Caution over macro-data flares volatility, markets end flat

Mumbai, Feb 12 (IANS) Caution over upcoming macro-data coupled with unwinding of long positions and negative global cues flared extreme volatility in the Indian equity markets on Friday.

In the process, a barometer index of the Indian equities markets closed the day’s trade flat — up by only 34 points.

The choppy trade was marked by short-covering and value-buying, a day after the barometer index corrected by 3.40 percent, or 807.07 points, due to less-than-expected earning results, bleeding international indices and a weak rupee.

However, caution over the upcoming macro-data points on monthly industrial production and inflation capped gains and dragged markets down to their new 52-week lows during intra-day trade.

Initially, both the bellwether indices of the Indian equity markets opened on a weak note, following a steep fall in Asian indices and Thursday’s decline in the US markets.

Despite some recovery, indices ended below the psychologically important levels of 23,000 and 7,000-point marks, respectively.

According to a market analyst, volatility spiked as buyers retreated after Thursday’s massive fall. Nevertheless, recovery in crude oil prices which stood at $27 a barrel (one barrel is equal to 159 litres) kept sentiments mildly positive.

The rise was fuelled by the news that OPEC (organization of the petroleum exporting countries) can curtail global supply.

But heavy selling by the foreign investors, absence of any fresh positive trigger and below expected third quarter (Q3) results briefly halted markets upward movement.

In addition, a weak rupee unnerved investors. However, it strengthened by six paise at the close of the day’s trade at 68.23-24 to a US dollar from its previous close of 68.30 to a greenback.

During the intra-day trade, the Indian rupee touched its lowest level since September 2013 at 68.47 level on spot.

“On the back of risk aversion across Asian stock market, dollar gained against the Indian rupee,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.

“However, heavy intervention from RBI (Reserve Bank of India) saved the day. Intervention has helped the rupee to claw back.”

Besides, investors’ confidence was further eroded by doubts over the central government’s ability to perk up investments.

Nonetheless, positive European indices lend some support to the recovery of Indian markets at the end of the day’s trade.

Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed flat.

It has lost over 1,665 points, or 6.76 percent, in the last four sessions.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day’s trade flat. It inched up by five points or 0.07 percent to 6,980.95 points.

The NSE Nifty touched a new 52-week low at 6,869 points. Nifty traded at its lowest levels since early May, 2014.

It has slid by 512.75 points, or 6.84 percent, during the last four days’ trade.

The S&P BSE Sensex, which opened at 23,060.39 points, closed at 22,986.12 points — up 34.29 points or 0.15 percent from the previous day’s close at 22,951.83 points.

The Sensex touched a high of 23,161.15 points and a low of 22,600.39 points — its new low in 52 weeks, during the intra-day trade.

The BSE market breadth favoured the bears — with 1,730 declines and only 851 advances.

“Short-coverings on the last day of the trading week has led to some recovery. Higher crude oil prices also helped markets climb back up,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

“However, negative Asian markets, long liquidated positions and disappointing results and a weak rupee capped gains.”

Vaibhav Agarwal, vice president and research head at Angel Broking, expected markets to react to global cues and upcoming macro data.

“Markets recovered from the lows of the day and ended on a flat note. However, the negative bias continues to sustain with an advance decline ratio of 1:2 on the BSE,” Agarwal pointed out.

“Oil and gas and capital goods stocks were the worst hit today. European markets which opened in the green resulted in the recovery.”

Nitasha Shankar, vice president for research with YES Securities, cited that Indian markets witnessed high volatility following Thursday’s massive sell-off.

“Headline index Nifty staged a pull back after hitting fresh 52-week low led by buying in the large cap index stocks. Broader markets, however, continued to slide lower as high beta stocks saw sustained selling pressure,” Shankar noted.

“Auto and FMCG indices ended in the green, while reality, energy, metal and bank indices ended in the red.”

Sector-wise, capital goods, oil and gas and healthcare indices of the BSE ended in the red. On the other hand, automobile, telecom and technology, entertainment and media (Teck stocks gained.

The S&P BSE capital goods index plunged by 354.01 points, oil and gas index plummet by 206.82 points and healthcare index receded by 116.51 points.

The S&P BSE automobile index augmented by 256.16 points, followed by telecom index which gained by 65.29 points and Teck index edged-higher by 56.39 points.

The foreign institutional investors (FIIs) were net sellers during the day’s trade, while the domestic institutional investors (DIIs) bought stocks.

The data with stock exchanges showed that FIIs divested Rs.398.37 crore, while the DIIs’ bought stocks worth Rs.545.07 crore.

Major Sensex gainers during Friday’s trade were Tata Motors, up 8.34 percent at Rs.298.65; Bharti Airtel, up 5.40 percent at Rs.325.25; Mahindra and Mahindra, up 3.77 percent at Rs.1,168.40; Axis Bank, up 3.52 percent at Rs.390.80; and NTPC, up 2.44 percent at Rs.124.05.

Major Sensex losers during the day’s trade were BHEL, down 13.13 percent at Rs.104.55; Adani Ports, down 5.20 percent at Rs.178.70; ONGC, down 4.56 percent at Rs.193.55; Larsen and Toubro (L&T), down 3.53 percent at Rs.1,053.70; and Tata Steel, down 3.18 percent at Rs.217.85.

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