Yuan revaluation swamps Sensex; bank stocks down

Mumbai, Aug 11:

Devaluation of the Chinese yuan coupled with the upcoming key economic data points subdued investor sentiments on Tuesday leading to a barometer index of the Indian equity markets closing over 235 points in the red.

The barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) closed more than 235 points or 0.84 percent down.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) also closed in the negative. It closed lower by 63.25 points or 0.74 percent at 8,462.35 points.

The S&P BSE Sensex, which opened at 28,193.26 points, closed at 27,866.09 points — down 235.63 points or 0.84 percent from the previous day’s close at 28,101.72 points.

The Sensex touched a high of 28,205.12 points and a low of 27,825.83 points in the intra-day trade.

Analysts said the revaluation of the yuan, intended to boost Chinese exports, has made investment in China cheaper. This is leading foreign investments away from India.

China’s central bank has devalued yuan by two percent. This is the biggest devaluation in the Chinese currency since 1994.

The move has strengthened the dollar value, which has negatively impacted major world currencies including the Indian rupee.

However, as most commodities like oil, zinc and steel fell, the international gold prices inched-up above $1,100 a troy ounce due to the upcoming festive season in India.

India is the largest gold importer in the world. The Indian gold prices rose by over Rs.1,000 per 10 gram in just under a week.

“The revaluation of yuan is a major reason for today’s subdued sentiments. The currency wars have started at a time when the world economy is stalling, commodities prices are falling and the Chinese markets are bleeding,” Alex Mathews, head of research with Geojit BNP Paribas, told IANS.

“The Indian rupee has fallen to Rs.64.50 to a dollar. However, the move has helped the information technology (IT) and other exports related stocks.”

Investors were also anxious over the upcoming key economic data points of Consumer Price Inflation (CPI) and Index of Industrial Production (IIP) slated to be released on Wednesday.

“There is very little hope of any positive surprises from the CPI or the IIP, despite good monsoon and pick-up in demand,” Mathews elaborated.

Devendra Nevgi, chief executive of ZyFin Advisors, told IANS that though the parliament has begun functioning with the introduction of GST (goods and services) bill in the Rajya Sabha, its passage in this session is unclear.

The monsoon session of parliament ends on August 13 with the fate of key legislations like the GST and the land bill hanging in the balance.

“There is still hope that the government will find a way to pass and implement the GST bill. However, the continuing logjam has provoked bearish sentiments,” Nevgi said.

Sector-wise, all 12 sub-indices of the S&P BSE except the information technology (IT) and technology, entertainment and media (TECK) index ended in the red.

The S&P BSE banking index decreased by 331.79 points, followed by metal index which receded by 302.30 points, automobile index declined by 259.14 points, capital goods index edged-lower by 225.35 points and oil and gas index fell by 110.04 points.

However, the S&P BSE IT index gained by 153.28 points and TECK index rose by 56.87 points.

Major Sensex gainers during Tuesday’s trade were Infosys, up 2.07 percent at Rs.1,104.35; Tata Consultancy Services (TCS), up 1.25 percent at Rs.2,603.05; Cipla, up 0.62 percent at Rs.719.80; Wipro, up 0.46 percent at Rs.566.25; and Maruti Suzuki, up 0.16 percent at Rs.4,504.80.

The major Sensex losers were: Tata Steel, down 5.46 percent at Rs.246.90; State Bank of India (SBI), down 4.87 percent at Rs.269.30; Hindalco Inds, down 4.22 percent at Rs.103.35; Tata Motors, down 4.16 percent at Rs.369.80; and Coal India, down 3.85 percent at Rs.393.20.

Among the Asian markets, Japan’s Nikkei was down 0.42 percent and Hong Kong’s Hang Seng slipped by 0.09 percent. China’s Shanghai Composite Index was at a standstill from Monday’s levels.

In Europe, the London FTSE 100 index lost by 0.68 percent, Germany’s DAX Index plunged by 1.64 percent and French CAC 40 fell by 1.09 percent at the closing bell here. (IANS)