Profit bookings dent markets; Sensex cedes day's gains

Mumbai, November 20: A late-hour sell-off triggered by profit bookings coupled with caution over the impact of the 7th Pay Commission’s proposals on fiscal deficit dented the Indian equity markets on Friday. The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) gained as much as 217 points during the intra-day trade, ended flat with a mere 27 points gains.

Initially, both the bellwether indices of the Indian equity markets opened flat. Both the bellwether indices also made healthy gains on the back of consumption-led demand prospects, after the fince panel recommended major salary and pension hike for central government employees.

The 7th Pay commission on Thursday recommended a 16 percent hike in salary and 24 percent raise in pension for central government employees. The pay panel proposal will entail an outflow of Rs.102,100 crore from the exchequer during the next fiscal.

The recommendations are not constitutiolly binding on the government, but its overarching suggestions, notably on the pay package and structure, are by and large accepted by the government of the day, experts said. Nevertheless, intertiol credit ratings agencies pointed out that the Pay Commission’s recommendations might hamper fiscal deficit targets and impact its credit worthiness.

Later on, the central government clarified that the hike announced in the 7th Pay Commission will not impact the fiscal deficit targets.

Notwithstanding this, profit-bookings after Thursday’s healthy gains and caution over the upcoming parliament session and derivatives expiry next week trigged a late-hour sell-off at the Indian equity markets. The wider 50-scrip Nifty of the tiol Stock Exchange (NSE) ceded its initial gains and closed flat. It ended higher by 14 points or 0.18 percent at 7,856.55 points.

The S&P BSE Sensex, which opened at 25,856.13 points, closed at 25,868.49 points, up 26.57 points or 0.10 percent from the previous day’s close at 25,841.92 points. The Sensex touched a high of 26,058.76 points and a low of 25,769.81 points during the intra-day trade. Vaibhav Agarwal, vice president and research head at Angel Broking, told IANS that the market rally fizzled out after the benchmark indices gave up all the day’s gain in the last hour of trading.

“The profit booking at higher levels are an indication of the headwinds ahead. We have the winter session of parliament starting next week, which is critical for the passage of the GST (goods and service tax) bill,” Agarwal said. “The F&O (future and options) expiry next week will also add to the pressure. Led by these issues, we expect markets to remain range bound with a negative bias over the next few sessions.”

Besides equities, the rupee too closed flat during the day’s trade. It closed Friday’s trade lower by one paisa at 66.19 to a US dollar from its previous day’s close of Rs.66.18 to a greenback. The foreign institutiol investors (FIIs) were net sellers in the day’s trade at stock exchanges, whereas the domestic institutiol investors (DIIs) were net buyers. According to data with stock exchanges, FIIs sold stocks worth Rs.94.09 crore, while DIIs bought stocks worth Rs.610.16 crore.

Nitasha Shankar, vice president for research with YES Securities, told IANS that benchmark indices gave up their gains in late trade suggesting choppiness going into the expiry week.

“Market breadth ended margilly in favour of the bulls with 1,450 advances and 1,200 declines,” Shankar said. “Bank and FMCG (fast moving consumer goods) indices saw profit booking while energy, auto and IT (information technology) indices saw buying interest.”

Sector-wise, FMCG, banking and realty indices came under intense selling pressure, whereas, oil and gas, capital goods and automobile indices gained during the day’s trade. The S&P BSE FMCG index receded by 65.71 points, banking index declined by 28.51 points and realty index was down 3.37 points. The S&P BSE oil and gas index augmented by 184.32 points, capital goods index gained by 117.74 points and automobile index edged-higher by 111.16 points. Major Sensex gainers during Friday’s trade were Gail, up 10.07 percent at Rs.348.80; Wipro, up 1.93 percent at Rs.568.20; Mahindra and Mahindra, up 1.92 percent at Rs.1,316.55; Dr. Reddy’s Lab, up 1.89 percent at Rs.3,349.05; and Bajaj Auto, up 1.85 percent at Rs.2,468.50.

The major Sensex losers were Sun Pharma, down 2.21 percent at Rs.726.50; ITC, down 2.17 percent at Rs.344.40; Hindalco Industries, down 1.53 percent at Rs.77.30; Hero MotoCorp, down 1.07 percent at Rs.2,563.65 and Tata Motors, down 1.06 percent at Rs.402.85. (IANS)