Rising inflation swamps markets, Sensex closes 81 points down (Roundup)

Mumbai, Jan 14 (IANS) Diminishing hopes of an interest rate cut, coupled with caution over the third quarter results and thin volumes, depressed Indian equity markets during volatile trading on Thursday.

Consequently, a barometer index of the Indian equity markets closed the day’s trade down 81 points.

The bellwether index receded after a key macro-economic data showed an acceleration in inflation trends. This was the fourth straight month of increase in the annual inflation.

The data showing rise in wholesale price index (WPI) came two day’s after it was announced that the annual retail inflation moved up further to 5.61 percent in December. This diminished hopes of a rate cut by the country’s apex bank and subdued investors’ sentiments.

Caution over the third quarter (Q3) results season, long-liquidation positions and sliding Asian markets, too, dented sentiments.

Initially, both the bellwether indices opened deep in the red, following lower closing of the US markets on Wednesday and a further plunge in oil prices.

However, both indices soon pared their initial losses as healthy Q3 results, recovering European markets and short-covering restored investors’ risk-taking appetite.

Value buying at lower levels, which was prompted by attractive prices, supported the markets’ upward movement.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed lower by 81 points or 0.33 percent.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day’s trade in the red — down by 26 points or 0.34 percent at 7,536.80 points.

The Nifty volatility index (India VIX) closed at 18.61 percent — up around 1.37 percent.

The S&P BSE Sensex, which opened at 24,606.20 points, closed at 24,772.97 points — down 81.14 points or 0.33 percent from the previous day’s close at 24,854.11 points.

The Sensex touched a high of 25,018.46 points and a low of 24,473.22 points during the intra-day trade.

The S&P BSE market breadth favoured the bears — with 1,923 declines and 774 advances.

“The general weakness in markets’ continued. Investors’ were cautious over the Q3 results season, slowdown in domestic reforms and fears of a global markets’ meltdown,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

“Earlier in the day, our markets’ recovered after a weak opening on the back of short-covering, value buying at lower levels and recovering European markets. Even the good Q3 results from an IT major boosted sentiments,” James added.

Sector-wise, shares of banking, capital goods and automobile came under selling pressure.

The S&P BSE banking index plunged by 301.79 points, capital goods index receded by 230.11 points and automobile index declined by 222.18 points.

On the other hand, buying was observed in technology, entertainment and media (TECK), fast moving consumer goods (FMCG) and healthcare stocks.

The S&P BSE Teck index augmented by 89.19 points, FMCG index gained by 11.84 points and healthcare index closed higher by 3.36 points.

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

According to data with stock exchanges, FIIs divested Rs.1,221.97 crore, while DIIs bought stocks worth Rs.1,526.22 crore.

Besides equities, the rupee got battered in the day’s trade. It touched a new 28-month low. It ended weaker by 45 paise at 67.30 to a US dollar from its previous close of 66.85 to a greenback.

“Short-covering and global risk-off had put pressure on all the emerging markets’ currencies. Panic set-in once the rupee breached its recent lows of 67.15. Importers also started covering their exposure,” Hemal Doshi, chief currency strategist, Geofin Comtrade, told IANS.

Major Sensex gainers during Thursday’s trade were Infosys, up 4.28 percent at Rs.1,128.70; Lupin, up 3.02 percent at Rs.1,717.95; Asian Paints, up 2.39 percent at Rs.890.20; Cipla, up 0.85 percent at Rs.613.90; and DrReddy’s Lab, up 0.84 percent at Rs.2,915.20.

Major Sensex losers during day’s trade were Axis Bank, down 3.90 percent at Rs.390.55; Tata Steel, down 3.36 percent at Rs.238.70; BHEL, down 2.81 percent at Rs.143.80; Tata Motors, down 2.63 percent at Rs.354.85; and State Bank of India (SBI), down 2.56 percent at Rs.195.80.

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