VantageTrade Eagle Eye: Markets pare early gains pulled by weak rupee

The markets, which were in Green for most of the trading session, pared all of the morning gains tracking weak rupee which touched its all time low of 55.04, and the slashing of India's 2012 economic growth forecast to 6.3% from the earlier 6.9% by Morgan Stanley. Nifty ended up 14.6 points today, to close at 4906.05. Sensex ended up 30.51 points, at 16,183.26.

Buying support from realty, capital goods and banking stocks pushed the indices higher in the morning, however the gains were offset by losses in FMCG, IT and metal stocks.

US markets bounced back as traders picked up stocks at reduced levels following the latest down trend, which led the major averages down to four-month closing lows on Friday. However, trading activity was subdued, as remaining concerns about Europe and a lack of major US economic data pushed traders on the sidelines.

Facebook’s shares declined sharply yesterday. On the opening of its second trading session they slumped by 13.7% and according to analysts’ calculations, the founder and the biggest shareholder, Mark Zuckerberg, lost 2.2 billion dollars. Nevertheless, after the disastrous start, Facebook managed to recover some losses and at the end of the session it was 10% down, at $34 per share. This is much less than the debut price of $38.

The Dow Jones industrial average jumped 135.10 points, or 1.09%, to 12,504.48 at the close. The Standard & Poor's 500 Index climbed 20.77 points, or 1.60%, to 1,315.99. The Nasdaq Composite Index rose 68.42 points, or 2.46%, to close at 2,847.21.

Asian markets continue growth today as hopes that Europe would embark on fresh action to address its debt crisis increased. Also expectations that China will take on further stimulus measures to boost growth increased investors’ sentiment.  Japan's Nikkei 225 index was trading 1% higher at 8,719.75 and Hong Kong’s Hang Seng index was trading higher at 19,062.12, up 0.7%. South Korea's Kospi index was trading 1% higher at 1817.45. China's Shanghai index was trading at 2361, up 0.5%.

Indian benchmarks opened in Green following the global peers and led by gains in capital goods, auto and metal stocks. Nifty climbed 48.65 points to 4,954.70 and Sensex opened 152.08 points higher at 16,334.34.

The rupee strengthened against the US dollar after falling to an all time low of 55.04 per dollar. It was at 54.74 per dollar, up 30 paise against the previous close of 55.04. However, it was only a brief sentiment boost provided by RBI measures that excluded banks' net overnight open positions from currency futures and options segment.  Rupee fell to a new record low of 55.09 to the dollar.

Banking stocks continued to be in an uptrend after SBI, India's biggest lender, reported higher than estimated profits in the March quarter. SBI continue to rally and traded today over 1% higher.

Other Economic and Political News:

-        RBI imposes restrictions on Forex dealers as rupee breaches 55-mark

-        Government to provide Rs.38,500cr subsidy to oil companies for 4QFY2012

-        Lokayukta court orders probe against Yeddyurappa, Nirani

-        White paper on black money a damp squib, states the obvious

-        COT panel sets 2G price 17% above TRAI’s

-        BHEL bags contract for 1,320MW Solapur power project

-        JSW Steel output up 35% in April at 715,000 tones

-        Dr. Reddy's launches much-delayed acidity drug in the U.S.

-        Government fixes turnover target of Rs.68,000cr for MMTC

 

 

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