Post Session: Yuan devaluation sparks rout on Dalal-St; Sensex plunges 353 pts Analysis for Aug 12, 2015

Posted By: Religare
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The Indian equities ended lower for the fourth straight session on Wednesday as China"s currency devaluation move sparked a rout in domestic bourses, with the benchmark Sensex falling to two-week low. Persistent logjam in Parliament also weighed on investor"s sentiment, giving a body blow to appetite for riskiest assets.

The BSE SENSEX closed at 27512.26, down by 353.83 points or by 1.27 per cent, while the NSE Nifty ended 108.55 points lower at 8353.8.

In the bearish trade, the BSE Sensex touched intraday high of 27883.33 and intraday low of 27479.43, while the NSE Nifty touched intraday high and intraday low of 8446.95 and 8337.95, respectively.

Traders remained concerns over the ongoing logjam in the Parliament as it may block the path of key reforms. The focus will also be on July consumer prices and June industrial output data which will offer fresh cues over the health of Asia"s third biggest economy. Investors also awaited reports on industrial output and retail sales in China.

The China yuan devaluation also raised fears of an Asian currency war, with the rupee falling to two-year low of 64.78. With the depreciation of Yuan, the Reserve Bank will come under pressure for further monetary easing and could be forced to take further rate cut action in coming months.

A weaker Yuan is not a simple but a complex issue that can also dent the competitiveness of Indian exports. Though it"s hard to gauge how deep the impact will be, but it will be a tough challenge for the economist around the world to averse this big challenge.

In line with the benchmark indices, the broader market also ended lower, with the BSE MIDCAP settling 52.85 points lower at 11502.55, while the BSE SMLCAP closed at 11919.04, down by 135.95 points or by 1.13 per cent.

Leading the decline on BSE Sensex pack were Vedanta Ltd. (Rs. 113.90,-8.03%), Hindalco Industries Ltd. (Rs. 95.90,-7.21%), Coal India Ltd. (Rs. 371.45,-5.53%), State Bank of India (Rs. 256.45,-4.77%), Tata Motors Ltd. (Rs. 355.30,-3.92%), among others.

However, some buying were witnessed across stocks, such as Infosys Ltd. (Rs. 1141.75,+3.39%), Sun Pharmaceutical Industries Ltd. (Rs. 866.25,+2.90%), Tata Consultancy Services Ltd. (Rs. 2671.40,+2.63%), Wipro Ltd. (Rs. 576.15,+1.75%), Lupin Ltd. (Rs. 1718.65,+1.28%), among others.

On the sectoral front, realty and metal indices emerged as top losers, shedding 5.42 and 4.37 per cent, respectively, on BSE.

The Market breadth, indicating the overall strength of the market, was weak. On BSE out of total shares traded 2900, shares advanced were 676 while 2109 shares declined and 115 were unchanged.

On the global front, the Asian equities ended lower after China devalued its currency for a second straight day, sparking fears of an Asian currency war, while raising alarm bells over the health of the world"s second biggest economy. All three of the Shanghai Composite, Hang Seng and Nikkei 225 tanked more than 1 per cent as the People"s Bank of China cut its yuan"s daily fixing rate by 1.6 per cent to 6.3306 per dollar, the lowest level since 2012, putting the Yuan on course for its worst loss in 21 years.

Story first published: Wednesday, August 12, 2015, 16:24 [IST]
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