corporates that will announce their first quarter numbers are SBI, DLF, ONGC, M&M, Tata Steel, Hindalco and Bharat Petroleum.
In macroeconomic data, the government will release industrial production data for June 2013 and Consumer Price Inflation on Monday and inflation based on the wholesale price index (WPI) on Wednesday.
Markets are likely to open lower on Monday as the central bank late Thursday decided to drain out more liquidity from the money market to make the carry cost of rupee expensive.
The central bank will auction Rs 22,000 of government cash management bills every Monday, it said in a statement, without specifying for how many weeks the sales would last. The duration of cash management bill sale will be announced one day before the auction, it said.
RBI will auction 35 days and 34 days cash management bills on Monday and Tuesday for a notified amount of Rs 11,000 each. The auctions will be conducted using multiple price auction method.
Further, investors will also keen watch the parliamentary proceedings as a host of bills, including the Food Security Bill and Companies Bill would be presented.
The stock exchanges will remain closed for trading on August 15, Independence Day.
