Profit booking, weak rupee depress equity markets

Mumbai – Profit booking, coupled with foreign fund outflows and a weak rupee, depressed the Indian equity markets on Friday.

This led the key indices to end the day’s volatile trade session on a negative note, as heavy selling pressure was witnessed in healthcare, capital goods, banking, information technology (IT) and automobile stocks.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) failed to hold on to its psychological resistance level of 7,800 points. It edged lower by 33.70 points or 0.43 percent, at 7,749.70 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 25,428.42 points, closed at 25,301.90 points — down 97.82 points or 0.39 percent from the previous day’s close at 25,399.72 points.

The Sensex touched a high of 25,506.06 points and a low of 25,251.90 points during the day’s trade.

The BSE market breadth was skewed in favour of the bears with 1,728 declines and 845 advances.

Both the key indices had ended on a lower note during the previous trade session on Thursday due to negative global cues, profit booking and a fall in crude oil prices.

The barometer index during the previous trade session plunged by 305 points or 1.19 percent, while the NSE Nifty declined by 87 points or 1.10 percent.

Initially, the key indices opened on a flat-to-positive note, in sync with their Asian peers. The domestic markets rose on the back of higher Asian and European indices.

Besides, value buying after two consecutive days of losses and higher crude oil prices buoyed the equity markets.

However, a sudden slide in mid-afternoon trade session triggered by profit booking forced the key indices to cede their initial gains.

In addition, investors feared a massive outflow of foreign funds a day after market regulator Sebi announced new norms for users of investment instrument — participatory notes (P-note).

The instrument constitutes a major part of the total foreign institutional investors (FIIs) investments into key domestic indices.

The new stringent norms have made it mandatory for all P-note users to follow anti-money laundering law and report any suspected breach immediately.

P-Notes, mostly used by overseas individual investors, hedge funds and foreign institutions, allow investors to invest in Indian markets through registered FIIs.

Moreover, a weak rupee eroded investors’ confidence. The Indian rupee slipped by eight paise to close at 67.44-45 to a US dollar.

“Markets witnessed selling during the last hour of trade despite Asian and European markets trading in the positive zone,” Dhruv Desai, director and chief operating officer of Tradebulls, told IANS.

“The weakness in the Indian rupee continues as the US dollar was bought by public sector banks on behalf of oil importers.”

Vaibhav Agarwal, vice president and research head at Angel Broking said that volatility continued to trim gains of the key indices after a sudden slide in mid-afternoon trade session.

“Going forward the markets will remain volatile due to global cues,” Agarwal said.

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

Data with stock exchanges showed that the FIIs sold scrip worth Rs.743.86 crore, while the DIIs purchased stocks worth Rs.597.49 crore.

Sector-wise, all the 19 sub-indices of the BSE, except FMCG (fast moving consumer goods), ended in the red.

The S&P BSE healthcare index plunged by 215.62 points, followed by the capital goods index, which slumped by 98.28 points; the banking index receded by 89.62 points, the IT index declined by 58.58 points, and the automobile index slipped by 52.36 points.

In contrast, the FMCG index rose by 14.65 percent.

Major Sensex gainers during Friday’s trade were Adani Ports, up 3.49 percent at Rs.177.85; ITC, up 1.55 percent at Rs.329.95; ONGC, up 1.40 percent at Rs.212.95; NTPC, up 1.00 percent, at Rs.136.80; and Bajaj Auto, up 0.83 percent at Rs.2,461.

Major Sensex losers were Lupin, down 9.10 percent at Rs.1,505.15; ICICI Bank, down 2.44 percent at Rs.220.05; Reliance Industries, down 1.73 percent at Rs.934.10; Mahindra and Mahindra (M&M), down 1.17 percent at Rs.1,294.05; and Cipla, down 1.04 percent at Rs.507.25.