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Profit booking, caution over US rate hike dent equity markets

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  30 March 2016 12:00 AM GMT

Mumbai, March 29: Profit booking, unwinding of long positions ahead of derivatives expiry and caution over a likely US rate hike dragged the key equity markets lower on Tuesday. Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed the day’s trade in the red. Similarly, the wider 50-scrip Nifty of the tiol Stock Exchange (NSE) ended in the negative territory. It dropped by 18 points or 0.24 percent, to 7,597 points.

The Sensex, which opened at 24,957.24 points, closed at 24,900.46 points — down 65.94 points or 0.26 percent from the previous day’s close at 24,966.40 points.

During the intra-day trade, the Sensex touched a high of 25,079.35 points and a low of 24,835.56 points. The BSE market breadth favoured the bears — with 1,718 declines and 928 advances. The barometer index had plunged by 371 points or 1.46 percent on Monday. Initially, both the key indices of the Indian equity markets opened on a flat note, following their Asian peers. Even commodities like gold, oil and copper were at standstill at the beginning of the day’s trade.

Market observers cited that profit booking, and unwinding of long positions ahead of the derivatives expiry dented investors’ sentiments. In addition, caution prevailed ahead of the US Federal Reserve chairman Janet Yellen’s speech at the Economic Club of New York later in the day.

The speech assumes significance as it can give cues on a likely US rate hike next month. Recent US economic growth data has increased chances of a rate hike. A hike in the US interest rates is expected to lead away Foreign Portfolio Investors (FPIs) from emerging markets such as India.

Besides, upcoming US economic data such as ADP employment report figures and non-farm payroll numbers deterred investors from chasing prices higher. However, some value buying, positive opening of the European markets and healthy foreign funds inflow briefly supported prices and led key indices to pare their initial losses. Further, a stable rupee gave a boost to investors’ sentiments. The rupee ended the day’s trade at 66.54 to a US dollar from its previous close of 66.56-57 to a greenback.

“Profit booking and unwinding of long positions ahead of F&O (futures and options) expiry dented sentiments. Caution also prevailed ahead of the US Fed Chair Janet Yellen’s speech and upcoming ADP jobs data tomorrow and non-farm payroll data on Friday,” And James, chief market strategist, Geojit BNP Paribas Fincial Services, told IANS.

“However, markets were able to pare some of their losses due to value buying and positive opening of the European markets.”

According to Vaibhav Agarwal, vice president and research head at Angel Broking, equity markets traded in a rrow range throughout the day’s trade and closed in the red led by a correction in pharma, IT (information technology) companies and index heavyweight HDFC.

“Traders remain cautious ahead of Federal Reserve Chairwoman Janet Yellen’s speech today and F&O expiry,” Agarwal noted.

“However, with expectations of a rate cut, we expect the selling pressure to reduce going forward. Investors would also keenly watch out for US jobs data for further cues on the rate hike.”

Furthermore, foreign institutiol investors (FIIs) were net buyers during the day’s trade, while the domestic institutiol investors (DIIs) sold stocks. The data with stock exchanges showed that FIIs invested Rs.513.45 crore, while the DIIs sold stocks worth Rs.556.69 crore. Sector-wise, healthy buying was witnessed in automobile, banking and metal stocks, whereas scrip of healthcare, capital goods and IT industries came under selling pressure.

The S&P BSE automobile index augmented by 156.19 points, followed by the banking index which increased by 69.96 points and the metal index rose by 29.39 points.

The S&P BSE healthcare index receded by 391.63 points, followed by capital goods index which declined by 125.23 points and the IT index fell by 45.73 points.

Major Sensex gainers during Tuesday’s trade were Tata Motors, up 2.63 percent at Rs.372.80; Maruti Suzuki, up 2.55 percent at Rs.3,730.85; Axis Bank, up 1.55 percent at Rs.429.35; Reliance Industries, up 1.46 percent at Rs.1,035.40; and Tata Steel, up 1.28 percent at Rs.303.90. Major Sensex losers during the day’s trade were Lupin, down 6.27 percent at Rs.1,401.45; Cipla, down 3.83 percent at Rs.504.35; Dr.Reddy’s Lab, down 2.98 percent at Rs.2,945.15; Gail, down 2.88 percent at Rs.347.30; and Sun Pharma, down 2.10 percent at Rs.794.05. (IANS)

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