Bearish global cues, weak rupee dent markets

Mumbai, Jan 21 (IANS) Bearish global cues, coupled with a weak rupee and long-liquidation positions, pushed down the Indian equity markets on Thursday and led to a barometer index closing the day’s trade 100 points in the red.

The selling pressure led both the bellwether indices of the Indian equity markets to close at levels which were last seen during May 2014.

Initially, both the bellwether indices opened on a positive note due to Wednesday’s late trading-hour short-covering rally and slightly higher crude oil prices.

However, the bellwether indices soon ceded their gains in sync with their bearish Asian peers.

Furthermore, investors were seen to be cautious regarding the slide in the rupee value which touched a low of 68.11 to a US dollar — its weakest level in the since August 2013 during the intra-day trade.

It ended weaker by seven paise at 68.02 to a US dollar from its previous close of 67.95 to a greenback.

“Demand for dollars from the offshore market kept the spot hovering around the 68 handle,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.

“Over the near term, USD/INR would remains hostage to global markets, if they stabilise, then we can get a rebound in the rupee, or else depreciation would continue.”

The weakness in the rupee value indicates the massive foreign funds outflow from the Indian equity and debt markets.

This was evident as foreign institutional investors (FIIs) were net sellers during the day’s trade, while domestic institutional investors (DIIs) were net buyers.

According to data with stock exchanges, FIIs divested Rs.1,747.23 crore, while DIIs bought stocks worth Rs.1,267.74 crore.

Besides, caution prevailed over the upcoming US macro-data points of jobless claims and crude oil inventory figures.

Nevertheless, markets were able to pare some of their losses on the back of value-buying which took place in the later stages of the session.

The positive sentiments were supported after European markets opened in the green in anticipation of some positive comments from ECB (european central bank) president.

In addition, the selling pressure eased after an international banking major predicted that India will remain an attractive destination for investors given its relative strong macros.

The banking major’s report added that the country is likely to clock a GDP (gross domestic product) growth rate of 7.5 percent this fiscal.

But the positive momentum was not strong enough to loosen the bear grip on the markets.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) receded by 100 points or 0.41 percent.

The wider 50-scrip Nifty of the National Stock Exchange (NSE), meanwhile, ended the day’s trade flat. It was down by 32.50 points or 0.44 percent at 7,276.80 points.

This is Nifty’s lowest closing since May 30, 2014, when it had closed at 7,229.95 points.

The S&P BSE Sensex, which opened at 24,194.75 points, closed at 23,962.21 points — down 99.83 points or 0.41 percent from the previous day’s close at 24,062.04 points.

This is the lowest closing of the Sensex since May 15, 2014, when it had closed 23,905.60 points.

The Sensex touched a high of 24,351.83 points and a low of 23,862 points during the intra-day trade.

“Bearish Asian markets, weak rupee and long-liquidated positions dampened sentiments,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

Vaibhav Agarwal, vice president and research head at Angel Broking, cited that while valuations have turned attractive, FIIs continue to remain net sellers which has limited any gains in the market.

“With earnings continuing to remain lacklustre, we expect markets to consolidate at lower levels before we see any uptick. We expect to see some positive bias ahead of the budget, which would be a key trigger for the markets,” Agarwal noted.

Nitasha Shankar, vice president for research with YES Securities, elaborated that broader markets, however, managed to buck the trend as stock specific buying was seen post steep declines.

“Pharma, FMCG (fast moving consumer goods), energy and auto indices were major drags in trade today, while IT (information technology), media and reality indices along with banking ended in the positive territory,” Shankar said.

Sector-wise, shares of automobile, healthcare, oil and gas, capital goods and FMCG came under intense selling pressure. In contrast, healthy buying was observed in stocks of banking, IT and consumer durables.

The S&P BSE automobile index plunged by 309.48 points, healthcare index receded by 236.32 points, oil and gas index declined by 137.82 points, capital goods index slumped by 120.95 points and FMCG index edged lower by 102.73 points.

The S&P BSE banking augmented by 226.09 points, followed by IT index which gained by 77.39 points and consumer durables closed higher by 46.75 points.

Major Sensex gainers during Thursday’s trade were Axis Bank, up 5.21 percent at Rs.408.90; Wipro, up 1.58 percent at Rs.550.70, Infosys, up 1.32 percent at Rs.1,136.50, State Bank of India (SBI), up 1.24 percent at Rs.175.85; and Tata Steel, up 1.23 percent at Rs.234.55.

Major Sensex losers during the day’s trade were Maruti Suzuki, down 4.11 percent at Rs.3,892.10; DrReddy’s Lab, down 3.86 percent at Rs.2,757.55; Tata Motors, down 3.70 percent at Rs.329.40; Coal India, down 3.24 percent at Rs.288.30; and Sun Pharma, down 2.59 percent at Rs.773.25.

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