Weekly: Markets wilt under depreciating Rupee

IT index holds ground, up 3%

After a positive start last week, the Indian macroeconomic concerns and the depreciating Rupee once again came to the fore and weighed on the investor sentiment during the latter half of the week. The news that the country was reviewing its tax treaty with Mauritius, sparked fears of outflows from foreign investors. The BSE Sensex lost 2.07% and the Nifty shed 2.34% during the past five trading days. Also, the Friday closing of Sensex at 16,831.08 was the lowest in more than three months.

Meanwhile, in the broader markets, the smallcap index shed 2.05% almost in line with the BSE benchmark index. However, the midcap index slumped 2.73% underperforming the Sensex.

In the macro space, the rupee came precariously close to 54 levels but recouped someof the losses to end the week at 53.47/48, down six paise against the US currency, after RBI's suspected intervention in forex market.

Among the sectoral indices, continuing its good run, the IT index managed to close in the green with nearly 3% gains on the back of gains in IT giants like TCS and Wipro. Health Care was the only other index to stay positive with a 0.4% gain for the week. Meanwhile, Auto and Capital Goods indices closed down 5% each followed by Power, Bankex and Metal indices losing 4% each.

In the auto space, the tepid sales numbers for the month of April was a dampner. After a 20% increase in March, car sales dropped to 9% and two-wheeler sales slid from 17% to 13%. The top losers were Apollo Tyres and Ashok Leyland which lost 10-12% through the week.

Banking stocks were also under pressure as the Reserve Bank of India said in its final guidelines on Basel III capital regulations that Indian banks have to maintain Tier I capital, or core capital, of at least 7% of their risk weighted assets on an ongoing basis. Bank of Baroda, Axis Bank, SBI, IDBI Bank which ended down 5-10% were some of the notable losers here.

The top gainers among the Sensex stocks were TCS, Cipla and HUL up 4-6% followed by Wipro, Infosys and Bharti Airtel which added 1.5-2%.

Hero Motocorp, Maruti Suzuki, BHEL, SBI, Tata Steel, Coal Idnia and L&T down 6-9% were the top losers among the Sensex-30.

Owing to all the negative developments through the week, the Rs 1,665-crore Initial Public Offer of Samvardhana Motherson Finance, the largest since October 2010, had to be withdrawn due to poor investor response, amid weak secondary market conditions. The IPO got less than a quarter of the issue size, despite raising a little over Rs 200 crore from anchor investors.