Mkts live: Nifty struggles to hold ground but ends in green, rupee strengthens

3:32 pm : Indian markets struggled to hold ground today, oscillating between red and green territories for most part of the day.

The BSE Sensex closed up 41 points or (0.22% up) at 18761.22, while the Nifty closed up 11.73 or 0.21 percent higher at 5667.65. The Indian rupee recovered slightly and at 3:30 pm the Indian currency was trading at 59.2 against the US dollar.

Market analyst Sudarshan Sukhani said he would not buy into any rally as the trade remained choppy through the day after yesterday’s huge sell-off.

According to experts, policy makers will be forced to come up with long-term solutions to address the Current Account Deficit.

Kotak Securities believes the thrust will have to be reducing imports or items that can be easily produced in India and managing the demand and supply of items (energy, for example) that India does not produce in sufficient quantity.

In FII outflows, worst yet to hit India, warns Nomura

3:pm While the markets continue to trade in red, Nomura India analyst Sonal Varma cautions that the worst has not hit Indian markets yet.

In an interview with _CNBC-TV18 s_he said," we are still vulnerable on the upside given the quantum of flows that have come in over the last 12 months. Clearly, only a fraction of that has gone out. So, this transition from a liquidity driven model to a more fundamental driven model can cause some more volatility in the coming months."

She further cautioned that RBI may actually hike interest rates going forward.

“When one has currency under pressure, the text book response of central bank is that you start hiking interest rates. In India’s case, it is debatable whether flows are growth sensitives or rate sensitives so I don’t think the text book approach can be applied outright,” she said.

FM says chill out, don’t panic over rupee fall

2:15 pm Finance Minister P Chidambaram reiterated that investors should not panic over the rupee fall as the government is monitoring the situation. He added that RBI will take action whenever necessary but also cautioned that US Fed’s statement on tapering of bond buying has been misunderstood.

“We are not insulated from what is happening in the rest of the world,” Chidambaram said at a press conference. “My request is we should not react and panic. It is happening around the world.”

Experts too see RBI intervention to prevent the rupee from crossing 60 to the US dollar.

India, China can become flavour of the day, says Jim Walker

2:00pm: The markets have given up the intra-day gains and are again trading in the red.

At 2 pm, the BSE Sensex was down 25 points at 18693, while the Nifty was down 12 points at 5643.

The rupee, however, rebounded sharply, coming off its lows since morning, at 59.23/25 versus Thursday close of 59.57/58. Dealers cited dollar inflows related to Essar Steel’s $1 billion overseas borrowing.

Meanwhile, Jim Walker, Founder and Managing Director of Asianomics told ET Now that the Indian currency can fall further from current levels but added that tapering of quantitative easing will not impact emerging markets much as the global central banks were not in a position to withdraw stimulus. He also added that India and China will become the flavour of the day.

Golden age of emerging markets coming to an end, says Goldman Sachs

12:28 pm According to Goldman Sachs, the 10 year outperformance of emerging markets is now coming to and end.

“The five trends that spurred outsized gains during the past 10 years – surging growth in the so-called BRIC nations, higher commodities, improved government finances, slower inflation and lower US bond yields – are halting and in some cases reversing,” the investment bank said in a report yesterday. The report also said the that assets of emerging economies are unlikely to deliver the kind of risk-reward that investors had become used to in the last one year.

RBI will protect rupee from hitting 60, says expert

11:39 am: Markets are trading flat but heavy selling by foreign institutional investors has sparked worries.

According to a Reuters report, foreign institutional investors (FIIs) provisionally sold Indian shares worth a net Rs 2074 crore on Thursday, marking their biggest single-day selling in at least a year, according to National Stock Exchange data. Traders worry an end to the US monetary stimulus and a weakening rupee could lead to portfolio outflows, which will delay further rate cuts by the central bank. FIIs have sold cash shares for eight straight sessions, totalling Rs 5949 crore, as per exchange and regulatory data.

Meanwhile, the rupee was trading at 59.39 against the US dollar, slightly stronger than its opening of 59.75 against the USD.

Mitul Kotecha of Credit Agricole believes that the RBI will protect the rupee from hitting the 60 level because it is psychologically important.

10:32 am After yesterday’s sell-off the markets have finally pulled back slightly. Both the Sensex and the Nifty are trading in the green. However, market analyst Sudarshan Sukhani cautioned that investors should not play into this pull back because yesterday’sdeep decline implies that lower levels are here to stay.

At 10:34 am, the Sensex was trading 32 points higher at 18751, while the Nifty was up marginally at 5664.40.

10:o7 While a rate cut in July seems unlikely given the rupee weakness, Ajay Srivastava of Dimensions Consulting is of the view that the RBI may even raise rates to protect rupee. Otherwise a free-fall in the markets and the currency is almost certain.

In an interview to CNBC-TV18, he says it would be at least a couple of years before the macro-economic environment normalises. He says the RBI may even be compelled to raise rates in its efforts to protect the rupee. At the same time, given the chaos in global markets, there is little the Indian government can do on its own.

9:14 am Equity markets opened marginally weak despite the sell-off in global markets.

While the BSE Sensex opened down 40 points or 0.14 percent at 18692, the Nifty was down 14 points ( 0.26 percent) at 5641.

“With the strongest market falling 500 points in two days, this adjustment will take a while. This is not a one day-two days adjustment. Volatility will be there in the market, one will get 2-3 bad days and then get an up day and that up day will look spectacular as bear market or dead cat bounces do. However, this adjustment, given that it probably involves several billions of dollars in terms of leveraged and carry positions is going to happen over a period of time because a psychological reset is happening now in global financial markets and that never usually plays out in 24-48 hours,” said Udayan Mukherjee, managing editor, CNBC-TV18.

