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Thursday, August 22, 2013

Wicked Wednesday! Nifty ends 200 points off day’s high

Bulls were once again at the receiving end on Wednesday as the Nifty ended at its lowest level since September 6, 2012 while the Sensex plummeted to its September 11, 2012 lows. In the last four trading sessions, the Nifty and Bank Nifty has fallen almost 450 and 800 points, respectively.

With the rupee appreciating post Reserve Bank's steps to assuage liquidity concerns, the Sensex and Nifty opened gap up. The measures included an Rs. 80bn bond buyback on August 23 to ensure adequate credit flow to the productive sectors of the economy. The measures were aimed at easing liquidity conditions in the market which worsened after RBI’s money tightening steps, including raising short-term rates, to curb volatility in the exchange rate.

But bears smelt blood with the spot rupee touching a new all-time low of 63.18 to the dollar. This triggered a massive sell-off on the Indian bourses. From there on, there was no end to the blood-letting, with the Nifty slipping almost 200 points while the Sensex shedding nearly 650 points from the day’s high.

The Sensex finally closed Wednesday at 17,905, down 340 points, while the Nifty shut shop at 5,302, down 99 points over Tuesday's close.

Commenting on trade today, Amar Ambani, Head of Research at IIFL, said that after Friday’s carnage, there has been a downward shift in the Nifty's range and Wednesday’s fall seems to be confirming this view. "If Nifty ends August below the 5,450 mark, it is likely to enter into a new medium-term trading band of 4,900-5,500."

Metals led the losers pack on Tuesday with oil and gas, realty, FMCG and healthcare following suit. Midcap and smallcap stocks continued to bear the brunt.

The only pockets of respite were consumer durables and select banking stocks.

Ranbaxy, Sesa Sterlite, ACC, JP Associates, Bharti Airtel, Reliance Infrastructure, Reliance Industries, Ambuja Cement and BPCL lagged while IndusInd Bank, BHEL, HDFC, HDFC Bank, ICICI Bank, Bank of Baroda and PowerGrid gained.

The advance-decline ratio favoured the bears. On the Bombay Stock Exchange, 1,350 stocks declined against 915 advances, while 137 scrips remained unchanged.

Volatility, as measured by India VIX, ended at its highest level since March 5, 2012. It closed 3.1% up at 28.09 after hitting a day’s high of 29.96 and low of 24.25.