Global cues, results subdue markets; Sensex down 16 points

Mumbai, Oct 21 (IANS) Receding Chinese markets, diminishing hopes of a European stimulus package and heightened chances of a US rate hike subdued Indian equities markets on Wednesday.

The negative global cues coupled with caution over the ongoing results season spooked investors leading a barometer index of the Indian equities markets to trade 16 points down during the late-afternoon session.

Initially, both the bellwether indices opened higher on the back of better-than-expected quarterly results which were released on Tuesday.

However, both the bellwether indices ceded their initial gains, as investors were seen reluctant to chase higher prices.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) traded flat during the session under review. It was lower by 13.40 points or 0.16 percent at 8,248.25 points.

The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE), which opened at 27,312.35 points, was trading at 27,290.37 points (at 3.00 p.m.) — 16.46 points or 0.06 percent lower from its previous close at 27,306.83 points.

The Sensex has so far touched a high of 27,445.24 points and a low of 27,190.55 points during the intra-day trade.

The barometer index closed 58.09 points or 0.21 percent lower on Tuesday, the previous trading session.

Analysts pointed out that investors’ confidence was eroded as caution built up over the possibility of a US rate hike this month, diminishing hopes of European Central Bank (ECB) extending its stimulus package and receding Chinese markets.

“The markets were impacted by the global cues eminating from heightened chances of a US rate hike, diminishing hopes of ECB extending its stimulus package and receding Chinese markets,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

On Tuesday, the US housing data revelled a rise of 6.5 percent in ground breaking activity which stood at 1.21 million units in September from 1.13 million units in August.

The data which showed a pickup in economic activity spooked investors as it can push the US Fed to raise interest rates in October.

The US Fed will decide on whether to raise rates during its Federal Open Market Committee (FOMC) meet on October 27-28.

The FOMC assumes significance as higher interest rates in the US are expected to lead away FPIs (Foreign Portfolio Investors) from emerging markets such as India.

In Asia, Chinese markets receded following the downward trajectory of their European and US counterparts’. China’s Shanghai Composite index declined by 3.47 percent.

“Furthermore, investors were cautious to chase prices higher due to the results season,” James added.

Vaibhav Agrawal, vice president, research, Angel Broking, told IANS: “Markets continue to trade flat in the absence of any short-term triggers and no major earnings surprise.”

“We expect markets to continue to trade flat tracking global cues. Some weakness can be expected ahead of the F&O (Futures and Options) expiry next week.”

Sector-wise, S&P BSE capital goods index plunged by 172.07 points, banking index receded by 149.90 points and healthcare index declined 122.50 points.

The S&P BSE metal index surged by 83.98 points, information technology (IT) index augmented by 60.35 points and automobile index gained by 41.81 points.

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