Derivatives expiry spooks investors; Sensex slips into the red (Roundup)

Mumbai, Nov 24 (IANS) The upcoming derivatives expiry, the winter session of parliament and the possibility of an extended US rate hike subdued Indian equity markets on Tuesday.

Initially, the bellwether indices of the Indian equity markets opened on a weak note. They oscillated between the negative and the positive zones before closing marginally in the red.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed the day’s trade lower by 44 points or 0.17 percent.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) slipped during the day’s trade. It closed lower by 18 points or 0.22 percent at 7,831.60 points.

The S&P BSE Sensex, which opened at 25,785.61 points, closed at 25,775.74 points — down 43.60 points or 0.17 percent from the previous day’s close at 25,819.34 points.

The Sensex touched a high of 25,901.56 points and a low of 25,703.86 points during the intra-day trade.

Market observers pointed out that investors were reluctant to take positions ahead of the upcoming derivatives expiry and the start of the winter session of parliament, both of which are scheduled for Thursday.

“Lack of fresh triggers, caution over the upcoming winter session of parliament and consistent selling by the foreign investors subdued markets and capped investor participation,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

Furthermore, investors were concerned over government’s ability to pass key economic legislations during the winter session that begins on November 26 and will run till December 23.

The central government’s position seemed to have weakened especially after the Bihar polls outcome. The government needs to get the Goods and Services Tax (GST) bill passed in the upcoming session to meet the April 1, 2016, roll-out deadline.

“Other than the winter session, there were concerns over an extended rate hikes in the US commencing from December after yesterday’s US Federal Reserves unscheduled meet,” James said.

The US Fed held an ‘unscheduled’ meet on Monday. The meet precedes the federal reserve policy meet in December, when a rate hike is expected to be announced.

The US central bank has given signs that it might go in for a series of gradual rate hikes starting from December.

Higher interest rates in the US are expected to lead away FPIs (Foreign Portfolio Investors) from emerging markets such as India.

Besides a US rate hike, derivatives expiry has caused some nervousness, as Securities and Exchange Board of India (SEBI) has reduced the lot size in futures and options (F&O) segment which has resulted in lower volumes.

The SEBI rules has increased the minimum contract size to Rs.5 lakh from Rs.2 lakh to reduce speculative trading among retail investors. This has indirectly rubbed on the trading dynamics of the cash segment.

“We expect markets to continue to remain under pressure led by the F&O expiry and uncertainty of the rate hike,” Vaibhav Agarwal, vice president and research head at Angel Broking, told IANS.

Nevertheless, rupee strengthened in the day’s trade by 15 paisa at 66.33 to a US dollar from its previous day’s close of 66.48 to a greenback.

The foreign institutional investors (FIIs) were net sellers in the day’s trade at stock exchanges, whereas the domestic institutional investors (DIIs) were net buyers.

According to data with stock exchanges, FIIs sold stocks worth Rs.540.12 crore, while DIIs bought stocks worth Rs.532.13 crore.

The FIIs have taken out Rs.23,352 crore during the period August-September. Till date in November, the foreign investors have off-loaded stocks worth Rs.5,809 crore.

However, the FIIs had invested Rs.6,650 crore during October.

Sector-wise during the day’s trade, capital goods, automobile and healthcare indices came under intense selling pressure, whereas, oil and gas, energy and telecom indices gained.

The S&P BSE capital goods index receded by 173.58 points, automobile index declined by 139.01 points and healthcare index was down 76.12 points.

The S&P BSE oil and gas index augmented by 57.93 points, energy index gained by 26.94 points and telecom index edged-higher by 12.84 points.

Major Sensex gainers during Tuesday’s trade were Hindalco Industries, up 2.42 percent at Rs.811.40; HDFC, up 2.09 percent at Rs.1,218.70; Relaince Industries, up 1.67 percent at Rs.968; Lupin, up 1.12 percent at Rs.1,860.35; and Bharti Airtel, up 0.77 percent at Rs.341.25.

The major Sensex losers were Maruti Suzuki, down 2.04 percent at Rs.4,640.45; Larsen and Toubro (L&T), down 1.94 percent at Rs.1,342.35; Bajaj Auto, down 1.76 percent at Rs.2,478.85; Sun Pharma, down 1.50 percent at Rs.707.90; and NTPC, down 1.32 percent at Rs.131.15.

The Indian equity markets will remain closed on November 25, Wednesday, on account of Guru Nanak Jayanti.

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