The rupee too opened weak at 57.75 against the US dollar against yesterday’s close of 59.58. The Indian currency, however, touched an all-time low of 59.98 against the US dollar in intra-day trade yesterday. On Thursday, markets recorded the steepest fall in 21 months after comments by US Fed that it would scale back its monetary stimulus measures earlier than expected led to a selloff in global equities.

The rupee slump to an all time low also dampened investor sentiment as it would force the RBI to defer easing of key policy rates.

Sandeep Bhatia of Kotak Institutional Equities expects rupee weakness to continue and hit 62 some time later this year. “There is very little option for the RBI to stem rupee fall, I think they have done the right thing by staying away from the market,” he said in an interview with CNBC-TV18.

Bhatia expects a further $2-3 billion outflow from Indian bonds.

Traders, however, told Reuters that movement in the rupee and foreign portfolio flows would be key to see if markets are looking to consolidate at current levels.

The dollar has been strengthening against a basket of countries with high current account deficits on improving US economic data. With India having the second largest current account deficit in the world, in absolute terms, it faces the risk of further depreciation.

On the monsoon front, India received 73.5 mm rainfall in week to Jun 19, 89% above normal, said the Indian Meteorological Department.

Meanwhile Reliance Capital has suspended sale of gold in physical form as well as financing against gold to curb gold imports.

Another day to bleed, but it is a buy for retail investors, say experts

8:30 am The Indian financial markets are likely to continue the meltdown, in tandem with their Asian peers.Today’s calamity in global markets is really an extension of yesterday’s sell-off, which appeared to be triggered by comments made by Federal Reserve Chairman Ben Bernanke.

All the focus, as yesterday, is going to be on the forex market. According to CNBC-TV18, the one month dollar-rupee forwards in the overseas non-deliverable forwards market are at Rs 60.45 today morning. The nose-dive in the rupee will inevitably pull all other asset classes down.

According to Mohammed Apabhia of Citigroup, outlook for India remains negative and the rupee’s decline has reduced chances of rate cut by the RBI. However, market experts have said the fall in equities is actually offering a buying opportunity for investors.

In an _Economic Times repor_t, Devan Choksey of KR Choksey Shares and Securities said, “The time is ripe for retail investors to gradually buy into equity markets.”

Motilal Oswal of Motilal Oswal Financial Services also said in an ET column that barring 10-11 companies with high forex debt, rest of the market offers a buy opportunity from a bottoms-up approach. “Even on an overall basis markets are unlikely to fall more than 5-7 percent from these levels,” he said.

Traders said movement in the rupee and foreign portfolio flows would be key to see if markets are looking to consolidate at current levels

8 am Global cues signal bloodbath on Dalal St

Global market cues

US stocks fell more than 2 percent on Thursday, extending the previous day’s sharp decline as investors fretted over the Federal Reserve’s plan to begin reducing its stimulus later this year if the economy strengthens.(Reuters)

Experts believe that despite the sell-ff in markets , the US economy is actually recovering.

“What the market is undergoing now is a state of normalization, going back to pre-stimulus times,” said Joyce Liu, investment analyst at Phillip Futures in Singapore.

Asian stocks extended losses on Friday as the US Federal Reserve’s plan to scale back stimulus drove MSCI’s broadest index of Asia-Pacific shares outside Japan down another 0.6 percent after it hit a nine-month low on Thursday. (Reuters)

The US dollar, euro and sterling were all in demand on Friday as the prospect of an end to super-easy money from the Federal Reserve drove a mass migration out of emerging markets and into developed world assets.(Reuters)

Commodities were down too.

Gold f ell to a three-year low on Friday and was in danger of recording its biggest weekly drop in 30 years after the US Federal Reserve said it would wind down its bullion-friendly stimulus later this year. Spot gold - down nearly 9 percent this week - dropped for the fifth straight session, while Comex gold futures also declined over 1 percent to their lowest in three years. Silver was down 6.3 percent, whileBrent crude and gasoline were down 2.6%.

Business/ Stock news

Idea Cellularslashed data charges by 90 percent in eight circles, following Bharti Airtel and Vodafone, who recently cut their rates by similar margins in select circles.Bharti Airtel had yesterday slashed data usage charges by 90 per cent for pre-paid subscribers in Punjab and Haryana, a day after Vodafone lowered its data charges by 80 per cent for pre-paid and post-paid customers in three circles.

Unilever’s voluntaryopen offer to increase its stakein Hindustan Unilever (HUL) will begin today and remain open till July 4.Currently, Unilever holds 52.48 per cent in HUL and post open offer it will go up to 75 per cent.The open offer price has been fixed at Rs 600 apiece, the statement said, adding that the company will offer a Rs 6 bonus per share.

Foseco India, as the company’s offer for sale kick starts today. The floor price of Rs 450 is at a discount to yesterday’s closing price of Rs 470.50.

Economy news:

Global retailers like Walmart and Tesco have sought assurance from India that any change of governments at both centre and states should not result in reversal of FDI policy in multi-brand segment, before taking investment decisions in the country. Bentonville-based Walmart has also raised apprehensions about the ongoing probe by investigating agency Enforcement Directorate, said an internal note of the Department of Industrial Policy and Promotion (DIPP).

The Cabinet may consider next week across-the-board increase in natural gas prices after key finance and fertiliser ministries have endorsed Oil Ministry proposal for a 60% increase in rates immediately.The ministries of Finance, Power and Fertiliser have sent their comments on a revised note floated by Oil Ministry for pricing natural gas, as per the formula suggested by Prime Minister’s economic advisorC Rangarajan-headed panel.