Profit booking, US rate hike fear subdue equity markets (Roundup)

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Mumbai, March 28 (IANS) Profit booking, coupled with heightened chances of a US rate hike and unwinding of long positions dragged the Indian equity markets lower on Monday.

Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed the day’s trade deep in the red. It plunged by 371 points or 1.46 percent.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) receded into the negative territory. It declined by 101.40 points or 1.31 percent, at 7,615.10 points.

The Sensex, which opened at 25,417.11 points, closed at 24,966.40 points — down 371.16 points or 1.46 percent from the previous day’s close at 25,337.56 points.

During the intra-day trade, the Sensex touched a high of 25,432.94 points and a low of 24,895.49 points.

The BSE market breadth favoured the bears — with 1,999 declines and 967 advances.

The barometer index had closed the last trade session flat on March 23.

The Indian equity markets were closed from March 24-25, on account of Holi and Good Friday.

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Market analysts pointed out that profit booking, and unwinding of long positions ahead of the derivatives expiry and financial year end dragged the equity markets lower.

In addition, investors were hesitant to chase prices due to the heightened chances of a US rate hike next month. Recent US economic growth data have increased chances of a rate hike.

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

Further, an unstable rupee dented sentiments. The Indian rupee closed flat during the day’s trade. It stood at 66.57 to a US dollar from its previous close of 66.62-63 to a greenback.

“Markets are witnessing some selling pressure today ahead of the F&O (futures and options) expiry and fears of an interest rate hike after St.Louis Federal Reserve President James Bullard hinted at a rate hike in April or June,” Vaibhav Agarwal, vice president and research head at Angel Broking, told IANS.

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“Breadth continued to remain weak with an advance decline ratio of 1:2. We expect markets to remain under pressure in the short term. However, the directional trend continues to remain positive, with a 25 basis points rate cut expected in the upcoming credit policy.”

Nitasha Shankar, senior vice president for research with YES Securities said: “Indian markets shut shop lower led by profit booking in late trade. However, it recovered marginally from the low point indicating active buying from support levels. Further, volumes remained shallow in the corrective bars suggesting a pause before indices resumed their uptrend.”

“Broader markets came under selling pressure underperforming the headline indices. Market breadth also ended in favour of the bears as high beta stocks witnessed unwinding of long positions,” Shankar noted.

According to Shankar, metal, reality, PSU (public sector undertaking) banks, and pharma indices experienced heavy selling and closed lower by 2-4 percent.

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

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The data with stock exchanges showed that FIIs invested Rs.2,042.94 crore, while the DIIs sold stocks worth Rs.2,494.44 crore.

Sector-wise, all 19 BSE indices closed in the red. Stocks of consumer durables, banking, healthcare, metal and capital goods sectors came under intense selling pressure.

The S&P BSE consumer durables index plunged by 401.98 points, the banking index receded by 348.50 points, the healthcare index declined by 301.29 points, metal index edged lower by 299.41 points and the capital goods index fell by 269.23 points.

Major Sensex gainers during Monday’s trade were NTPC, up 1.57 percent at Rs.129.35; Gail, up 0.42 percent at Rs.357.60; and Bajaj Auto, up 0.04 percent at Rs.2,355.50.

Major Sensex losers during the day’s trade were Tata Steel, down 5.23 percent at Rs.300.05; State Bank of India (SBI), down 4.24 percent at Rs.188.45; Sun Pharmaceuticals, down 4.20 percent at Rs.811.05; ICICI, down 3.86 percent at Rs.225.25; and Tata Motors, down 3.63 percent at Rs.363.25.

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