Political Uncertainty, Global Sell-Off Drag Equities Lower

Mumbai: India’s barometer indices — Sensex and Nifty — fell for a third straight day on Thursday tailing a global sell-off and as investors avoided taking positions ahead of a long weekend. Political uncertainty emanating from the dissolution of Jammu & Kashmir’s assembly, and elections in key states such as Madhya Pradesh and Rajasthan also weighed on sentiments. However, a fresh bout of fund inflows and lower crude oil price lifted the rupee and contained losses in equities. The BSE S&P Sensex settled down 218.78 points or 0.62 per cent at 34,981.02, from its previous close of 35,199.80. It touched an intra-day high of 35,364.50 and a low of 34,937.98.

The NSE Nifty50 lost 73.30 points or 0.69 per cent to finish at 10,526.75 points. India’s financial markets will remain shut tomorrow on account of Guru Nanak Jayanti. The overall market breadth was negative, and the broader market indices like Mid- and Small-cap on the National Stock Exchange fell 0.91 per cent and 0.37 per cent, respectively. According to analysts, uncertainty due to the ongoing state elections was one of the major causeS for the day’s decline. Elections to constitute assemblies in Chhattisgarh, Madhya Pradesh, Rajasthan, Telangana and Mizoram are scheduled for this month and the next.

A win for the Bharatiya Janata Party, which rules Chhattisgarh, Madhya Pradesh, and Rajasthan, would bolster Prime Minister Narendra Modi’s chances of re-election next year. “Stocks had drifted higher in early trade on value buying after a two-day slide. Volatility subsequently struck, with benchmark indices erasing intra-day gains to sink into negative zone,” said Abhijeet Dey, Senior Fund Manager, Equities, BNP Paribas Mutual Fund. The weakness in equities mirrors a global trend, led by the United States, as global growth is seen buffeted by trade tensions between the US and China. Asian markets closed mixed. European indices — FTSE 100, DAX and CAC 40 — traded in the red.

A decline in Brent crude prices helped the equities avert a steeper fall. The Brent crude was last at $63.46 per barrel. The decline in crude oil prices, which have crashed nearly 30 per cent since early October, comes amid expectations of slowing demand and rising US inventories. “Markets failed to hold on to the opening gains, as weak global cues and selling in metals and PSU banks dragged the indices,” said Vinod Nair, Head of Research, Geojit Financial Services. “Global growth concerns due to an ongoing US-China trade war, higher US interest rates and lower liquidity in the financial markets added to the woes. However, a rise in US crude oil inventory and expectations of a softening of the Fed’s stance on interest rates could provide some support.”

The decline in crude oil, which accounts for a large import bill for India, has propped up the rupee, which had plumbed an all-time high of 74.47 on October 11. It closed at Rs 70.67 to a dollar, gaining 78 paise from its previous close of 71.45. Heavy selling pressure was witnessed in the metal, power and banking stocks on the BSE, which fell over 1 per cent each, whereas the index pivotal finance counters declined 0.83 per cent. Barring the media index, which gained over 1 per cent, all other sectoral indices on the National Stock Exchange closed the day with losses. “Technically, the short-term trend of the Nifty continues to be weak. Having moved below the support of 10,600-550 levels, there is a possibility of more weakness in next week,” said Deepak Jasani, Retail Research Head, HDFC Securities. “Now the important supports to be watched for the next week are at 10,440 and 10,315 levels. On upmoves, 10,640 could offer resistance.”

Provisional data with the exchanges showed that foreign institutional investors bought stocks worth Rs 446.24 crore on Thursday while the domestic institutional investors bought scrips worth Rs 49.68 crore. Top gainers on the Sensex were Adani Ports, up 1.73 per cent at Rs 367.15; Larsen and Toubro (L&T), up 0.49 per cent at Rs 1,409.35; HDFC, up 0.35 per cent at Rs 1,874.50; ONGC, up 0.30 per cent at Rs 152.20 and TCS, up 0.19 per cent at Rs 1,815.25. The laggards were Mahindra and Mahindra (M&M), down 3.02 per cent at Rs 745.75; Tata Steel, down 2.28 per cent at Rs 539.95; Wipro, down 2.10 per cent at Rs 307.45; Axis Bank, down 1.92 per cent at Rs 614.30, and Coal India, down 1.61 per cent at Rs 256.75 per share. (IANS)