Caution over Q2 dents markets, Sensex down 117 points

Mumbai, Oct 13 (IANS) Caution over the ongoing results season and weak global cues coupled with reduced chances of a lending rate cut depressed investors leading to a barometer index of the Indian equity markets shedding 117 points or 0.43 percent during mid-afternoon trade on Tuesday.

Both the Indian bellwether indices opened lower due to negative import-export data coming out of China. Even the healthy domestic macro data points released a day earlier were not able to arrest the slide.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) was trading in the negative territory. It was lower by 39 points or 0.48 percent at 8,104.70 points.

The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE), which opened at 26,874.29 points, was trading at 26,787.33 points (at 2.30 p.m.) — 116.78 points or 0.43 percent down from its previous close at 26,904.11 points.

The Sensex has so far touched a high of 26,918.52 points and a low of 26,719.10 points during the intra-day trade.

The barometer index closed on Monday with a loss of 175 points or 0.65 percent.

Analysts pointed out that investors were reluctant to chase higher prices due to the uncertainty over the second quarter results which, they fear, might turn out to be below expectations due to currency fluctuations and slowing demand scenario.

“The negative Chinese markets due to sliding import-export data had an initial impact on the Indian indices,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

Chinese exports during last month fell by 3.7 percent and imports receded by 20.4 percent. The 11-straight month of downfall in imports impacted commodity stocks world wide.

“The investors were also seen reluctant to chase prices as caution grew over the ongoing results season,” James said.

Global software major Infosys was the first bluechip to come out with its results on Monday. It dampened the markets with a weak guidance on revenue growth.

Another major software exporter Tata Consultancy Services (TCS) will release its results later in the day.

“Other factor that dampened sentiments were speculations that the country’s central bank might not ease monetary policy in the remaining part of the calendar year due to the latest factory out and inflation data points which were released on Monday,” James added.

The Index of Industrial Production (IIP) data for August grew the fastest in the last three years. India’s factory expansion accelerated to 6.4 percent in August, from 4.1 percent in the month before.

Retail inflation figures for September, based on the consumer price index (CPI), increased to 4.41 percent — from 3.74 percent recorded for the previous month.

This led economists and analysts to predict that the Reserve Bank of India (RBI) will maintain a status-quo in key lending rates for the rest of the calendar year.

Nitasha Shankar, vice president, research with YES Securities, told IANS: “Metal stocks are witnessing profit booking following a sharp rally. IT stocks maintain their weakness ahead of the Tata Consultancy Services (TCS) results.”

Sector-wise, information technology (IT), healthcare, banking, oil and gas and technology, entertainment and media (Teck) stocks came under intense selling pressure.

However, realty and power scrip managed to stay afloat.

The S&P BSE IT index plunged by 146.11 points, healthcare index receded by 76.18 points, banking index fell by 63.98 points, oil and gas index declined by 69.38 points, and Teck index was lower by 69.26 points.

The S&P BSE realty index increased by 15.56 points and power index gained 5.44 points.

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