Asian cues dent markets, Sensex down 243 points
Mumbai, Sep 2 (IANS) Volatility prevailed in the Indian equities markets on Wednesday as negative cues from Asian exchanges eroded the initial euphoria over the capital gains tax issue, leading a barometer index to shed 243 points.
The continuous slide in Chinese bourses impacted the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which plunged 242.88 points or 0.95 percent.
Bearish sentiments also dented investors’ confidence at the wider 50-scrip Nifty of the National Stock Exchange (NSE). The CNX Nifty closed 68.85 points or 0.88 percent down at 7,717 points.
The S&P BSE Sensex, which opened at 25,891.95 points, closed at 25,453.56 points — lower by 219.49 points or 0.85 percent from the previous day’s close at 25,696.44 points.
The Sensex touched a high of 25,939.37 points and a low of 25,395.09 points in the intra-day trade.
Analysts observed that Tuesday’s announcement by Finance Minister Arun Jaitley on minimum alternate tax (MAT) buoyed markets initially.
The barometer index gained over 240 points as the government decided not to impose (MAT) on foreign portfolio and institutional investors.
“The Indian markets made initial gains after the government (Tuesday) accepted Justice A.P. Shah Committee report ending the uncertainty on the applicability of MAT on foreign investors,” Vaibhav Agrawal, vice president, research, Angel Broking told IANS.
The MAT issue on capital gains was expected to impact the margins of foreign funds.
Notwithstanding the positive announcements on MAT, the initial gains receded on account of continued weakness in the Asian markets coupled with less-than-expected macro data.
“The high intra-day volatility was caused due to the bearish cues coming in from the Asian markets. Investors were nervous about the evolving situation in China,” Anand James, co-head, technical research, Geojit BNP Paribas, told IANS.
As per James, volatility is also being flared-up due to expectations of new measures by the Chinese government and central bank to stabilise their markets. This in turn will further put pressure on the yuan and subsequently on the rupee value.
On Wednesday among the Asian markets, Japan’s Nikkei slipped by 0.39 percent. Hong Kong’s Hang Seng tumbled by 1.18 percent. China’s Shanghai Composite Index inched-down by 0.37 percent.
The massive implosion in the Chinese markets which has by some estimates eroded 40-45 percent of the entire stock value coupled with yuan devaluation and lower factory out has spooked the world markets.
“Sentiments are also dampened — as investors make sense of the slowdown in the growth, purchasing mangers index (PMI) and eight core industries (ECI),” James added.
The Q1 GDP came in at 7 percent, showing signs of slowing vis-a-vis the 7.5 percent expansion during the previous quarter.
The ECI for select factory output slowed to 1.1 percent growth in July from an increase of 3 percent in the previous month.
The Nikkei India Manufacturing PMI (Purchasing Manufacturers Index) for the last month stood at 52.3 which is marginally down from July’s 52.7.
Gaurav Jain, director with Hem Securities elaborated that continuous sell-off by the FPIs created a worrisome sentiment on the street.
“Even strengthening rupee couldn’t boost the sentiment,” Jain added.
Sector-wise, S&P BSE banking, capital goods, automobile, healthcare and consumer durables indices came under intense selling pressure.
The S&P BSE banking index plunged by 342.48 points, the capital goods index receded by 264.87 points, the automobile index contracted by 238.37 points, the healthcare index declined by 151.84 points and the consumer durables index decreased by 110.77 points.
However, information technology (IT) index augmented by 136.91 points, technology, entertainment and media (TECK) index gained by 58.48 points and fast moving consumer goods (FMCG) index rose by 26.29 points.
Major Sensex gainers during Wednesday’s trade were: Tata Consultancy Services (TCS), up 2.45 percent at Rs.2,601; Tata Steel, up 1.60 percent at Rs.219.65, ITC, up 1.41 percent at Rs.320; Reliance Industries, up 1.09 percent at Rs.849.30 and Infosys, up 0.98 percent at Rs.1,100.30.
The major Sensex losers were: BHEL, down 5.10 percent at Rs.206.55; Mahindra and Mahindra (M&M), down 3.56 percent at Rs.1,134.95; State Bank of India (SBI), down 3.55 percent at Rs.230.60; ONGC, down 3.55 percent at Rs.225.55; and Coal India, down 3.07 percent at Rs.344.50.
In Europe, London’s FTSE 100 index rose by 0.18 percent, French CAC 40 inched-up by 0.33 percent and Germany’s DAX Index gained by 0.30 percent at close of trading here.