The market will find the going tough unless there is clarity about the rupee and global capital flows
The domestic market finished in the red on global concerns after US Federal Reserve chief Ben Bernanke suggested that the central bank may scale down it bond-buying programme later this year. The decline in the market resulted in the benchmarks ending lower for the third week in a row. Global worries, which saw the rupee tumbling to an all-time low of 60 against the dollar on Thursday, also added to the market gloom.
The market is expected to remain volatile in the coming week on account of the expiry of the June futures & options derivatives contract. Current account deficit figures for the March quarter, which would be released by the government on Friday, will also be closely watched by investors.
The Sensex declined 403.69 points (2.1%) to 18,774 and the Nifty closed the week at 5,668, down 141 points (2.42%). Although the benchmarks settled in the green on three of the five trading days, losses on the other two days were responsible in bringing the market down. The market will find the going tough unless there is clarity about the rupee and global capital flows.
The market settled higher on Monday on buying in auto, capital goods and technology stocks in the second half of the day. Selling pressure from banking, consumer durables and PSU sectors led the market down on Tuesday. The market settled with minor gains on Wednesday amid volatile trade on nervousness ahead of the announcement from the US Fed about the future of its stimulus programme.
The market saw its highest percentage loss in the past 21 months on Thursday, which led the rupee making fresh all-time lows. Late buying in IT and technology stocks, as the declining rupee improved the prospects for IT exporters, helped the market close in the positive terrain on Friday.
BSE TECk (up 1%) was the lone gainer in the sectoral segment while BSE Realty (down 6%) and BSE Bankex (down 5%) were the biggest losers.
Bajaj Auto (up 4%), Wipro, Maruti Suzuki (up 3% each), Hero MotoCorp and Bharti Airtel (up 1% each) were the top gainers on the Sensex. The key losers were Jindal Steel & Power (down 16%), Hindalco Industries (down 10%), NTPC (down 6%), ICICI Bank (down 5%) and HDFC Bank (down 4%).
The major gainers on the Nifty were Ambuja Cements (up 5%), Bajaj Auto (up 4%), Maruti Suzuki (up 3%), Hero MotoCorp and Cairn India (up 1% each). The main laggards on the benchmark were JSPL (down 16%), Bank of Baroda (down 13%), Punjab National Bank (down 10%), Hindalco Ind and Jaiprakash Associates (down 9% each).
The United Progressive Alliance (UPA) government, finally seems to have woken up to the reality of the worsening economic situation, made worse due to the falling rupee, rising current account deficit (CAD) and concerns over withdrawal of funds by foreign institutional investors (FIIs). While the Cabinet Committee on Economic Affairs (CCEA) came up with several measures, finance minister P Chidambaram tried to calm the nerves over the domestic currency that touched a lifetime low on Thursday.
The rupee on Thursday plunged by 130 paise to hit life-time low of 60 against the US dollar in early trade on the Interbank Foreign Exchange on strong demand for the American currency from banks and importers. The Indian unit had earlier hit its all-time intra-day low of Rs 58.98 on 11th June.
The Reserve Bank of India (RBI), in its mid-quarter review of the monetary policy on Monday, decided to keep key interest rates, cash reserve ratio (CRR) and repo rates unchanged. According to economists, external risks, particularly weakness in the rupee, may have prevented the RBI from cutting rates. The CRR stands at 4% and the repo rate has been left unchanged at 7.25%.
India’s exports contracted by 1.1% year-on- year in May to $24.5 billion compared to $24.77 billion in May last year. Imports grew by 6.99% to $44.65 billion during the period, leaving a high trade deficit of $20.1 billion, government data showed.
In international news, European Union finance ministers failed to secure an agreement on how best to downsize or close banks without calling on taxpayers to bail out the ailing lenders. The breakdown in negotiations could weaken the trust in Europe’s ability to stabilise its financial system.
US Fed chief Ben Bernanke, at the end of the two-day Federal Open Market Committee meeting on Wednesday, said the central bank may scale back its monthly bond-buying programme later this week and end it when the unemployment rate falls to 7%, most likely by the mid 2014. The US jobless rate was 7.6% in May, up from 7.5% in April.
Commenting on the development, ibiboGroup CEO Ashish Kashyap said: “We see this as an exciting market opportunity. Online penetration of the bus market is only 5.7% compared to 28% for air travel, suggesting headroom for rapid future growth”
E-commerce firm ibiboGroup on Friday said it will acquire Bangalore-based online bus ticketing firm redBus.in for an undisclosed amount.
ibiboGroup and Pilani Soft Labs Pvt Ltd, owner of redBus.in have executed a binding agreement for the acquisition, the company said in a statement.
“This transaction will expand and diversify Ibibo Group’s existing travel assets—Goibibo.com (a B2C travel aggregator) and TravelBoutiqueOnline (a B2B travel agency platform),” the statement added.
redBus.in sells more than a million tickets a month and has over 600 full time employees.
Commenting on the development, ibiboGroup CEO Ashish Kashyap said: “This gives us significant combined scale in terms of daily transaction volumes...We see this as an exciting market opportunity. Online penetration of the bus market is only 5.7% compared to 28% for air travel, suggesting headroom for rapid future growth.”
He further said India now has a network of good roads, which is increasing further. The number of buses would increase as people are opting for bus travel due to costly air travel and long wait-listed railway tickets, said Kashyap.
Pilani Soft Labs was founded in 2006 by three BITS-Pilani graduates—Phanindra Sama, Charan Padmaraju and S Pasupunuri, which own three products—redBus, BOSS and SeatSeller—serving the fragmented bus industry in India.
All travel entities of ibiboGroup, including redBus.in will continue to run independently and operate as separate businesses to drive deep focus, it said, adding, the founders and management teams of redBus.in would continue in their respective positions in the company.
IbiboGroup is owned by a holding company MIH, which is jointly owned by South Africa’s media house Naspers and China’s internet firm Tencen.