Caution over macro-data flares volatility, markets trade flat

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Mumbai, Feb 12 (IANS) Caution over the upcoming macro-data, coupled with unwinding of long-positions and negative global cues flared extreme volatility in the Indian equity markets on Friday.

The choppy trade was marked by short-covering and value buying, a day after the barometer index corrected by 3.40 percent or 807.07 points due to less-than-expected earning results, bleeding international indices and a weak rupee.

However, caution over the upcoming macro-data points on monthly industrial production and trade data capped gains and dragged markets lower to their new 52-week lows.

Both the bellwether indices of the Indian equity markets opened on a weak note, following a steep fall in Asian indices and Thursday’s decline in the US markets.

Both the indices remained below the psychologically important levels of 23,000 and 7,000-point marks, respectively.

According to a market analyst volatility spiked, as buyers retreated after Thursday’s massive falls. Nevertheless recovery in crude oil prices which stood at $27 a barrel (one barrel is equal to 159 litres) kept sentiments mildly positive.

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But heavy selling by the foreign investors, absence of any fresh positive trigger and below expected third quarter (Q3) results halted markets upward movement.

In addition, a weak rupee unnerved investors. It opened lower at 68.38 to a US dollar from its previous close of 68.30 to a greenback.

The weakness in rupee indicated massive flight of foreign funds from the equity markets. The foreign institutional investors (FIIs) were net sellers on Thursday, they divested Rs.1,112.66 crore.

Investors’ confidence was further eroded by doubts over the central government’s ability to perk up investments.

Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) traded flat.

It has lost over 1,665 points, or 6.76 percent in the last four sessions.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) stood unchanged at 6,976.35 points.

The NSE Nifty touched a new 52-week low at 6,869 points. Nifty traded at its lowest levels since early May, 2014.

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It has slide by 512.75 points, or 6.84 percent during the last four days trade.

The S&P BSE Sensex, which opened at 23,060.39 points, was trading at 22,948.88 points (2.20 p.m.) — down three points or 0.01 percent from the previous day’s close at 22,951.83 points.

During the intra-day trade, the Sensex touched a high of 23,116.27 points and a low of 22,600.39 points — its new low in 52 weeks.

The BSE market breadth favoured the bears — with 1,819 declines and only 652 advances.

“Short-coverings on the last day of the trading week has led to some recovery. Higher crude oil prices also helped in markets climb,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

“However, negative Asian markets, long liquidated positions and disappointing results and a weak rupee capped gains and dragged markets lower.”

Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that markets recovered from the lows of the day.

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“However, the negative bias continues to sustain with an advance decline ratio of 1:3 on the BSE. Oil and Gas and capital goods stocks are the worst hit today,” Agarwal pointed out.

“European markets have opened in the green which has resulted in the recovery. We expect markets to continue to react to global cues where headwinds continue to linger. Markets will also watch out for macro data to be released later today.”

Nitasha Shankar, vice president for research with YES Securities, cited that Indian markets continues to trade with weakness amidst high volatility following Thursday’s massive sell-off.

“Broader markets are witnessing massive unwinding of long positions leading to a fall of 3-4 percent,” Shankar noted.

“Bank, metal and reality stocks continue to be major culprits in today’s downfall. FMCG index is the lone gainer at the moment.”

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