Sensex recovers led by banks; Market breadth flat

Markets pared losses in afternoon session this Tuesday on back of buying witnessed in banking shares , however, sentiments remained dovish on concerns over depreciating rupee that hit a fresh life-time low today.

At 1PM, 30-share Sensex fell 78 points to trade at 18,228 and the 50-share Nifty shed 22 points at 5,392 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 flat. Out of 2,051 stocks traded, 987 stocks declined while 934 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 63.63 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 2.7% to 13,396, Singapore’s Straits Times fell 1.5% to 3,125, China’s Shanghai Composite index dropped 0.6%  at 2,072 while Hong Kong’s Hang Seng shed 2 % to 22,028 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.

European markets also opened lower. France’s CAC declined 1% to 4,045, Germany’s DAX shed 1.2% to 8,266 while UK’s FTSE was down 0.8 % to 6,412.


STOCK MOVERS

Domestically, the key sectoral indices dropped with PSU, Healthcare, capital goods sectors leading the fall while realty, bankex gained on the BSE.

The gainers included IT shares such as ITC rising 1.7%, Sterlite Industries gained 1.4%, Tata  Steel added 2% while ICICI Bank rose 1% on the BSE.

The laggards were Sun Pharma slumped 3%, Mahindra & Mahindra dropped 2.5%, Tata Motors shed 3.6% while Maruti Suzuki was down  2% on the BSE.