Profit booking, Parliament logjam dents equity markets

Bombay Stock Exchange (File Photo: IANS)

Mumbai – Profit booking, coupled with the logjam in parliament and negative global cues, subdued the Indian equity markets on Thursday.

The sell-off was accelerated by a marginal decline in crude oil prices and the decision by the Bank of Japan (BoJ) to maintain the status quo in its monetary policy.

This led to key indices of the Indian equity markets to close the day’s trade in the red.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) declined by 132.65 points or 1.66 percent, at 7,847.25 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 26,078.28 points, closed at 25,603.10 points — 461.02 points or 1.77 percent down from the previous close at 26,064.12 points.

The Sensex touched a high of 26,100.54 points and a low of 25,561.17 points during the intra-day trade.

The BSE market breadth was tilted in favour of the bears — with 1,698 declines and 829 advances.

On Wednesday, both the key Indian indices had marginally ended on a higher note. The barometer index had risen by 57 points or 0.22 percent, while the NSE Nifty had gained 17.25 points or 0.22 percent.

On Thursday, the key indices opened on a flat-to-positive note in sync with their Asian peers, which were disappointed after the BoJ decided to maintain its monetary policy.

Investors were disappointed as they expected a further easing by the BoJ.

Besides, profit booking and unwinding of long positions at the onset of the futures and options (F&O) expiry dented sentiments.

In addition, the ongoing logjam in parliament dampened sentiments. Investors worried that the logjam might postpone key economic legislation from getting passed.

However, value buying at lower levels and healthy fourth quarter (Q4) results pared some of the initial losses.

The positive commentary from the US FOMC (US federal open market committee) meet also supported prices. The US FOMC expressed confidence in the global economy.

“Sell-off and profit bookings on the F&O expiry day dented equity markets. Selling was accelerated after the BoJ decided to maintain status quo in its monetary policy, which strengthened Yen,” Anand James, chief market strategist, Geojit BNP Paribas Financial Services, told IANS.

“Investors were cautious due to the logjam in parliament that has reduced the chances of key economic legislation getting passed.”

According to Vaibhav Agarwal, vice president and research head at Angel Broking, markets ended in a negative zone led by weak Asian cues.

“The broad market depicted weakness as the BSE mid-cap and BSE small-cap declined lower compared to Sensex,” Agarwal said.

“We could see some earnings related pressure in the coming days.”

Nitasha Shankar, senior vice president for research with YES Securities, cited
that Indian markets ended the F&O expiry session with deep cuts post making new high for the year i.e. 8,000 points in early trade.

“Volumes picked up in the corrections portending to volatile and choppy trading sessions ahead,” Shankar noted.

“Bank index ended with sizeable cuts after outperforming in the morning. All major sectorial indices ended in the red led by profit booking.”

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

The data with stock exchanges showed that FIIs invested Rs.120.63 crore in stocks, while the DIIs sold Rs.416.21 crore worth of scrip.

Sector-wise, automobile, capital goods, metal, banking and IT (information technology) scrip came under selling pressure.

Nevertheless, the realty sector ended in the green.

The S&P BSE automobile index plunged by 375.44 points, followed by the capital goods index, which plummet by 200.53 points, metal index receded by 175 points, banking index declined by 170.88 points and IT index edged lower by 163.81 points.

The S&P BSE reality index inched up by 22.20 points.

Major Sensex gainers during Thursday’s trade were Tata Consultancy Services (TCS), up 0.85 percent at Rs.2,526.95; Axis Bank, up 0.59 percent at Rs.468.25 and Lupin, up 0.44 percent at Rs.1,577.15.

Major Sensex losers during the day’s trade were HDFC, down 3.21 percent at Rs.1,087; ITC, down 3.00 percent at Rs.323.30; Mahindra and Mahindra (M&M), down 2.99 percent at Rs.1,343.35; Maruti Suzuki, down 2.94 percent at Rs.3,748.45, and Gail, down 2.52 percent at Rs.363.75.