CARNAGE

Stock markets in India suffered brutal carnage on Wednesday with the benchmark equity indices getting thrashed by around two percentage points in afternoon trades. Though the downslide for the equity markets seems to have stabilized in the last half an hour, however, there emerged no evidence of recovery in local bourses. Sentiments got spooked in the session following the sharp over a percent depreciation in Indian currency which went on to hit fresh all time lows of 54.42 against the US dollar on sustained dollar demand. Investors grew increasingly worried about the recent sharp fall in Indian currency despite repeated interventions by Reserve bank of India as relentless risk aversion hit markets and highlighted the vulnerabilities of a country facing challenging fiscal and economic outlooks. The frontline gauges have even gone on to breach the important psychological 4,850 (Nifty) and 16,000 (Sensex) levels for the first time since January 2012 amid the across the board risk aversion. However, cues from the global front too remained discouraging as Asian markets were rattled after market participants buckled under the fears that the Greece would exit from the single currency union after talks to form a new government in the debt laden nation failed. The European counterparts too got off to a gap down opening and traded with large cuts of around a percent, thereby adding to the pressure on domestic markets. Back home, across the board profit booking was evident with rate sensitive Auto index getting thrashed by over three percent being the top laggard followed by the Metal and Bankex indices which fell over two percent each. However, the heavyweight Oil & Gas index managed to keep its head above the water with marginal gains of less than a quarter percent thanks largely to slight gains bellwether Reliance.

Moreover, the broader markets too traded on a pessimistic note but managed to perform relatively better than their larger peers, trading with cuts of little a percent. The bourses tumbled on large volumes of over Rs 0.7 lakh crore while the market breadth on BSE was dominantly in favor of declines in the ratio of 1706:716 while 112 scrips remained unchanged.

The BSE Sensex is currently trading at 16,023.56 down by 304.69 points or 1.87% after trading as high as 16,132.68 and as low as 15,978.35. There were 3 stocks advancing against 27 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index sank 1.16% and Small cap index slipped 1.27%.

On the BSE sectoral space, Oil & Gas up 0.22% was the sole gainer, while Auto down 3.27%, Metal down 2.34%, Bankex down 2.29%, Consumer Durables down 2.21% and Power down 2.20% were the major laggards in the space.

Gail India up 1.27%, TCS up 0.12% and RIL up 0.09% were the only gainers on the Sensex, while Tata Motors down 6.70%, HDFC down 4.81%, BHEL down 4.13%, ICICI Bank down 3.22% and Tata Steel down 2.98% were the major losers in the index.

Meanwhile, the Federation of Indian Exporters Organization (FIEO) has asked the government to extend the interest subvention scheme on rupee credit for another one year in the upcoming annual supplement to the foreign trade policy (FTP) expected to be announced in the first week of June.

Ajay Sahai, the Director General of FIEO said that 'We are of the view that the interest subvention should be extended to all export-oriented sectors'. We are expecting the Commerce Ministry to move a proposal to the Finance Ministry on this.

The scheme ended on March 31, 2012. Exporters from handicrafts, handloom, carpet, and small & medium enterprises (SMEs) sectors were provided the benefit under the scheme.

FIEO further stated that the increase in bank interest rates for exporters from 7% to over 12% in a span of two years is a serious concern and it should be addressed in order to make Indian exporters competitive against its competitors.

The organization has also recommended that additional markets and new products should be included under the Focus Market Scheme (FMS) and the Market Linked Focus Product Scheme (MLFPS). All the export related schemes which are there at the moment for the benefit of the exporters should be continued.

The S&P CNX Nifty is currently trading at 4,849.60, lower by 93.20 points or 1.89% after trading as high as 4,882.25 and as low as 4,841.15. There were 7 stocks advancing against 43 declines on the index.

The top gainers on the Nifty were BPCL up 3.12%, Bank of Baroda up 1.92%, GAIL up 0.98%, Cairn up 0.84% and Dr Reddy's up 0.41%.

Tata Motors down 6.92%, HDFC down 5.12%, JP Associates down 4.55%, BHEL down 4.36% and SAIL down 3.90% were the major losers on the index.

In the Asian space, Shanghai Composite plunged 1.13%, Hang Seng got slaughtered by 3.05%, Jakarta Composite got hammered 2.74%, KLSE Composite plummeted 1.57%, Nikkei 225 sank 1.12%, Straits Times Index dived 1.68%, KOSPI Composite got obliterated 3.08% and Taiwan Weighted slumped 2.18%.

The European markets got off to a negative start as France's CAC 40 plunged 1.03%, Germany's DAX sank 0.94% and United Kingdom's FTSE fell 0.73%.