Likely US rate hike subdues markets; Sensex down 108 points
Mumbai, Dec 7 (IANS) Heightened prospects of a US rate hike, coupled with slow progress in the Indian Parliament in approving a key economic legislation, subdued Indian equity markets on Monday, leading to a barometer index closing 108 points in the red.
Initially, both the bellwether indices of the Indian equity markets opened higher in sync with their Asian peers which firmed up following Friday’s positive close for the US markets.
Furthermore, Friday’s recommendations from the chief economic advisor (CEA) for a standard goods and services tax (GST) rate in the range of 17-18 percent and to eliminate all taxes on inter-state trade buoyed markets.
Even the reassuring comments from the ECB (European Central Banks) president that it would step up the stimulus efforts, if required, cheered investors.
However, the initial gains were capped following healthy growth in a key US data — the non-farm payroll figures which were released on Friday.
The data showed that the US economy created 211,000 jobs last month against expectations of 200,000.
The data assumes significances as it heightened the chances of a US rate hike slated for mid-December.
A US rate hike could potentially lead to a massive pullback of foreign funds from emerging economies like India.
During Monday’s trade, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) shed 108 points or 0.42 percent.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE), too, closed in the red. It was marginally lower by 17 points or 0.21 percent at 7,765.40 points.
The Sensex of the S&P Bombay Stock Exchange (BSE), which opened at 25,746.03 points, closed at 25,530.11 points, down 108 points or 0.42 percent from the previous day’s close at 25,638.11 points.
The Sensex touched a high of 25,785.53 points and a low of 25,477.69 points during the intra-day trade.
Markets observers elaborated that a healthy US non-farm payrolls data coupled with parliament’s logjam depressed investors.
“Friday’s better-than-expected US jobs data has heightened the rate hike chances and with no fresh triggers the markets ended lower,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
“Further, the parliament’s logjam has reduced the chances of GST bill getting passed this session. This has been a major dampener for the markets.”
Besides equities, the Indian rupee came in for a beating, it closed weaker by three paise at 66.72 to a US dollar during the day’s trade from its previous close of 66.69 to a greenback.
Both the foreign institutional investors (FIIs) and the domestic institutional investors (DIIs) were net sellers during the day’s trade at the stock exchanges.
According to data with stock exchanges, FIIs sold stocks worth Rs.65.04 crore, while DIIs off-loaded stocks worth Rs.54.9 crore.
Nitasha Shankar, vice president for research with YES Securities said that markets decoupled from global peers which started the week on a positive note.
“Broader markets ended on a mixed note as smallcap index terminated with minor gains while midcap index remained under pressure,” Shankar said.
“FMCG, public sector banks, energy and auto stocks came under selling pressure. Pharma, tech and reality stocks outperformed with decent gains.”
Sector-wise, healthy buying was observed in healthcare, banking and consumer durables sector, while selling pressure was seen in fast moving consumer goods (FMCG), metal and oil and gas sectors.
The healthcare index augmented by 126.40 points, banking index gained by 57.54 points and consumer durables index was higher by 35.27 points, while the FMCG index plunged by 191.68 points, metal index receded by 55.85 points and oil and gas index declined by 42.56 points.
Major Sensex gainers during Monday’s trade were Sun Pharma, up 2.81 percent at Rs.777.35; Hindustan Unilever, up 2.01 percent at Rs.831.75; Lupin, up 1.41 percent at Rs.1,831.35, Tata Steel, up 1.39 percent at Rs.243.55; and HDFC, up 1.20 percent at Rs.1,186.
The major Sensex losers were ITC, down 6.57 percent at Rs.313.55; Coal India, down 2.42 percent at Rs.327.55; ONGC, down 1.54 percent at Rs.224.10; Reliance Industries, down 1.25 percent at Rs.953.70; and Maruti Suzuki, down 0.91 percent at Rs.4,564.35.