Results, rupee and rate spook investors, Sensex at a new low

Mumbai, Jan 12 (IANS) Caution over third quarter results, coupled with the release of macro-data points that may determine future lending rates and a weak rupee, subdued the Indian equity markets on Tuesday.

The slide led both the bellwether indices of the Indian equity markets to end the day’s trade at new 19-months closing lows. Tuesday’s closing levels were last seen during July 2014.

Both indices even touched their new 52-week lows during intra-day trade.

Initially, both the indices made modest gains, as investors were attracted by a sizeable number of stocks that have receded to their yearly lows.

Besides value buying, short covering amidst thin volumes led to a morning relief rally.

However, both indices soon ceded their gains, as anxiety was stoked by the third quarter (Q3) results season that started on Tuesday. Investors are expecting only a three percent year-on-year (YoY) growth in PAT (profit after tax).

Among major companies that were to release their Q3 results on Tuesday were information technology (IT) major Tata Consultancy Services (TCS), Federal Bank and IndusInd Bank.

In addition, long-liquidation positions and lacklustre Asian markets, too, dented investors’ sentiments.

Caution also prevailed over the upcoming domestic macro-data on industrial output, and retail inflation. Both the data points were slated to be released later on Tuesday.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) plunged by 143 points, or 0.58 percent in the day’s trade.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day’s trade deep in the red. It declined by 53.55 points, or 0.71 percent, at 7,510.30 points.

The NSE Nifty breached the psychological level of 7,500 points during the intra-day trade. It also touched a new 52 week low at 7,487.80 points.

Bluechip stocks took a massive blow, as 12 out of 50 Nifty stocks hit their fresh 52 week lows.

The Sensex of the S&P BSE, which opened at 24,862.93 points, closed at 24,682.03 points — down 143.01 points or 0.58 percent from the previous day’s close at 24,825.04 points.

During the intra-day trade the Sensex touched a high of 24,882.30 points and a low of 24,597.11 points — its new low in 52 weeks.

The S&P BSE market breadth favoured the bears — with 1,867 declines and 920 advances.

“We have had a flat-to-firm opening based on our markets’ yesterday’s close. The bearish sentiment still continued which was supported by a weak rupee and low expectations out of the Q3 results,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

“The release of the macro-data points stoked some volatility. Healthy results will give a positive bias to markets, as investors are not expecting much out of this quarter’s results. The movements are expected to be stock specific.”

Nitasha Shankar, vice president for research with YES Securities, elaborated that the weakness in the equity markets is visible across the globe, as panic selling continues.

“Broader markets underperformed the headline indices amidst unwinding of long positions in high beta stocks continued for second day. Market breadth turned in favour of the bears as the day progressed with 937 advances and 1,852 declines,” Shankar noted.

“Banking index extended its plunge to form fresh 52-week low. Metal, reality and financial service indices also declined in trade. Pharma index was the lone gainer.”

Sector-wise, banking, oil and gas and automobile indices came under selling pressure.

The S&P BSE banking index plunged by 320.06 points, oil and gas index receded by 81.41 points and oil and gas index closed lower by 78.27 points.

On the other hand, consumer durables index rose by 17.09 points and healthcare index inched-up by 10.98 points.

The 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.540.99 crore, while DIIs bought stocks worth Rs.141.25 crore.

Apart from equities, the rupee, too, weakened during the day’s trade. It closed five paise down at 66.86 to a US dollar from its previous close of 66.81 to a greenback.

Major Sensex gainers during Tuesday’s trade were NTPC, up 2.47 percent at Rs.145.15; Wipro, up 2.08 percent at Rs.549; Mahindra and Mahindra (M&M), up 1.59 percent at Rs.1,182.15; Adani Ports, up 0.94 percent at Rs.236.20; and Hindustan Unilever, up 0.87 percent at Rs.819.50.

Major Sensex losers during day’s trade were Axis Bank, down 2.67 percent at Rs.406.10; Tata Steel, down 2.24 percent at Rs.246.35; State Bank of India (SBI), down 2.18 percent at Rs.199.85; ONGC, down 2.14 percent at Rs.221.50; and Bharti Airtel, down 1.91 percent at Rs.315.15.

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