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Possible US rate hike, political bickering subdue equities

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  18 Nov 2016 12:00 AM GMT

Mumbai, Nov 17: Worries over a possible US rate hike, along with political bickering over the demonetisation decision and lower crude oil prices pulled the Indian equity markets lower on Thursday. The key Indian indices started the day’s trade on a flat note, and filly closed the day’s trade in the red after a brief stay in the positive territory. The wider 51-scrip Nifty of the tiol Stock Exchange (NSE) edged lower by 31.65 points or 0.39 per cent to 8,079.95 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 26,304.90 points, closed at 26,227.62 points — down by 71.07 points or 0.27 per cent from the previous close at 26,298.69 points. The Sensex touched a high of 26,449.87 points and a low of 26,155.40 points during the intra-day trade.

The BSE market breadth was skewed in favour of the bears — with 1,671 declines and 943 advances. On Wednesday, the Indian equity markets had closed on a flat note due to prevailing anxiety over the impact of demonetisation, foreign fund outflows and negative global cues. The barometer index was down by 5.94 points or 0.02 per cent, whereas the NSE Nifty gained only 3.15 points or 0.04 per cent.

Initially on Thursday, the benchmark indices opened on a flat note, as investors were cautious over a possible US rate hike in December.

The cues on the possible rate hike are expected from an upcoming speech of US Federal Reserve’s Chairman Janet Yellen. A hike can potentially lead foreign portfolio investors (FPI) and funds away from emerging markets such as India, and dent the business margins of corporate sector, as access to capital from the US will become more expensive.

Besides, global sentiments continued to remain subdued on worries over trade restrictions with the US as a result of the surprise victory of Republican Dold Trump in the November 8 US Presidential election prevailed in the global markets.

On the domestic front, the political bickering over the government’s demonetisation move and its impact on the winter session of Parliament, too, eroded investors’ confidence. “Markets have remained in a consolidation phase. They traded flat on the back of weak global cues. However, USD/INR showed some relief with the Indian rupee appreciating,” Astha Jain, Senior Research Alyst at Hem Securities, told IANS.

The Indian rupee strengthened by 13 paise to 67.82 against a US dollar from its previous close of 67.95 to a greenback. “Investors were jittery ahead of the US Fed’s Janet Yellen’s speech later in the evening,” Jain said.

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, short covering led the CNX Nifty to trade with bearish sentiments. “IT and banking stocks failed to sustain at higher levels, while pharma, auto and cement stocks traded down on selling pressure,” Desai said. “However, oil-gas and textile stocks traded with firm sentiments on buying support at lower levels, while FMCG, power and media-entertainment stocks traded lower on continuous selling pressure from traders.” In terms of investments, provisiol data with exchanges showed that the foreign institutiol investors (FIIs) sold stocks worth Rs 988.93 crore, and the domestic institutiol investors (DIIs) purchased scrip worth Rs 1,144.15 crore.

Sector-wise, the S&P BSE IT index plunged by 130.19 points, the Teck (technology, media and entertainment) index declined by 86.63 points, and the telecom index fell by 27.78 points. In contrast, the S&P BSE healthcare index surged by 53.76 points, the metal index rose by 50.89 points, and the oil and gas index edged up by 41.08 points. Major Sensex gainers during Thursday’s trade were: Tata Motors, up 3.21 per cent at Rs 472.60; Power Grid, up 2.66 per cent at Rs 192.95; Gail, up 1.52 per cent at Rs 435; Cipla, up 1.12 per cent at Rs 544.70; and NTPC, up 1.00 per cent at Rs 151.50.

Major Sensex losers were: Bharti Airtel, down 4.26 per cent at Rs 296.35; Bajaj Auto, down 2.55 per cent at Rs 2,544.35; Tata Consultancy Services (TCS), down 2.20 per cent at Rs 2,142.15; Coal India, down 2.08 per cent at Rs 306.10; and Asian Paints, down 1.72 per cent at Rs 918.25. (IANS)

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