Weekly Wrap: Nifty Wipes Out 2018 Gains, RBI’s Surprise Status Quo, IL&FS Rescue
India’s NSE Nifty 50 Index wiped out all its gains of 2018 after the index posted its worst decline since Feb. 2016 amid rising prices of Brent crude and a falling rupee.
The S&P BSE Sensex fell 5.11 percent to 34,377 and the NSE Nifty 50 Index dropped 5.62 percent to 10,316.
The rupee touched a record low of 74 against the U.S. dollar and Brent crude prices rose above $86 per barrel, sparking concerns over a widening current account deficit.
It has been an issue with crude and rupee and we're looking at top-down macro-based foreign institutional investors selling, so FII (foreign institutional investor) confidence is taking a hit and positions are getting lightened, Ajay Bagga, executive chairman, OPC Asset Solutions, told BloombergQuint over the phone.
During the week, foreign investors sold shares worth Rs 9,523 crore while domestic institutional investors bought shares worth Rs 6,932 crore, according to provisional data available with the National Stock Exchange.
Energy companies were among the top losers in the Nifty 50 Index, paced by losses in Hindustan Petroleum Corporation Ltd., Bharat Petroleum Ltd. and Indian Oil Corporation Ltd. after the government asked the three state-run oil retailers to cut fuel prices by Re 1. The move stoked fears of the government moving away from deregulation to a subsidy-controlled regime.
On the flipside, Yes Bank Ltd. and Indiabulls Housing Finance Ltd. rebounded after falling 19 percent in the previous week.
All sectoral gauges compiled by the National Stock Exchange fell led by the Nifty Auto Index's 7 percent drop, which was paced by losses in Eicher Motors Ltd., Mahindra & Mahindra Ltd., TVS Motor Ltd. and Ashok Leyland Ltd.
The Indian rupee fell to a record low of 74.22 against per dollar before settling at 73.77 after the Reserve Bank of India kept the repo rate unchanged at 6.50 percent and doused expectations of a rate hike.
The Monetary Policy Committee said that its decision was consistent with the stance of "calibrated tightening" of monetary policy in consonance with the objective of achieving the medium-term target for CPI inflation of 4 percent.
Pami Dua, Ravindra Dholakia, Michael Patra, Viral Acharya and RBI governor Urjit Patel voted in favour of keeping the policy repo rate unchanged, while Chetan Ghate voted for an increase in the policy rate by 25 basis points.
The rupee slid 1.7 percent to 73.77 per dollar this week—tracking the sell-off in equity markets and surge global crude oil prices—making it the third-worst performer in Asia after the South Korean won and the Indonesian rupiah.
Big Stories Of the Week
- NCLT allows government to take over IL&FS.
- The IL&FS rescue – Keep LIC out, say experts.
- IL&FS has 348 entities, more complex than expected, says board.
- RBI to buy Rs 36,000 crore of bonds in October to add liquidity.
- How Rakesh Jhunjhunwala’s portfolio fared in latest selloff.
- RBI eases overseas borrowing rules for state-run oil marketing companies.
- Petrol, diesel to be cheaper as government, states cut prices.
- Fuel price cut to squeeze oil marketers’ margins.
- Chanda Kochhar steps down as ICICI Bank CEO.
- ArcelorMittal, Numetal must clear dues in two weeks to become eligible to bid for Essar Steel.