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Profit booking, negative global cues subdue equity markets

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  20 Aug 2016 12:00 AM GMT

Mumbai, Aug 19: Profit booking, negative global cues and a weak rupee subdued the Indian equity markets on Friday.

Consequently, both the key equity indices closed the day’s trade flat — margilly in the red — as heavy selling pressure was witnessed in the automobile and information technology (IT) stocks.

The wider 51-scrip Nifty of the tiol Stock Exchange (NSE) slipped by 6.35 points or 0.07 per cent to 8,666.90 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 28,167.66 points, closed at 28,077 points — down 46.44 points or 0.17 per cent from the previous close at 28,123.44 points.

The Sensex touched a high of 28,212.30 points and a low of 28,026.12 points during the intra-day trade.

In contrast, the BSE market breadth was slightly tilted in favour of the bulls — with 1,471 advances and 1,239 declines.

On Thursday, the benchmark indices had closed in the green prompted by positive global cues and value buying.

The barometer index had closed higher by 118.07 points or 0.42 per cent, while the NSE Nifty edged up 49.20 points or 0.57 per cent.

Initially on Friday, the key indices opened on a flat-to-positive note, a day after the board of State Bank of India (SBI) approved the swap ratio for taking over four banks — three of its associate banks as well as the Bharatiya Mahila Bank (BMB).

The banking major had earlier announced its decision to take over all its five associate banks — State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank of Travancore (SBT) — and the BMB.

But on Thursday, SBI announced the swap ratio for only SBBJ, SBM, SBT and BMB.

The development on the proposed SBI merger enhanced investors’ risk-taking appetite.

However, negative global indices, profit booking and a weak rupee forced the key indices to cede their initial gains.

The rupee weakened by 25 paise to 67.06 against a US dollar from its previous close of 66.81 to a greenback.

Besides, caution over the increased chances of a rate hike in the US continued to subdue sentiments.

Earlier, the US FOMC (Federal Open Market Committee) had decided to maintain its key lending rates due to a weak domestic jobs market and bleak global economic outlook.

A hike in the US interest rates can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India.

Nevertheless, value buying in select high quality mid and small caps stocks aided the key indices to pare some of their losses.

“Negative Asian and European markets weighed heavy on the domestic equity indices,” And James, Chief Market Strategist at Geojit BNP Paribas Fincial Services, told IANS.

“Profit booking, along with a weak rupee also dented investors’ sentiments.”

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, volatile trade was witnessed at the CNX Nifty due to profit booking.

“Banking, pharma and auto stocks traded with mixed sentiments, while IT and FMCG (fast moving consumer goods) stocks witnessed sideways to firm price movement,” Desai said.

“Aviation stocks faced selling pressure tracking higher crude oil prices, while most sugar stocks held their last session’s gains in intra-day session as well.”

Desai added that firm USD/INR futures prices had pressurised the Nifty price movement and capped the upside trajectory.

In terms of investments, the provisiol data with exchanges showed that the foreign institutiol investors (FIIs) purchased stocks worth Rs 409.94 crore and the domestic institutiol investors (DIIs) bought scrip worth Rs 106.19 crore.

Sector-wise, the S&P BSE automobile index plunged by 108.59 points, the IT index fell by 52.89 points, and the technology, entertainment and media (TECK) index slipped by 29.82 points.

On the bright side, the S&P BSE consumer durables index surged by 113.36 points, followed by the metal index, which edged up by 100.84 points, and the banking index rose by 100.55 points.

Major Sensex gainers during Friday’s trade were: SBI, up 4.15 per cent at Rs 258.50; Tata Steel, up 1.32 per cent at Rs 392.30; Cipla, up 0.72 per cent at Rs 555.55; Hindustan Unilever (HUL), up 0.61 per cent at Rs 912; and Asian Paints, up 0.60 per cent at Rs 1,115.25.

Major Sensex losers were: Coal India, down 1.36 per cent at Rs 334.20; Tata Consultancy Services (TCS), down 1.24 per cent at Rs 2,603.95; Lupin, down 0.80 per cent at Rs 1,577.25; Wipro, down 0.80 per cent at Rs 520.60; and Axis Bank, down 0.78 per cent at Rs 588.40.(IANS)

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