WORLD EQUITIES, OIL TUMBLE ON YUAN DEVALUATION; CPI, IIP IN FOCUS AT HOME
US indices plunged 1%-1.3% yesterday on renewed concerns about a deeper slowdown in the world's second-largest economy after an unexpected move by the People's Bank of China to depreciate the yuan by nearly 2%.
The drop in the daily peg to 6.2298 renminbi against the U.S. dollar, down from 6.1162 on Monday, was the largest one-day move in more than two decades and took the currency back to levels from three years ago. The central bank described the decision as a "one-off depreciation."
Apple plunged more than 5% and Caterpillar fell more than 2.5% to lead declines on concerns about the negative impact of a China economic slowdown .
The U.S. dollar index traded mildly higher, while the euro held above $1.10 on a bailout deal between Greece and its creditors. Gold rallied to $1110, its highest level since the end of June.
Oil and industrial metals faced severe selling. Nymex oil tumbled $1.88 or 4.2% to $43.08 a barrel, marking the lowest close in six years. Brent dipped below $49 a barrel. Nickel and copper both slumped in the region of 3% on the London Metal Exchange.
European markets fell 1%-2.7% with DAX leading the fall. Germany's ZEW economic sentiment index came in at 25 points, falling from the 29.7 recorded in the previous month.
Benchmark indices tumbled nearly eight tenth of a percent, extending the losing streak to third straight day. Sensex settled at 27866, down 236 points while Nifty lost 63 points to finish at 8462. BSE mid-cap and small-cap indices lost 0.5% and 1.1% respectively. Except a 1.4% and 0.9% rise in BSE IT and Teck indices respectively, all the sectoral indices ended in red with Metal index leading the tally, down 3.5%, followed by 1.7% cut in Realty index.
FIIs net sold stocks, index futures and stock futures worth Rs 737 cr, 858 cr and 91 cr respectively. DIIs were net buyers to the tune of Rs 131 cr.
Rupee plunged 32 paise to end at 64.19/$.
SBI posted mixed set of earnings. Net profit rose better-than-expected 10.2% to Rs 3692 cr. However, NII disappointed with 3.6% growth at Rs 13732 cr. Gross NPA ratio rose 4 bps q-o-q to 4.29% while net NPA ratio deteriorated 12 bps to 2.24%. Slippages increased to Rs 7318 cr from Rs 4769 cr.
Tata Steel's quarterly profit soared 2.26 times to Rs 763 cr driven by other income, exceptional gain and lower finance cost & tax expenses. Revenue fell 16.8% to Rs 30300 cr. Other income shot up 3.5 times to Rs 762.2 cr. Operating profit plunged 35% y-o-y to Rs 2774 cr and margin declined 250 bps to 9.2%, the expected figure being 7.5%.
Sun Pharma reported 46% q-o-q fall in quarterly net profit at Rs 479 cr, impacted by exceptional loss, higher tax expenses and lower other income. Revenue met expectations, growing 10% to Rs 6767 cr. Operational performance was ahead of expectations. Consolidated operating profit shot up 108% to Rs 1860 cr and margin expanded by 1300 bps to 27.5%.
The government yesterday succeeded in introducing the goods and services tax (GST) bill in the Rajya Sabha amid uproar by Congress members. The Rajya Sabha, however, was adjourned for the day shortly afterwards amid protests by Congress MPs.
Today morning Asian markets are trading with cuts of 1%-2% and SGX Nifty is suggesting about 50 points lower opening for our market.
In yesterday's report we had mentioned that 8498, the low made on Monday, is the immediate support, a breach of which can take the benchmark to around 8435, which is the 61.8% retracement level of the 8322-8622 upmove. Therefore we had advised exiting trading longs if 8498 is breached.
Nifty broke 8498 support and plunged all the way to 8441 before closing at 8462. A gap down opening today is expected to take the benchmark below the 8435 level mentioned above and in that case 8380, the 38.2% retracement level of the entire 7940-8655 upmove, would be the next support to eye. Below 8380, 8322, the immediate previous bottom on the daily chart, would be the next crucial support, a breach of which would break the higher-top higher-bottom formation on the daily chart.
Coal India will report its quarterly earnings today.