Moneycontrol Bureau
Right from the beginning, there was a constant flow of bad news this week. The negative industrial production growth, core inflation coming in higher than expected and an uneventful RBI credit policy meet pushed Indian equities to fall by over 4.5%. The volatility in currency and commodity markets worldwide further quickened the slide.
The Nifty closed below the psychological mark of 4700 for the first time since 2009, losing over 200 points, at 4651.60. The Sensex lost 722 points to end at 15,491.35.
Market Movers:
In its mid-quarter credit policy review today, the Reserve Bank of India kept key interest rates unchanged , hitting the pause button on the rate hikes we have seen in the past. The central bank also went ahead and kept the door open for possible rate cuts in the months to come to address the problem of falling economic growth.
Putting to rest any doubts of an economic slowdown, industrial production for October came in at a shocking -5.1%, mainly lead by the 25.5% de-growth in the capital goods space.
On the positive side, core inflation for November declined to 9.11% against 9.78% the previous month. Even though this was higher than expectations, the general reaction was relief as inflation finally seems to be cooling down. Food inflation for the week ended December 3 also fell to 4.63%, the lowest in four years.
However, the situation in the currency space remains precarious as the rupee kept making new highs in trade. The dollar got as expensive as 54.29, but cooled off a bit to end the week at 52.71 per dollar. The euro is currently languishing around 1.30 levels, reporting the worst weekly fall since September. The dollar index continues to show strength above the 80 mark.
So as to control the sharp bouts of currency volatility, the RBI reduced trading position limits yesterday . Foreign exchange dealers can now hedge up to 25% of their total forward contracts, against 75% earlier. The effect of this move was seen today was the rupee appreciated by almost 2% in early trade.
Don't miss: 16 stocks you should buy in falling market
The popular safe haven gold also bore the brunt of the risk-off scenario in the world, as investors sought after cash as the safest asset. The growing strength of the dollar and anxiety about the eurozone’s debt crisis pushed the yellow metal below USD 1600 per ounce for the first time since October.
On the policy front, the Companies Bill was introduced in Parliament, and Corporate Affairs Minister, Veerappa Moily, hopes to see it getting passed this session . The key point of this Bill is the mention of corporate social responsibility. Though implementation of the same is not mandatory, disclosure is. With regards to other policies, the Parliament is still in a state of deadlock.
Losers & Gainers:
Pantaloon Retail (Rs 139.65; -23%): The company faces a warrant conversion dilemma, with the prospect of either forfeiting its initial Rs 100 crore investment or forking out Rs 300 crore before the year ends.
Electrotherm India (Rs 136.85; -15%): The company sold 100% stake in its pipe business to French glass manufacturer Saint Gobain for Rs 950 crore.
Larsen & Toubro (Rs 1075; -12.4%): Lack of investment demand and the effects of the high interest rate regime seem to be catching up to the infrastructure major as it languishes close to its 52 week low.
Bharti Airtel (Rs 336.30; -6%): Reports suggest that the telecom regulatory authority (TRAI) is set to fine the company for violating mobile number portability norms. The department of telecom may also issue a show cause notice to the operator for discrepancies in payment of licence fees.
Jet Airways (Rs 204.60; 14.5%): The woes for the airline continue even after the government de-freezed the company’s accounts after part-payment of its service tax liability.
No comments:
Post a Comment