Bloodbath on Dalal Street; Bonds, rupee slide

Sensex drops 700 points, Nifty drops 200 points, Rupee hits 62/$

Markets edged lower in the afternoon session this Friday with benchmark index, Sensex slumping nearly 700 points on fear that the roll-back of US stimulus could spark selling pressure by the overseas investors in the equity space.

Risk appetite further 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.

At 02:30PM, 30-share Sensex tanked 639 points to trade at 18,727 and the 50-share Nifty shed 202 points at 5,540 levels.

The Rupee, Asia’s worst currency so far this year, fell to an all-time low of 62 per USD. The partially convertible currency traded at 61.86 against the dollar in late trades against the Wednesday’s close of 61.44 at the Interbank Foreign Exchange market.

Globally, Asian stocks dropped after an unexpected drop in U.S. jobless claims fueled speculation the Federal Reserve will cut stimulus.  

Japan’s Nikkei was down 0.7% to 13,650, Singapore’s Straits Times fell 0.9% to 3,192, China’s Shanghai Composite index dropped 0.6%  at 2,068 while Hong Kong’s Hang Seng shed 0.1% to 22,517 today.

Claims for jobless benefits unexpectedly dropped last week to the lowest level in almost six years, signalling the US job market continues to mend.

The number of applications for unemployment insurance payments declined by 15,000 to 320,000 in the week ended August 10, the fewest since October 2007, from a revised 335,000, a US Labor Department report showed in Washington on Thursday.

European markets also opened lower. France’s CAC declined 0.15% to 4,087, Germany’s DAX shed 0.3% to 8,315 while UK’s FTSE was down 0.1% to 6,478.

Domestically, all the key sectoral indices dropped with  realty, consumer durable, power, banks, capital goods sectors leading the drop on the BSE.

The gainers included only Hero MotoCorp that rose 2.3%  on the BSE.

The laggards were BHEL slumping 7.3%, HDFC dropping 5.6%, ICICI Bank and SBI shed 4% each, Maruti Suzuki declined 5% on the BSE.

The key notable movers included counters such as Jain Irrigation Systems that has tanked over 10% at Rs 48.50 after the company said its consolidated net loss increased by 22% at Rs 60 crore for the quarter ended June 30, 2013 (Q1), due to higher raw material expenses. The micro irrigation company had loss of Rs 49 crore in year ago quarter.

Hero MotoCorp (HMCL) has moved higher by 3% to Rs 1,998, also its 52-week high, on the Bombay Stock Exchange (BSE).

The stock of two-wheeler maker has outperformed the market by surging 10% since announcement of April-June (Q1) quarter earnings on July 24. The benchmark S&P BSE Sensex has dipped 6.4%, while auto sector index was up 0.20% during the same period

The broader markets traded lower with mid-caps and small-caps falling 2-2.3 per cent on the BSE.

The market breadth was negative. Out of 2,324 stocks traded, 1,551 stocks declined while 650 stocks advanced on the BSE.