Profit booking subdues equity markets

Mumbai, Aug 1: Profit booking, along with lower crude oil prices and apprehensions over two upcoming global events, subdued the Indian equity markets on Monday. The key indices closed the day’s trade on a flat note, as heavy selling pressure was witnessed in capital goods and banking stocks. The equity markets had receded after they touched new intra-day highs in almost a year. The wider 51-scrip Nifty of the tiol Stock Exchange (NSE) inched down by 1.95 points or 0.02 per cent to 8,636.55 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 28,083.08 points, closed at 28,003.12 points — down 48.74 points or 0.17 per cent from the previous close at 28,051.86 points. The Sensex touched a high of 28,284.85 points and a low of 27,873.53 points during the intra-day trade.

The BSE market breadth was tilted in favour of the bears — with 1,586 declines and 1,165 advances.

On Friday, the benchmark indices closed the day’s trade in the negative territory due to profit booking, negative global cues and foreign fund outflows. The barometer index had plunged 156.76 points or 0.56 per cent, while the Nifty slipped by 27.80 points or 0.32 per cent.

Initially on Monday, the benchmark indices opened on a higher note in sync with their Asian peers. The upward trajectory also got a boost from the increased chances of the GST (Goods and Services Tax) Bill getting passed during parliament’s ongoing monsoon session.

Investors are hopeful about the bill’s passage after the Union cabinet last week approved key changes in the proposed legislation. The pan-India tax reform has been passed by the Lok Sabha but is stuck in the Rajya Sabha, where the government lacks a majority. Besides, positive macro economic data — the Purchasing Magers’ Index (PMI) — which showed an acceleration in manufacturing sector’s growth, unleashed fresh buying spree.

Even the appreciation in rupee’s value aided in the rise. The rupee strengthened by 24 paise to 66.74-75 against a US dollar from its previous close of 66.99 to a greenback. However, profit booking, lower crude oil prices and anxiety over upcoming macro-economic data dragged the equity markets lower.

In addition, caution ahead of major global events risks such as Bank of England’s (BoE) monetary policy review and US jobs data subdued investors’ sentiments.

“Profit booking and a steep decline in banking sector stocks dragged the equity markets lower,” And James, Chief Market Strategist at Geojit BNP Paribas Fincial Services, told IANS. “However, the key indices opened on a higher note, aided by positive Asian markets, strong closing from last week and expectations of GST bill getting through.”

Dhruv Desai, Director and Chief Operating Officer of Tradebulls, pointed out that IT (information technology) stocks maged to hold initial gains throughout the session, while banking and pharma stocks closed lower due to profit booking.

“Most auto sector stocks traded firm,” Desai said. According to Nitasha Shankar, Senior Vice President for Research with YES Securities, broader markets outperformed the headline indices.

“Midcap index ended higher by 0.80 per cent and smallcap index ended higher by 0.10 per cent,” Shankar noted. In terms of investments, the provisiol data with exchanges showed that the foreign institutiol investors (FIIs) purchased stocks worth Rs 726.22 crore, while the domestic institutiol investors (DIIs) divested scrip worth Rs 413.77 crore. Sector-wise, the S&P BSE capital goods index plummetted by 362 points, followed by the banking index, which plunged by 256.51 points, and the fast moving consumer goods (FMCG) index dropped by 45.33 points. In contrast, the S&P BSE IT index augmented by 190.22 points, followed by the metal index, which increased by 123.40 points, and the automobile index rose by 100.18 points. Major Sensex gainers during Monday’s trade were: Tata Consultancy Services (TCS), up 3.03 per cent at Rs 2,698; Tata Steel, up 2.71 per cent at Rs 364.35; Wipro, up 2.45 per cent at Rs 558.65; Maruti Suzuki, up 2.41 per cent at Rs 4,869.80; and Dr.Reddy’s Lab, up 1.62 per cent at Rs 2,984.80. Major Sensex losers were: ICICI Bank, down 5.19 per cent at Rs 249.20; Larsen and Toubro (L&T), down 4.12 per cent at Rs 1,493.80; Adani Ports, down 1.51 per cent at Rs 228.45; Lupin, down one per cent at Rs 1,723.35; and State Bank of India (SBI), down 0.70 per cent at Rs 227.45. (IANS)