Disappointing macro-data subdues equity markets

Mumbai, May 16 (IANS) Disappointing macro-economic data subdued the Indian equity markets on Monday.

Consequently, key indices traded flat — marginally in the green during the mid-afternoon session, as heavy selling pressure was witnessed in banking, capital goods and oil and gas stocks.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) edged up 9.80 points or 0.13 percent, at 7,824.70 points.

The barometer 30-scrip BSE sensitive index (Sensex), which opened at 25,528.80 points, traded at 25,522.58 points (at 2.15 p.m.) — up 33.01 points or 0.13 percent from the previous close at 25,489.57 points.

The Sensex has so far touched a high of 25,606.92 points and a low of 25,351.62 points during the intra-day trade.

The BSE market breadth was tilted in favour of the bears – with 1,257 declines and 1,196 advances.

Both the key indices had ended on a lower note during the previous trade session on Friday due to disappointing macro-economic data and profit booking.

The barometer index had lost 300.65 points or 1.17 percent, while the NSE Nifty had edged down by 85.50 points or 1.08 percent.

The broader markets also traded flat in line with the headline indices.

Initially, the key indices opened on a positive note on Monday, in sync with their Asian peers and value buying after last Friday’s correction.

However, investors were disappointed after a key macro-economic data showed a faster rise in annual wholesale inflation.

India’s annual wholesale price index (WPI) moved up into the positive zone at 0.34 percent for April, from (-)0.85 percent in March and (-)2.43 percent during the corresponding month of the previous year.

The WPI moved up after staying in negative zone for 17 straight months, mainly on the back of a rise in global commodity prices. The rise comes after the Consumer Price Index (CPI) for last month also showed an upward movement in annual retail inflation.

The rise in both the inflation indices has reduced the chances of the Reserve Bank of India (RBI) to further ease its key lending rates during the monetary policy review scheduled in June.

Apart from the WPI, investors’ sentiments were subdued after data released on May 13 showed that India’s merchandise exports in April fell for the 17th straight month.

Last month’s exports were valued at $20.57 billion — down 6.74 percent against $22.05 billion in the like month of last year.

Besides, selling pressure was witnessed in the banking sector after the Bank of Baroda (BoB) reported its second consecutive quarter of losses. The BoB’s quarterly results were released after the market hours last Friday.

“WPI showing a faster rise disappointed investors. Both WPI and CPI have shown acceleration, this has reduced chances of a RBI rate cut in June,” Anand James, chief market strategist, Geojit BNP Paribas Financial Services, told IANS.

“Selling pressure in banking stocks especially the PSU banks also dented investors’ sentiments.”

According to Nitasha Shankar, senior vice president for research with YES Securities, Indian markets underperformed their Asian peers on the back of thin volumes.

“VIX (volatility index) is gradually approaching upper band of the range portending to volatile sessions,” Shankar noted.

“Bank index is bleeding with a cut of 1.4 percent led by sharp selling in the PSU banks. PSU Bank Index is down 5.3 percent at the moment. FMCG, metal and reality are also trading in the red.”



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