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Negative global cues, profit booking dent equity markets

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  19 May 2016 12:00 AM GMT

Mumbai, May 18: Negative global cues, profit booking and poor quarterly results pushed the Indian equity markets down on Wednesday. This led the key indices to close the day’s trade flat — margilly in the red, as heavy selling pressure was witnessed in automobile and consumer durables stocks. The wider 51-scrip Nifty of the tiol Stock Exchange (NSE) ended lower by 20.60 points or 0.26 percent, at 7,870.15 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 25,671.48 points, closed at 25,704.61 points — down 69 points or 0.27 percent from the previous close at 25,773.61 points. The Sensex touched a high of 25,747 points and a low of 25,503.40 points during the intra-day trade. The BSE market breadth favoured the bears with 1,336 declines and 1,223 advances.

Both the key indices ended on a higher note during the previous trade session on Tuesday, as positive global indices, along with higher crude oil prices and expectations of better quarterly results lifted prices. The barometer index on Tuesday gained 120.38 points or 0.47 percent, while the NSE Nifty had risen by 30 points or 0.38 percent.

Initially, the key indices on Wednesday opened on a negative note, in sync with their Asian peers and due to profit booking after two consecutive days of gains. The Asian and domestic markets receded on the back of renewed fears of a US rate hike after a recent data showed a rise in the US consumer prices and evoked hawkish comments from US Fed officials.

Besides, investors were seen cautious ahead of the release of US Federal Open Market Committee’s (FOMC) minutes of its last meeting.

The US FOMC minutes assume significance as they can give vital cues on the future course of US interest rates. A hike in US interest rates is expected to lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India. In addition, reduced chances of the Reserve Bank of India (RBI) to further ease its key lending rates during the upcoming monetary policy review subdued investors’ sentiments.

Moreover, poor quarterly results from Punjab tiol Bank and a weak rupee dragged the key indices lower. However, equity markets were able to pare some of their losses on the back of value buying at lower levels and higher crude oil prices. “Markets ended on a negative note led by weak Asian indices. Selling was witnessed in the future contracts,” Vaibhav Agarwal, vice president and research head at Angel Broking, told IANS.

“Investors in emerging markets, including India, are worried that higher interest rates in the US will drain liquidity from emerging markets and redirect it to developed economies. Therefore markets might see volatility in the coming days.”

According to Nitasha Shankar, senior vice president for research with YES Securities, broader markets outperformed the headline indices and ended in the green.

“PSU bank index spped its losing streak, ending in the green led by short covering. Realty and metal indices also supported the markets,” Shankar noted. “Media and auto stocks came under severe profit booking.” During the day’s trade, the foreign institutiol investors (FIIs) turned net sellers, while the domestic institutiol investors (DIIs) were net buyers.

Data with stock exchanges showed that the FIIs sold scrip worth Rs.250.70 crore, while the DIIs purchased stocks worth Rs.239.91 crore.

Sector-wise, healthy buying was witnessed in capital goods, metal and realty stocks, whereas scrips of automobile, consumer durables, and technology, media and entertainment (TECK) came under intense selling pressure during the day’s trade.

The S&P BSE capital goods index surged by 85.13 points, followed by the metal index, which gained by 46.33 points, and the realty index rose by 28.94 points.

Conversely, the S&P BSE automobile index plunged by 235.97 points, followed by the consumer durables index, which dipped by 32.64 points; and the TECK index fell by 19.08 points. Major Sensex gainers during Wednesday’s trade were ONGC, up 1.83 percent at Rs.214.20; State Bank of India (SBI), up 1.78 percent at Rs.180.20; Larsen and Toubro (L&T), up 1.24 percent at Rs.1,309.40; Lupin, up 1.18 percent, at Rs.1,632.45; and ITC, up 0.76 percent at 332.85.

Major Sensex losers were Bajaj Auto, down 1.85 percent at Rs.2,466.45; Mahindra and Mahindra (M&M), down 1.59 percent at Rs.1,320.10; Hero MotoCorp, down 1.47 percent at Rs.2,884.85; Tata Motors, down 1.26 percent at Rs.385; and BHEL, down 1.16 percent at Rs.119.80. (IANS)

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