Sensex hits 19-month low on weak corporate earnings, falling rupee

Sensex hits 19-month low on weak corporate earnings, falling rupeePeople look at a screen displaying the Sensex on the facade of the Bombay Stock Exchange (BSE) building in Mumbai, India, June 29, 2015.Reuters

Continued selling in the domestic stock markets has led the benchmark indices fall to a 19-month low on Friday amid concerns over weak corporate earnings and a further depreciation in rupee to two-year lows.

While the BSE Sensex closed 318 points down at 24,455 and the 50-share Nifty ended 99 points lower at 7,438.

“It was complete mayhem on Dalal Street as Sensex and Nifty ended at 19-month closing lows while the Nifty Bank hit a 52-week low and ended at a 15-month closing low. SBI and ICICI Bank contributed 28% to Nifty’s fall today, while Tata Motors, TCS and ITC were among the other major draggers,” said Amar Ambani, Head of Research, IIFL, in a note.

A total of 25 stocks registered a fresh 52-week highs in trades today, while 86 stocks touched new 52-week lows on the National Stock Exchange (NSE).

Weakness in the rupee resumed on Friday, with the currency falling to a two-year low of 67.70 against the dollar. The rupee had hit a record low of 68.85 in August 2013, when fears over interest rate hike in the US were at their peak.

The sell-off in the Indian markets is also driven by a slump in global market to 3.5-year lows due to plunging crude oil prices. Currently, crude oil prices are trading under $30 a barrel, a 12-year low, as oil supply from Iran is expected to aggravate the oversupply issues facing the market.

Stocks of oil exploration companies Cairn India and ONGC ended lower on the back of weakness in global crude oil prices.

The Chinese benchmark Shanghai Composite Index tumbled 3.55% to close at 2,900 points as negative economic data fuelled concerns over the health of the world’s second-largest economy.

Metal stocks Tata Steel, Vedanta, Hindalco, SAIL and JSW Steel ended sharply down as commodity prices fell on worries over slowdown in China.

While Vendanta shares plunged over 8% to close at Rs 73, Tata Steel shares closed 3.7% lower at Rs 229. Stock prices of Hindalco and SAIL closed 3.7% and 4.8% lower, respectively.

Bank shares came under heavy selling pressure due to concerns over their asset quality.

However, Infosys shares continued to edge up, closing over 1% higher at Rs 1,140. India’s second-largest IT firm on Thursday surprised investors by posting upbeat results for the December quarter even as most analysts had expected the results to be muted.

Shares of Mukesh Ambani’s Reliance Industries ended the session in green, gaining over 1% to close at Rs 1,073.

“We expect RIL to report a GRM of $11/bbl as compared to $7.3/bbl reported in Q3 FY15 and $10.6/bbl in Q2 FY16. Petrochemical prices too have seen a correction in line with the crude oil prices but we expect the spreads to remain flattish,” said Ambani.

Copyright 2000 © Finance solutions