Indian markets need not be sensitive to US data : FM

Attributing the 4-per cent plunge of the BSE Sensex to global factors, Union Finance Minister P. Chidambaram on Friday said the market should not be “so sensitive” to data flowing from the U.S. but reflect Indian conditions.

“I have no doubt in mind, when calm is restored in the market, people will begin to understand India market indicators must basically reflect Indian market conditions. They should not be so sensitive to data coming out of the U.S.,” he said on sidelines of an event in New Delhi. "We have taken a number of measures. Let us wait for what the first quarter growth numbers are," Mr Chidambaram said.

The BSE 30-stock index, Sensex, fell nearly 770 points or 4 per cent and the rupee breached the 62 level against the US dollar on concerns among large investors of capital curbs. The gold prices too shot up by Rs. 1,310 per 10 gram to Rs. 31,010.

Worried over the developments, Mr. Chidambaram said: “I think this is time for calm; this is time for reflection and let’s see what happens next week.” Observing that nothing has happened in the Indian economy between Wednesday and Friday morning, the minister said, “nevertheless the markets have taken a hit and that is reflected in the rupee also. We have taken a number of measures... a number of measures are being taken. Let’s wait to see what the first quarter growth rates are.”

black friday : I think this is time for calm; this is time for reflection and let’s see what happens next week - P Chidambaram

Govt allays fears on capital control measures

New Delhi (PTI): Seeking to calm rattled investors, the government and RBI on Friday clarified that there was no reverting to capital control regime -- the fear of which spooked stock market, sent rupee to its lowest level. On a day when Sensex fell nearly 770 points or 4 per cent and rupee breached 62 to a dollar on concerns among large investor of capital curbs, the government and RBI went into fire-fighting mode assuring there was no move to check repatriation of funds by FIIs.

"They are saying that a capital control is coming in...There is no question of us putting any restriction on outflows which are commercial in nature, which means whether it is FII sell...," Economic Affairs Secretary Arvind Mayaram said here. He further said: "there is no control of outflows of dividends, profits, royalties, or on any kind of commercial outflows which happen in the normal course".

Top sources in RBI blamed "unwarranted rumours" about controls on FII money to the nearly 770 point drop in the benchmark Sensex and rupee dipping to record low of 62.03 in intra-day trade before recovering to close at a record low of 61.65 against the dollar. To restrict the outflow of foreign currency, the RBI had on August 14 announced stern measures, including curbs on Indian firms investing abroad and on outward remittances by resident Indians. The central bank reduced the limit for overseas direct investment (ODI) by domestic companies, other than oil PSUs, under the automatic route from 400 per cent of net worth to 100 per cent. Higher levels of ODI would now need prior approval from RBI.

Stock market out of elite trillion-dollar club
The Indian stock market moved out of the trillion-dollar league today as equities crashed, pulling down the total valuation of all listed companies to $985 billion on fresh concerns about the US stimulus withdrawal, and the rupee plunging to a historic record low of 62.

Market capitalisation of all the listed companies stood at Rs 60,73,881.22 crore as stocks witnessed bloodbath that dragged down the BSE 30-stock benchmark, Sensex, by 769.41 points to 18,598.18 - its biggest fall in 4 years. The rupee also touched an all-time low of 62.03 against the US dollar. It recovered some ground to record an all-time closing low of at 61.65. Indian stock market's valuation had earlier dropped to $985 billion on August 7, after slipping below the $one-trillion level a day prior to that. However, it regained the level on August 8.

India had first entered the trillion-dollar club in June 2007, but moved out in September 2008, amid the global slowdown. It again got back into the elite league in May 2009 and had largely remained there since then, except for some brief periods including once in 2012.

Market Outlook : Recovery after opening hour
Nifty suffered one of the worst falls and lost more than 4 per cent and lost more than what it had gained in the last 4 days of continuous rise. Nifty could not go above 5800 to confirm the short term uptrend and once again fell reinforcing intermediate down trend. It is once again close to yearly low and hence till the low is decisively breached, selling should be resorted to only on sharp rally. Nifty spot is expected to encounter resistance at 5550, 5585 and find support at 5470, 5435 for Monday. While global cues and gunds flow are expected to guide the market. It can be expected to recover reasonably considering the huge fall on Friday.
-BA Sastry