Caution over upcoming macro-economic events subdues markets (Roundup)

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Mumbai, Feb 24 (IANS) Caution-selling ahead of the upcoming railway budget and derivatives expiry depressed the Indian equity markets on Wednesday.

Consequently, the barometer 30-scrip sensitive index (Sensex) of the BSE closed the day’s trade down by 321 points, or 1.37 percent.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day’s trade in the red. It was lower by 91 points, or 1.28 percent, at 7,018.70 points.

The Sensex, which opened at 23,332.94 points, closed at 23,088.93 points — down 321.25 points, or 1.37 percent from the previous day’s close at 23,410.18 points.

During the intra-day trade, the Sensex touched a high of 23,338.89 points and a low of 23,057.45 points.

The BSE market breadth was heavily tilted towards the bears — with 1,797 declines and 770 advances.

Initially, the key indices of the Indian equity markets opened on a negative note in sync with their Asian peers and Tuesday’s lower close at the US indices.

Caution-selling, just a day ahead of the railway budget and F&O (futures and options) expiry, dragged the equity markets lower.

Besides, investors’ confidence was eroded by the continuing conflict between the ruling NDA (National Democratic Alliance) and the opposition, which is seen as having a bearing on some key economic legislations that await parliamentary approval.

The government is desirous of pushing through major economic legislations like bankruptcy code and Goods and Services Tax (GST) Bill during the ongoing Budget session.

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Investors’ sentiments were further subdued over assumptions that the central government might not announce any big ticket capital expenditure projects to meet its fiscal deficit targets.

In addition, softening of crude oil prices which declined by 1.72 percent to $31.33 and negative global markets, deterred investors from chasing stock prices higher.

Moreover, caution prevailed over the upcoming G20 finance ministers’ meet in Shanghai, China.

However, the markets rose briefly on the back of strengthening rupee and short-covering value-buying which were triggered by budgetary expectations.

Despite opening on a weak note, the rupee strengthened throughout the day’s trade. It closed flat at 68.56 to a US dollar from its previous close of 68.59 to a greenback.

“Indian rupee closed almost flat smack right at the middle of the daily range of 68.48 and 68.66 levels on spot. Central bank has been quite vigilant over the past few sessions, probably trying to prevent any blowback of weak rupee on a strained bond market,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.

“FIIs (foreign institutional investors) have invested over Rs 1.4 lakh crore in the Indian debt market, a weaker bond coupled with a sharply weaker rupee may risk triggering stop losses on their investments. As a result, we can expect a range of 68.40 and 68.70 till the union budget.”

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Further, value-buying and short-covering which were triggered on hopes of positive budgetary announcements swelled the equity markets.

Market participants hoped that the central government may increase expenditure, announce tax concessions and pave the way to reduce the NPAs (non-performing assets) levels of the banking sector.

Notwithstanding the brief uptrend, the equity markets again plunged on the back of caution-selling.

“Softening of crude oil prices, political tensions and upcoming railway budget and F&O expiry dragged the markets lower,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

“However, the markets stabilised briefly as a strengthening rupee, value buying and short-coverings restored investors risk taking appetite. But these were not enough to sustain the upward trajectory and selling resumed again.”

Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that markets traded lower by taking cues from other Asian and European markets, mainly due to consistently falling crude oil prices.

“Metal, banking and industrial stocks witnessed particular weakness on significant selling pressure. Markets continued to consolidate in a narrow range,” Agarwal cited.

“Markets will look towards the railway budget and the economic survey for further cues ahead of the budget.

Nitasha Shankar, vice president for research with YES Securities, pointed out that headline index Nifty witnessed a sharp decline in late trade post its breakdown from a rising channel, portending to choppy sessions going ahead.

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“Moreover, a trade below the psychological level of 7,000 may trigger fresh selling. Broader markets also ended in the red, however, it outperformed the headline index suggesting buying at lower levels,” Shankar noted.

Furthermore, the FIIs were net sellers during the day’s trade, while the domestic institutional investors (DIIs) bought stocks.

The data with stock exchanges showed that FIIs divested Rs.730.99 crore, while the DIIs bought stocks worth Rs.605.88 crore.

Sector-wise, all but one out of the 19 indices of the BSE ended the day’s trade in the green.

The S&P BSE healthcare index plunged by 265.66 points, banking index lost 216.18 points, automobile index receded by 203.93 points, capital goods index declined by 196.49 points and metal index edged lower by 177.87 points.

In contrast, the S&P BSE oil and gas index ended higher by 17.74 points.

Major Sensex gainers during Wednesday’s trade were Bharti Airtel, up 0.93 percent at Rs.324; Mahindra and Mahindra (M&M), up 0.54 percent at Rs.1,218.45, Asian Paints, down 0.51 percent at Rs.879; Axis Bank, down 0.38 percent at Rs.386.55 and Reliance Industries, down 0.19 percent at Rs.952.55.

Major Sensex losers during the day’s trade were BHEL, down 4.97 percent at Rs.93.60; NTPC, down 4.20 percent at Rs.118.70; Tata Motors, down 3.63 percent at Rs.306.90; HDFC, down 2.68 percent at Rs.1,022.95; and ICICI Bank, down 2.63 percent at Rs.187.05.

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