Market Mayhem Continues

The unabated fall of the rupee has wreaked havoc. The tremors of a fast depreciating rupee are rippling through the bourses. The Sensex shed 769 points in a single trading session on August 16, following the rupee touching an all-time low. It is down 15 per cent since May this year, and is yet not showing any sign of bottoming out. The indications are clear; the worst is yet to come.

The benchmark indices opened the fortnight on a weak note with the Sensex beginning its journey at 18687 points. However, taking cues from some positive global developments, it gained some momentum by August 14. But this momentum was short lived and a declining rupee led to stocks getting hammered. The worst came on August 16, with the Sensex shedding a huge 769 points in a single day. Matters have only got worse with the Sensex hitting a peak of 19392 points on August 14, and a low of 17807 points on August 21, before closing at 17905 points – an overall loss of 781 points over the fortnight.

As far as global indices are concerned, the Dow also declined by 3.06 per cent over the fortnight with talks of the Fed tapering off the bond buying gaining further credence. Almost all global indices followed suit, with Singapore’s STI leading the downward course with a 3.13 per cent decline. It was closely followed by the Japanese Nikkei, the Taiwan Weighted and UK’s FTSE which were down by 2.03 per cent and 1.54 per cent and 1.17 per cent respectively. The Brazilian Bovespa was the only index that showed some appreciation having gone up by 3.18 per cent over the fortnight.

FIIs were net sellers of equities worth Rs 715 crore, while Indian Mutual Funds found markets worth investing, ending the fortnight with a net purchase of Rs 379 crore. The most worrisome part is that FIIs have been on a selling spree since August 16. The combined turnover on the BSE and the NSE ranged between Rs 13044 crore to Rs 16007 crore, clearly signaling towards the lack of retail participation in the markets.

Individually, JP Hydro was the biggest gainer with a 32.72 per cent rise followed by Gitanjali, Muthoot Finance, Essar Oil and Wockhardt which rose by 29.60, 26.37, 21.07 and 19.42 per cent respectively. On the other hand, the crisis struck Financial Technologies was the biggest loser with another 20.07 per cent decline in its share price over the fortnight. It was followed by Titan Industries, Shriram Transport, Future Retail and United Breweries which were down 16.84, 15.08, 14.32 and 14.21 per cent respectively.

The markets are not likely to bounce back in a major way any sooner. Investors have to exercise tremendous caution before exposing themselves to any major exposure in such volatile times. While the falling rupee remains the biggest concern, the global situation is also another major factor that will have to be kept in mind before initiating any buy calls.