Markets On A Consistent Downfall

Looking at the current situation, it seems quite likely that the current downturn will continue for some more time as uncertainty continues to exist in both, domestic and global markets, says Amit Bhanot

In the last fortnight, we have seen extreme turbulence on the bourses. On account of global cues, depreciation in the rupee and a reeling economy that has failed to show any signs of revival, markets have seen a consistent downtrend. Amid a backdrop of a sticky depreciation in the rupee, that led to levels of Rs 61.80 per dollar on August 6, 2013, the markets have failed to recover from the shock.

In the last fortnight, the Sensex opened on a sober note on July 25, 2013 at 20062 points and shed points in regular intervals in succeeding sessions. The Sensex was at its highest level of the fortnight at 20110 points on July 25 and reached at its lowest level of 18667.30 points on August 6. In the last fortnight, it lost 1328.96 points. In the same way, the Nifty opened at 5970.4 points on July 25 and declined continuously since then to touch its lowest level of 5521.8 points, before closing at 5542.25 points on August 6. In all, it lost 428 points in the last 15 days.

In the fortnight, the inflow of foreign funds made some recovery as FIIs pumped Rs 1356 crore. The markets yet failed to receive any kind of support. On the other hand, Indian mutual funds were selling freely. Over the fortnight, they sold Rs 361 crore. In terms of combined turnover, the BSE and NSE fared poorly, as the turnover declined to levels between Rs 11548 crore and Rs 17056 crore.

Key global macroeconomic indicators and central bank meetings across the world added to the volatility in the markets in the last two weeks. Although data has been encouraging in the US and Europe and central banks have maintained their policies, which had led the markets to trade at record highs, a break was seen in their upswing. All the indices baring China’s Shanghai Composite and Hong Kong’s Hang Sang showed depreciation. Japan’s Nikkei, Brazil’s Bovespa, Taiwan’s Wtd and Singapore’s STI led the decline. The Nikkei declined by 2.35 per cent followed by the US markets, which declined by 0.13 per cent. On the other hand, China’s Shanghai Composite and Hang Seng appreciated by 1.45 and 0.24 per cent respectively.

As far as gainers are concerned, Wipro was the biggest gainer as it appreciated by 19 per cent. It was followed by Sun TV, Biocon, and Bajaj Hindusthan which rose by 7.14 per cent, 6.44 per cent and 5.89 per cent rise respectively. On the other hand, losers of the fortnight included Financial Tech, MCX, and Wockhardt. These declined by 74.45 per cent, 53.61 per cent, and 40.26 per cent respectively.

Looking at the current situation, it seems quite likely that the current downturn will continue for some more time as uncertainty continues to exist in both, domestic and global markets. As elections are around the corner, it will leave marginal space for improvement in the sentiment. Moreover, the continuity in the rupee depreciation will continue to weigh on the markets. Operators and investors are both keeping themselves away from active participation in the markets. This gives us a feeling that the next two months would be sober as far as action on the bourses is concerned.