Profit booking dents equity markets

Mumbai, Aug 9: Profit booking, along with lower crude oil prices, dented the Indian equity markets on Tuesday. The disappointment over the Reserve Bank of India’s (RBI) decision to maintain its key lending rates during the monetary policy review also dampened sentiments.

Consequently, both the key indices closed the day’s trade in the red, as heavy selling pressure was witnessed in automobile, healthcare, and oil and gas stocks. The wider 51-scrip Nifty of the tiol Stock Exchange (NSE) edged down by 33.10 points or 0.38 per cent to 8,678.25 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 28,289.22 points, closed at 28,085.16 points — down 97.41 points or 0.35 per cent from the previous close at 28,182.57 points.

The Sensex touched a high of 28,289.96 points and a low of 27,956.77 points during the intra-day trade.

The BSE market breadth was skewed in favour of the bears — with 1,588 declines and 1,161 advances.

On Monday, the key indices had closed in the green due to positive global cues, along with hopes of parliamentary approval for a major economic legislation. The barometer index had gained by 104.22 points or 0.37 per cent, while the NSE Nifty edged up by 28.20 points or 0.32 per cent.

Initially on Tuesday, the benchmark indices opened on a higher note on the back of Lok Sabha’s approval for GST (Goods and Services Tax) constitutiol amendment bill.

The bill was passed after the market hours on Monday.

However, lower global crude oil prices, a weak rupee and flat Asian and European markets weighed heavy on the key indices. The rupee ended flat to 66.8450 against a US dollar from its previous close of 66.85 to a greenback.

Besides, disappointment over RBI’s decision to maintain its key lending rates dampened sentiments.

The repurchase (repo) rate, or the interest commercial banks pay the central bank for short-term loans, remained unchanged at 6.5 per cent. The cash reserve ratio (CRR) that scheduled banks have to keep in liquid funds also remained ultered at four per cent of deposits.

“Recent sharper-than-anticipated increase in food prices has pushed up the projected trajectory of inflation over the rest of the year,” RBI Governor Raghuram Rajan said after his last monetary policy review. In the previous policy update, too, conducted on June 7, the policy rates were left ultered.

“Consolidation and profit booking in the absence of any fresh positive development dragged the equity markets lower,” And James, Chief Market Strategist at Geojit BNP Paribas Fincial Services, told IANS.

“Upcoming release of quarterly results of a number of state-owned banks flared volatility.”

Dhruv Desai, Director and Chief Operating Officer of Tradebulls, cited that selling pressure was intensified after the RBI maintained the status-quo in its key lending rates. “Most IT stocks recovered well from the day’s low. However, banking and auto stocks felt the selling pressure throughout the session,” Desai noted.

“Aviation stocks witnessed downside tracking recovery in crude oil prices. Sugar stocks traded lower on lack of buying interest. Sideways to firm sentiments in USD/INR futures prices also dragged the Nifty down in intraday session.”

According to Nitasha Shankar, Senior Vice President for Research with YES Securities, broader markets underperformed the headline indices, as profit booking dragged them lower. “Media, PSU bank and realty indices ended in positive territory,” Shankar said. “Pharma, metal, auto and FMCG indices ended in the red.”  In terms of investments, the provisiol data with exchanges showed that the foreign institutiol investors (FIIs) purchased stocks worth Rs 144.15 crore, whereas the domestic institutiol investors (DIIs) divested scrip worth Rs 610.15 crore. Sector-wise, heavy selling pressure was witnessed in all the 19 sub-indices, except the consumer durables index, which rose by 54.99 points.

The S&P BSE automobile index plunged by 124.46 points, followed by the healthcare index, which declined by 115.95 points, while the oil and gas index fell by 96.26 points.

Major Sensex gainers during Tuesday’s trade were: Coal India, up 1.48 per cent at Rs 336.95; ONGC, up 1.33 per cent at Rs 229; State Bank of India (SBI), up 0.67 per cent at Rs 234.60; Axis Bank, up 0.50 per cent at Rs 572.10; and Hindustan Unilever, up 0.40 per cent at Rs 933.

Major Sensex losers were: Lupin, down 5.03 per cent at Rs 1,607.60; HDFC, down 1.81 per cent at Rs 1,342.70; Hero MotoCorp, down 1.43 per cent at Rs 3,407.30; Power Grid, down 1.35 per cent at Rs 175.95; and Mahindra and Mahindra (M&M), down 1.13 per cent at Rs 1,480.55.  (IANS)