Bloodbath at the bourses: Sensex ends down 590 points

Markets slumped on Tuesday and rupee hit a life-low of 66 per US dollar as investors feared that the country’s current account deficit may widen further after Lok Sabha approved $20 billion plan to provide cheap food to poor.

Risk appetite further dampened on fear over military action by the US after Secretary of State John Kerry held Syrian government accountable for using chemical weapons in an attack over civilians.

Mirroring the concerns, the 30-share Sensex declined 590.05 points or 3.18 per cent to close at 17,968.08 and the 50-share Nifty dropped 189.05 points or 3.45 per cent at 5,287.45 levels.

India VIX (Volatility Index), the key gauge of the market volatility, touched its 20-month high. The index closed at 29.42, up 12 per cent in today’s trade.

Global investors have sold about $720 million of shares in the previous six sessions through Friday, ahead of June quarter GDP data and the expiry of August derivatives contracts this week.

The broader markets fell with mid-caps and small-caps dropping 1.5-2 per cent on the BSE.

The market breadth was negative. Out of 2,395 stocks traded, 1,532 stocks declined while 724 stocks advanced on the BSE.

FOOD SECURITY BILL

The Lok Sabha on Monday cleared the Food Security Bill, which seeks to entitle 67 per cent of the country’s population -- about 800 million people -- subsidised food.

Food Minister K V Thomas said the food security programme, which would require 62 million tonnes of food grain a year, would entail a burden of Rs 1,30,000 crore (Rs 1,300 billion) on the exchequer.

The Bill would have a one-year time period for implementation.

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RUPEE

The rupee once again weakened against the dollar in late-trades on Tuesday due to month-end dollar demand, said currency dealers.

At 3:50PM, the rupee was trading at Rs 65.64 per dollar compared with Monday's close of Rs 64.31 on the Interbank Foreign Exchange.

Rupee has lost close to 16 per cent this year making it one of the worst Asian currencies so far.

GLOBAL MARKETS

Asian stocks fell while Brent crude surged to over 5-month high on brewing tensions between Syria and US.

Japan’s Nikkei fell 0.7% to 13,542, Singapore’s Straits Times fell 1.6% to 3,034, China’s Shanghai Composite index was up 0.4%  at 2,104 while Hong Kong’s Hang Seng fell 0.6 % to 21,874 today.

European markets also opened lower. France’s CAC declined 1.4% to 4,009, Germany’s DAX shed 1.5% to 8,309 while UK’s FTSE was down 0.7% to 6,443.

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STOCK MOVERS

Domestically, barring IT index, rest all declined with banks, realty, capital goods, oil & gas, PSU, metal leading the drop on the BSE.

The gainers included counters such as Infosys gaining 1%, Dr Reddy’s gained 0.4% on the BSE.

The laggards were BHEL falling 10%, HDFC and HDFC Bank dropped 7% each while Larsen & Toubro fell 5.6% on the BSE.

The key notable movers included counters such as IDFC that shed 16%, extending its previous day’s fall, after the company barred fresh purchases of its shares by foreign institutional investors (FIIs) and non-resident Indians (NRIs). The stock has fallen nearly 17% in past two trading sessions.

Banking shares were under pressure on the bourses after the rupee once again weakened against the dollar in early trades on Tuesday due to month-end dollar demand.

YES Bank, HDFC Bank, IndusInd Bank, Axis Bank, Bank of India, Kotak Mahindra Bank and Bank of Baroda are down 3% each on the Bombay Stock Exchange (BSE). Federal Bank, ICICI Bank, Canara Bank, Punjab National Bank and State Bank of India from public sector are down 2-5%.

ITC slipped nearly 3% ahead of board meeting tomorrow to consider merger of the non-engineering business of subsidiary Wimco with itself.