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Market Report

Tuesday, 06-Aug-2013

NSE

  • The Sensex slumped 450 points today to end below the 19,000-mark after five weeks on massive all-round selling, amid a weakening rupee, weighed down by financials on concerns that the RBI would announce fresh measures to cap liquidity in an effort to prevent further weakness in the rupee. The Sensex ended down 449.22 points or -2.34% to close at 18,733.04 and the Nifty ended down 143.15 points or -2.52% to close at 5,542.25 today.

  • After a lower start, the Sensex dropped to its lowest level since June 27. The loss of 449.22 points today was the steepest since June 20 when Sensex plunged by over 526 points. According to technical experts the markets are forming lower tops and lower bottoms indicating weakness ahead with both the benchmark indices trading way below their 200-DMA levels of 19,340 for the Sensex and 5,850 for the Nifty.

  • Asian markets outside Japan slipped, after dismal first-half earnings from HSBC dragged Hong Kong's Hang Seng Index sharply lower. European markets were trading flat today. The FTSE had gained on the back of strong retail and production data. The CAC and DAX were trading with marginal gains.

  • The rupee hit a all time low today as the liquidity tightening steps taken by Reserve Bank of India (RBI) since July 15 failed to prop up the currency. The rupee was down 42 paise at Rs 61.80 against the dollar. The recent measures by the RBI one would think were enough to contain the falling rupee but the plunge has only gotten deeper.

  • Meanwhile, the finance ministry and the Reserve Bank of India (RBI) will discuss possible measures to manage the situation. The sub-committee of Financial Stability Development Council (FSDC) will meet in Mumbai tomorrow to assess the impact of liquidity tightening steps taken by the central bank in the last few weeks. The meet will discuss further measures to arrest fall of the rupee.

  • The rupee, which hit an all-time intraday low of 61.80 against the US dollar, could be soon hitting 64 against the greenback, say analysts. The stock market will follow suit, they say.

  • Rupee targets could be around 64-65 in the near term, says Ashwani Gujral. If RBI sells a few dollars, the rupee recovers 20 paise but the big breakout that has happened on the dollar-rupee above 61.21 is likely to sustain, he says. Overall market trend remains down. If rate hikes come in, Bank Nifty will get to 8500 faster than we expect but overall the trend remains down, says Gujral.

  • Look for levels around 5400 on Nifty, says Sandeep Wagle. I would expect the bounce back from 5400 on the upside and the Nifty will be in range bound in the range of 5450 on the downside, he says. I have an immediate target of 5500 which should be achieved by the end of next day. As far as the final target goes, 5400 will be a tough nut to crack. At higher levels, not expecting Nifty to go beyond 5700-5720, says Wagle.

NIFTY 3-Month

(Data/Charts courtesy NSEI/Yahoo!/iCharts/The Economic Times)