Late recovery saves Sensex…Nifty below 4750

It could well have been worse for Indian markets but for the late afternoon recovery. The start was pretty bad and it looked like another disappointing session before the ‘U’ turn in afternoon. The main indices didn’t exactly set the screens afire but the pull back was commendable nevertheless. The Indian rupee, which breached the 54 mark versus the dollar and hit a new low also recovered on suspected RBI intervention.

The main trigger for the recovery was positive opening in the European markets and the euro rising back above $1.30. Third-quarter advance tax numbers from some of the top corporates also lent good support as did a sharp drop in food inflation. Advance tax paid by the top 100 Indian companies is said to have increased by 10% in the third quarter. That is in line with the growth registered in the second quarter.



Finally, the BSE Sensex closed at 15,836, down 45 points or 0.3% from the previous close. It had earlier been as high as 15,908 and as low as 15,596. It opened at 15,739.

The NSE Nifty lost 17 points or 0.3% at 4,746 after hitting a day’s peak of 4,768 and a day’s low of 4,673. It had opened at 4,712.

The smart recovery in the Large-Cap shares didn’t translate into gains for the broader market though. The BSE Small-Cap index and the BSE Mid-Cap index were down 1.5% and 1.1%, respectively.

India VIX finished flat today at 28.81 after crossing the 30 mark in intraday trading. It hit a low of 27.98 after opening at 28.79.

Capital Goods, Consumer Durables, PSU banks, Banks and Autos were among the top losers today. Select FMCG, Pharma and PSU stocks managed to rise.

Earlier, the Indian benchmarks opened weak on the back of a worldwide selloff and fresh fall in the Rupee. Even a sharp drop in food inflation failed to impress the market players with the Sensex and the Nifty hitting day's low in late morning trade.

Things started looking up once the European markets opened with a positive bias. The euro rose for the first time in four days against the dollar. The shared currency of the 17-member eurozone is back above $1.30 mark.

Meanwhile, the Rupee climbed back above 54 and was last trading at 53.75 per dollar after touching a new record low of 54.3050 in early morning trade. It had closed at 53.7150 yesterday.

Asian markets finished mostly lower, with Chinese stocks taking a big hit post announcement of a disappointing flash manufacturing PMI report by HSBC. Also, FDI into China fell for the first time since July 2009. The Shanghai Composite index fell by over 2%.

The Kospi in South Korea and the Taiex in Taiwan were also down 2% or more. The Nikkei in Japan and the Hang Seng in Hong Kong lost 1-2%.

"The RBI may refrain from any immediate policy action tomorrow but could hint at easing going forward. The central bank statement will be very crucial. A big headache for Indian policymakers at the moment is the unrelenting slide in the rupee. With the dollar in great demand and macro-economic fundamentals weak, the pressure is likely to continue on the Indian currency. That may, in turn keep FII inflows depressed. In short, things could worsen before they start looking up again. So, brace for some more volatility and uncertainty," says Amar Ambani, Head of Research, IIFL.