Markets end sharply lower amid weakening rupee

Markets ended over 2.3% lower on Tuesday, amid a weakening rupee, weighed down by financials on concerns that the RBI would announce fresh measures to cap liquidity in an effort to prevent further weakness in the rupee.

The Sensex ended down 449 points or 2.3% at 18,733 and the Nifty ended down 143 points or 2.5% at 5,542.

According to technical experts the markets are forming lower tops and lower bottoms indicating weakness ahead with both the benchmark indices trading way below their 200-DMA levels of 19,340 for the Sensex and 5,850 for the Nifty.

Asian markets outside Japan slipped, after dismal first-half earnings from HSBC dragged Hong Kong's Hang Seng Index sharply lower.  The Hang Seng ended down 1.3% and the Straits Times eased 0.5%. Meanwhile, the Nikkei ended up 1% and the Shanghai Composite gained 0.5%. Most other indices in the region ended lower.

European markets were trading flat on Tuesday. The FTSE pared early gains and was trading flat with negative bias. The FTSE had gained on the back of strong retail and production data. The CAC and DAX were trading with marginal gains.

The rupee hit a all time low today as the liquidity tightening steps taken by Reserve Bank of India (RBI) since July 15 failed to prop up the currency.

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The rupee was down 42 paise at Rs 61.30. The recent measures by the RBI  one would think were enough to contain the falling rupee but the plunge has only gotten deeper.

Meanwhile, the finance ministry and the Reserve Bank of India (RBI) will discuss possible measures to manage the situation.

The sub-committee of Financial Stability Development Council (FSDC) will meet in Mumbai tomorrow to assess the impact of liquidity tightening steps taken by the central bank in the last few weeks. The meet will discuss further measures to arrest fall of the rupee.

The BSE Consumer Durables index was the top loser among the sector indices down 5.6% followed by Realty, Bankex, Metal, Capital Goods, Oil and Gas, Power, FMCG and Healthcare indices down 1-4.6% each.

Financials shares witnessed selling pressure on concerns that the central bank may impose fresh liquidity measures to stem the fall in the rupee. HDFC Bank and ICICI Bank were among the top Sensex losers which ended down over 4% each while HDFC ended down 5.9%. SBI eased 2.5%.

Among the index heavyweights Reliance Ind lost 2.4% and ITC slipped 1.7%.

Bajaj Auto ended down 3.5% amid the ongoing workers' strike at its Pune plant.

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Tata Power slumped 14.8% after the company posted an unexpected net loss of Rs 115 crore in the April-June quarter, hit by higher finance costs and foreign exchange losses.
Analysts had forecast a net profit of Rs 264 billion rupees compared with Rs 146 crore in the same period a year ago.

Other Sensex losers include, Bharti Airtel, L&T, ONGC, and Hindustan Unilever.

Among other shares, Engineers India ended 6.9% lower at Rs 125 after reporting 16% year-on-year (yoy) decline in net profit at Rs 129 crore for the quarter ended June 30, 2013 (Q1), due to fall in operational income. The state-owned consulting services firm had profit of Rs 154 crore in a year ago quarter.

eClerx Services ended 4.3% higher at Rs 773, in otherwise weak market, after the company said it is considering share buyback proposal.

Orbit Corporation’s share price dipped 5.9% at Rs 11.18 after LIC Housing Finance Ltd sent a notice to Mumbai-based real estate company to recover dues.

In the broader market, the BSE Mid-cap and Small-Cap indices were down 1.8-2.6% each.

Market breadth ended weak with 1,599 losers and 655 gainers on the BSE.