The sensex touched a 14-month low.
Stock indices dipped on Monday by more than 2 per cent on widening trade deficit and weak global cues, which created panic among investors. Most counters witnessed selling pressures, especially economy-related stocks.
The Bombay Stock Exchange (BSE) 30-share Sensitive index (Sensex) tanked 430.65 points or 2.14 per cent at 19691.67, and the fall was sharp as the index closed above 20000-mark in the last two trading days after a long gap.
Stocks of consumer durables, metals, realty, banks, power and healthcare ended in the red.
A broader National Stock Exchange’s (NSE) 50-share Nifty closed at 5980.45 with a loss of 126.80 points or 2.08 per cent. In Saturday’s special trading session, the Nifty surpassed the 6100-mark. After hitting a new calendar year high, it fell sharply on Monday.
Markets started the week on a weak note, giving up nearly 2.5 per cent on the benchmark indices.
“The broad-based selling across sectors indicates some caution and profit-booking at higher levels, despite the better-than-expected April consumer price index (CPI)-based inflation of 9.39 per cent. The recent fall in rupee and a worse-than-expected April trade data soured sentiments,” said Dipen Shah, Head of Private Client Group Research, Kotak Securities.
Trade deficit in April rose to $17.8 billion in April, on a massive surge in imports of cheaper gold. This raised concerns about the current account deficit (CAD). Exports increased by 1.68 per cent to $24.2 billion. Markets had gone up substantially over the past few weeks, and some correction was expected. However, said Mr. Shah, “ We believe that, fiscal initiatives from the government are required for the markets to sustain and move up from the current levels.”
“Trade deficit number of close to $18 billion for April surprised negatively on the back of further increase in the import of gold and silver and feeble exports growth. It has dented the market hope that CAD situation would significantly improve with the recent crash in prices of oil and precious metals,” said Amar Ambani, Head of Research, IIFL.
Rupee up 7 paise
After falling to over two-month low levels in early trade, the rupee on Monday closed seven paise higher at 54.73 against the U.S. dollar on fresh selling of the American currency by exporters and moderate FII (foreign institutional investor) inflows.
At the inter-bank foreign exchange market, the rupee commenced lower at 54.88 a dollar from the previous close of 54.80. It soon dropped to the day’s low of 55.02 on weakness in domestic stocks and sustained dollar demand from importers. The rupee got a support over 55-level and it bounced back to a high of 54.70 before settling at 54.73, a net rise of seven paise. In the last three trading sessions, it had dipped by 66 paise or 1.21 per cent.
Traders said the rupee was seen sidelining the positive retail inflation and concentrated more on the vulnerable trade deficit data. However, the local currency finally ended up.