Stocks battered, Re up; falling gold boosts retail demand
Mumbai/New Delhi: Stocks and gold lost investor appeal on Monday with BSE Sensex tanking over 430 points, and the precious metal losing nearly Rs 400 per 10 grams but it triggered frenzied retail buying on Akshay Tritiya day.
Belying trends, the rupee however recovered from over two months lows to close seven paise higher against the dollar at 54.73 after the RBI imposed restrictions on gold imports. The rupee also shrugged off widening trade deficit of USD 17.8 billion in April.
There was mayhem in stock markets with key indices Sensex and Nifty plunging by over 2 percent triggered by a slew a factors like profit-booking and ballooning trade deficit.
The Sensex dropped the most in the last 14 months by 2.14 percent to end at 19,691.67, wiping off Rs 1 lakh crore investor wealth. The NSE's Nifty closed below 6,000 mark, shedding 126.80 points, or 2.08 percent, at 5,980.45 points.
Trade deficit widened mainly to due to rising gold and silver imports which jumped by 138 percent to USD 7.5 billion in April 2013.
Brokers said markets had run up quite a bit and investors booked profits after four-day rally that saw indices scaling fresh high levels.
"To moderate the demand for gold for domestic use, it has been decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of exporters of gold jewellery," the RBI said in a statement.
Gold dropped the most by Rs 390 in Mumbai, while in Delhi it lost Rs 180 per 10 grams on Akshay Tritiya which is considered as auspicious day for buying the precious metals. In Chennai and Kolkata, the prices fell by Rs 200 and Rs 260 per 10 grams respectively.
Traders said gold came under unwinding from stockists against the backdrop ongoing sell-off in global markets.
However, retail buyers were seen making a beeline in front of jewellery shops across the country, keeping up the spirit of festival buying.
"So far, I think sales have at least gone up by 10-15 percent at all-India level. Final figures will be collated tomorrow," Bombay Bullion Association Former President Suresh Hundia told PTI.
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