Higher current account deficit (CAD) and continuing political uncertainty at the Centre spelled doom for share markets on Monday as Sensex plunged 430 points leaving investors poorer by staggering Rs 1 lakh crore.
April trade deficit data at $17.8 billion weighed so heavily on the stock market that a fall in retail inflation to 9.4 per cent didn’t add to any optimism in the bourses. Sensex ended 430.65 points lower at 19,691.67 which is the biggest fall since Sensex lost nearly 478 points on February 27, 2012. Similarly, Nifty also slumped by 126.80 points to end below 6K-mark at 5,980.45 while MCX-SX flagship index SX40 closed 228.64 points lower at 11,662.34 points.
“The broad-based selling across sectors indicates some caution and profit-booking at higher levels, despite the better-than-expected April CPI of 9.39 per cent. The recent fall in the rupee, a worse-than-expected April trade data and weak Asian/European markets soured sentiments. India’s trade deficit rising to $17.8 billion in April due to massive surge in imports of cheaper gold raised concerns about the current account deficit,” said Dipen Shah, Head of Private Client Group Research, Kotak Securities.
Selling was seen across-the-spectrum as all 13 sectoral indices closed with losses in 0.94-3.17 per cent range with FMCG, capital goods, metal and auto shares leading downslide.
All 30 Sensex-based scrips closed with sharp to moderate losses with ITC suffering over 5 per cent drop after recent rally. l&T, TCS, ICICI Bank, Tata Motors, RIl and HDFC Bank were among major losers. Bharti Airtel and Tata Steel fell by over 4 per cent each.
Market breadth was negative as 1,542 stocks closed down while just 808 finished higher. BSE market capitalisation fell by over Rs 1 lakh crore to Rs 67.03 lakh crore today. Weakness in global markets also kept the market subdued. “Markets had gone up substantially over the past few weeks and some correction was expected. Valuations are at about 15x one-year forward (FY14) consensus earnings, which is the long term average. However, we are yet to see a significant improvement in the core sectors. We believe that, fiscal initiatives from the Government are required for the markets to sustain and move up from the current levels,” Shah added.
Globally, Asian stock indices closed mixed with downward bias with sentiment hit by selling in commodities triggered by a strong dollar. European markets were trading weak in their early trade.Key indices in China, Hong Kong, Singapore and Taiwanended with losses while from Japan and Kospi closed higher.
Japanese stocks jumped 1.20 per cent to their highest level in more than five years, boosted by an improved profit outlook and further yen weakness.
Meanwhile, belying trends, the rupee, however, recovered from over two months lows to close seven paise higher against the dollar at 54.73 after the RBI imposed restrictions on gold imports.