Weak rupee, credit crisis worries drag equity market down 3% over week (Market Review)

Mumbai, Sep 22
Persistent depreciation in the Indian rupee and high crude oil prices coupled with concerns over credit crisis dragged the key equity indices three per cent lower on a weekly basis during September 17-21.

The week started on a negative note, both in the domestic and global markets, primarily owing to the US announcement of fresh tariffs on Chinese imports.

This was the third consecutive week that saw fall in the Indian equity market.

The stock exchanges were, however, closed on September 20 on account of Muharram.

A major slump hit the market on Friday afternoon, with the S&P BSE Sensex losing over 1,100 points, only to partially recover from the lows minutes later. Analysts described it as a panic sell-off across the board, specifically in the banking and finance space, as there were concerns over credit risk.

"Firesale of financial units by IL&FS for repaying its CPs (commercial papers) added fuel to fire," said Mustafa Nadeem, CEO, Epic Research.

Infrastructure Leasing and Financial Services (IL&FS), which defaulted on its commercial paper obligation earlier this year, missed payments again on Friday. This increased concerns of a credit crisis among the investors.

On a weekly basis, the Sensex closed at 36,841.60 points, lower 1,249.04 points or 3.28 per cent from its previous close.

Similarly, the wider Nifty50 of the National Stock Exchange on Friday closed at 11,143.10 points, down 372.1 points or 3.23 per cent from the previous week's close.

"Indian markets remained in bear grip right from the beginning of the week, largely weighed down by a weakening rupee, escalation in trade war and rise in crude oil prices," said Prateek Jain, Director of Hem Securities.

He added that investor's sentiments were further weakened by the announcement of merger of three public sector banks -- Bank of Baroda, Vijaya Bank and Dena Bank.

"On Friday, towards the fag-end of the week, traders and investors witnessed a highly catastrophic market driven by a sharpfall in the NBFC sector," Jain said.

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrips worth Rs 2,674.12 crore, while the domestic institutional investors bought Rs 1,782.63-crore stocks in the truncated week.

According to National Securities Depository (NSDL) figures, foreign portfolio investors (FPIs) divested Rs 2,231.37 crore, or $306.04 million, in the equities segment during the week ended September 21.

On the currency front, the Indian rupee closed at 72.20 a US dollar on Friday recovering 35 paise from the previous week's close of 71.85.

On Tuesday, it touched an all-time low of 72.91 per greenback.

The top sectoral gainer was oil and gas, while the major losers were realty, infrastructure and finance counters, said Deepak Jasani, Head of Retail Research at HDFC Securities.

The top weekly Sensex gainers were ONGC (up 6.88 per cent at Rs 180.10); Power Grid (up 3.62 per cent at Rs 200.20); Tata Steel (up 3.15 per cent at Rs 624.55); Tata Consultancy Services (up 2.94 per cent at Rs 2,103.80); and Vedanta (up 2.66 per cent at Rs 229.70 per share).

The major losers were Yes Bank (down 27.79 per cent at Rs 227.05); Tata Motors (DVR) (down 7.44 per cent at Rs 131.85); Axis Bank (down 5.69 per cent at Rs 599.40); Maruti Suzuki (down 5.44 per cent at Rs 8,039.55); and State Bank of India (down 5.39 per cent at Rs 270.05 per share).

(Ravi Dutta Mishra can be contacted at ravidutta.m@ians.in)

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