Sensex cracks 354 points on yuan devaluation, GST deadlock

The rupee fell to a two-year low of 64.84 against the US dollar following devaluation of the Yuan for a second time this week

Markets ended lower, amid weak global cues, after the rupee slumped to nearly two-year lows in the wake of yuan devaluation while the ongoing protests in the Parliament by the opposition raised worries whether the GST Bill would be passed in the monsoon session that ends tomorrow.

Meanwhile, traders also turned cautious ahead of release of key macroeconomic parameters, IIP and CPI later today.
  The Sensex fell 354 points or 1.3% to close at 27,512 levels and the Nifty declined 113 points or 1.3% to close below the crucial level of 8,350 at 8,349. The broader markets underperformed their largecap peers. BSE Midcap and Smallcap indices lost 2.5% and 2% each. The market breath ended weak on the BSE with 2,147 declines versus 691 advances.

China’s devaluation of its currency dented global markets. In Asia, Shanghai Composite, Nikkei, Hang Seng and Straits Times fell between 1-3%. Meanwhile, in the European market, FTSE, DAX and CAC 40 dropped between 1% - 2.7%.

"Weak global cues and prevailing uncertainty over the key bills in parliament triggered selling pressure for third day in a row. Benchmarks slipped further down on Wednesday and lost nearly one & half percent. Mainly, rub off of China’s currency devaluation news was visible across the globe including ours as participants now fear possibility of global currency war. Also, they were maintaining cautious approach ahead of the Index of Industrial Production (IIP) and Consumer Price Index (CPI) data, which are scheduled post market today. Though majority of sectoral indices were reeling under pressure; however, currency depreciation aided some buying in IT pack," said Jayant Manglik, President, Retail Distribution, Religare Securities in a post market note.

"In last one month, Nifty has rebounded twice from roughly 8300 level and it has again reached near to that mark. So, its sustainability may trigger some technical bounce in the coming sessions otherwise the lower band i.e. 8200 of prevailing consolidation range will be tested," he adds.


RUPEE

The rupee fell to a two-year low of 64.84 against the US dollar today following China's devaluation of the Yuan for a second time this week. Weakness in the local equities fuelled the decline.

STOCKS & SECTORS

On the sectoral front, BSE FMCG, Auto, Metal, Bankex, Realty, Capital Goods and Oil & Gas indices ended lower between 2-4.5%. On the other hand, BSE IT, Healthcare and Consumer Durables indices ended higher up to 2.5%.

Metal shares slumped in today’s trade after China's yuan hit a four-year low on Wednesday, falling for a second day. Hindalco, Vedanta and Coal India plunged between 5-8%.

Hindalco’s overseas subsidiary Novelis reported weak earnings during the first quarter ended June 30, 2015. The stock fell 7%.

Coal India cracked 5% on news reports that the government may sell a minority stake to fund its fiscal deficit. The stock dropped for the 6th straight day, after hitting a record high on August 5th. 

Tata Motors slipped 3.6%. The stock has fallen 10% from Rs 393 in the past three trading sessions, after the company reported a near halving of its net profit at Rs 2,769 crore for the quarter ended June 2015, hit by a massive 50% fall in Jaguar Land Rover (JLR) profit due to a sales plunge in China.

Financials declined across the board with SBI falling nearly 5% after the company posted weak operational results for the June quarter (Q1), even as provisions for non-performing assets (NPAs) fell and asset quality ratios stood steady. Among its peers, ICICI Bank, Axis Bank and HDFC twins shed between 2-3.5%.

Capital Goods majors BHEL and L&T dropped nearly 2% each ahead of the IIP numbers due today and FMCG giants ITC and HUL dropped 1% and 2.4% each ahead of the CPI data due to be unveiled today.

Bucking the trend, the shares of of IT companies ended higher in an otherwise weak market after rupee hit a two-year low, lowest level since Sptember 2013, tracking the devaluation of yuan by the Chinese government. Infosys, TCS and Wipro climbed between 1.5-3%.

Sun Pharmaceutical Industries moved higher by 3% on the back of a sequential improvement in operating performance and positive management commentary. Among its peers, Dr Reddy’s Lab and Lupin advanced over 15 each.

Tata Steel climbed 1% after the steel major's consolidated net profit in the first quarter of fiscal 2015-16 surged over 100% on the back of sharp decline in operating expenses, lower tax outgo and higher other income.