Disappointing railway budget, weak rupee subdue markets (Roundup)

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Mumbai, Feb 25 (IANS) Disappointment over the railway budget, coupled with negative Chinese indices and a weak rupee, subdued Indian equity markets on Thursday.

This led to the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) to close the day’s trade down 113 points, or 0.49 percent.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day’s trade in the red — lower by 48.10 points, or 0.69 percent, at 6,970.60 points.

The Sensex, which opened at 23,105.16 points, closed at 22,976 points — down 112.93 points, or 0.49 percent from the previous day’s close at 23,088.93 points.

During the intra-day trade, the Sensex touched a high of 23,142.96 points and a low of 22,948.10 points.

The BSE market breadth was heavily tilted towards the bears — with 1,596 declines and 869 advances.

Initially, the key indices of the Indian equity markets opened on a negative note in sync with their Asian peers.

Investors’ sentiments were subdued after the railway minister failed to announce big ticket capital expenditure projects in his budget speech, so as to meet the government’s fiscal deficit targets.

Further, investors took notice of the fact that railway revenue targets might not be met due to a slowdown in economic activity and that the government looked at monetising the internal resources for fund mobilization.

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In addition, weak Chinese markets and softening of crude oil prices which declined by 1 percent to $31, deterred investors from chasing stock prices higher.

Besides, a weak rupee dented sentiments. It closed weaker by 15 paise to touch its 30-month closing low.

The rupee closed at 68.71 against the US dollar, at level which was last seen during late August, 2013.

During the intra-day trade rupee value dwindelled to 68.79 to a US dollar from its previous close of 68.56 to a greenback.

“Indian rupee opened marginally higher against the US dollar, thanks to risk-on sentiments across Asian markets. However, demand from importers brought it back above 68.50 levels on spot, closing at 68.71,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.

“Central bank would remain active till the union budget, as they trying to prevent a blowback of a weak currency on bond investment from FIIs (foreign institutional investors).”

However, liquidation and short-covering triggered by the futures and options (F&O) expiry arrested the equity markets falls.

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“Negative Chinese markets, softening of crude oil prices and a weak rupee dented sentiments and dragged the markets lower. The railway budget did not provide any surprises,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

“However, the equity markets’ falls were somewhat halted by liquidation and short-covering provided by the F&O expiry.”

Nitasha Shankar, vice president for research with YES Securities, pointed out that

persistent weakness dragged Indian markets lower for the third day in a row, closing below the psychological level of 7,000.

“Further, we have had back to back exceptionally weak F&O series, wherein Nifty has declined in excess of 12 percent. Moreover, headline indices now are approaching their respective 52-week lows; a break of which can trigger fresh round of selling,” Shankar noted.

“Volumes continue to remain high in the corrections threatening choppy and weak sessions ahead.”

According to Shankar, broader markets witnessed heavy unwinding of long positions and underperfored the headline indices.

“PSU Bank, media, reality, auto and energy indices ended deep in the red. Metal and pharma indices ended marginally higher,” Shankar added.

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

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The data with stock exchanges showed that FIIs divested Rs.1,465.68 crore, while the DIIs bought stocks worth Rs.806.97 crore.

Sector-wise, majority of the 19 indices of the BSE ended the day’s trade in the red.

The S&P BSE banking index plunged by 261.24 points, automobile index lost 226.20 points, capital goods index receded by 224.40 points, information technology (IT) index declined by 85.96 points and oil and gas index edged lower by 60.95 points.

In contrast, the S&P BSE metal index was up by 17.74 points, while healthcare index ended higher by 15.91 points.

Major Sensex gainers during Thursday’s trade were ONGC, up 2.88 percent at Rs.215.90; Sun Pharma, up 2.38 percent at Rs.874.85, HDFC, down 1.85 percent at Rs.1,041.90; Coal India, down 1.32 percent at Rs.299.50 and Cipla, down 0.87 percent at Rs.518.25.

Major Sensex losers during the day’s trade were State Bank of India (SBI), down 3.06 percent at Rs.151.90; Gail, down 2.96 percent at Rs.304.95; Tata Motors, down 2.90 percent at Rs.298; Larsen and Toubro (L&T), down 2.37 percent at Rs.1,086.90; and ICICI Bank, down 1.98 percent at Rs.183.35.

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