Post Session: Quick Review

Indian markets extending their consolidation mood turned lower on Thursday, mainly weighed down by the Federal Reserve’s monetary policy announcement, were Fed Chair Janet Yellen signaled that Fed may raise US interest rates from the middle of next year. Though, there was not much damage caused as traders continued betting big on the upcoming general election outcome, still the benchmarks ended in red with loss of around half a percent.

The global cues were mostly weak and after a negative closing of the US markets, the Asian indices too followed the trend and ended considerably lower on concern of capital outflows from emerging markets back into the US after the indication of rise in rate. The European markets after a mixed start, too turned lower ahead of the US reports on jobless claims and housing.

Back home, the market mood that was already showing signs of fatigue, turned weak on Janet Yellen’s hawkish tone of policy statement. Marketmen took an opportunity to book profit, dragging the benchmark indices lower from the psychological support levels of 6500 (Nifty) and 21800 (Sensex). All the high beta sectors like realty, banking, auto and power suffered selling pressure. Though, there was a good bounce back in IT and tech stocks which bucking the trend surged over a percent with weakness in the rupee, as dollar strengthened overseas on hopes of rise in interest rate and one more reduction in the bond purchase. The losses gathered pace in the final hour of trade with PSU banking stocks dragging the markets lower. The PSU oil marketing companies (OMCs) suffered sharp cuts on reports that the finance ministry wants oil marketing companies to absorb a much higher share of under recoveries this fiscal. It was reported the OMCs will have to absorb as much as Rs 5,000 crore as against Rs 900 crore in FY13.The upstream companies like ONGC and Oil India too turned lower despite them keeping untouched after their collective buying of 10 percent in IOC.

The market breadth on the BSE ended in red; advances and declining stocks were in a ratio of 1,279: 1,529, while 132 scrips remained unchanged. (Provisional)

The BSE Sensex lost 79.74 points or 0.37% to settle at 21753.12. The index touched a high and a low of 21853.25 and 21704.66 respectively. Among the 30-share Sensex, 8 stocks gained, while 22 stocks declined. (Provisional)

The BSE Mid cap index ended lower by 0.37%, while the Small cap index ended higher by 0.05%. (Provisional)

On the BSE Sectoral front, IT up by 1.69%, TECK up by 1.19%, Healthcare up by 0.26% and FMCG up by 0.03% were the gainers, while Realty down by 2.24%, Capital Goods down by 1.97%, Power was down by 1.57%, Bankex down by 1.27% were the top losers in the space. (Provisional)

The top gainers on the Sensex were TCS up by 3.21%, HUL up by 2.13%, Cipla was up by 1.13%, Wipro was up by 1.10% and Sun Pharma was up by 1.03%, while, BHEL down by 2.74%, Gail India down by 2.55%, HDFC down by 2.12%, L&T down by 2.12% and Axis Bank down by 2.11% were the top losers in the index. (Provisional)

Meanwhile, in order to curb volatility in domestic currency, the Finance Ministry wants the Reserve Bank of India (RBI) to intervene more frequently in the currency market to smoothen volatility. As per the Finance Ministry, the central bank should build reserves when the rupee strengthens and use this to bolster the currency when it depreciates.

Finance Ministry added that intervention at appropriate time also keeps speculators in check citing the example that in early 2008 when the rupee had strengthened to below 40 to the dollar, it could have been appropriate for the RBI to intervene at that time to buy the US currency to curb the appreciation. On the other hand, the central bank is still reluctant to use its reserves of nearly $300 billion to defend the currency when it depreciates, given that most of the amount is borrowed money. 

During 2013, Indian rupee depreciated over 20 percent against the dollar mainly due to high capital outflows amid concerns over the US Fed tapering programme and high CAD. The depreciation in rupee value leads to imports becoming costlier which is a concern for India as it is structurally an import intensive country.

Meanwhile, the RBI has taken some aggressive stance in currency management, sending clear signal that it would act against any speculation. The RBI bought dollars worth of $375 million against the $2.3 billion sold in January’2014, making it a net seller of the US currency after remaining a net buyer of dollars for three months in a row earlier

India VIX, a gauge for markets short term expectation of volatility gained 0.16% at 16.91 from its previous close of 16.88 on Wednesday. (Provisional)

The CNX Nifty lost 38.20 points or 0.59% to settle at 6,485.85. The index touched high and low of 6,523.65 and 6,473.25 respectively. Out of the 50 stocks on the Nifty, 12 ended in the green, while 38 ended in the red. (Provisional)

The major gainers of the Nifty were TCS up by 3.31%, HUL up by 2.03%, Cipla up by 1.31%, Wipro up by 1.27% and Sunpharma was up by 0.97%. The key losers were DLF down by 3.91%, BPCL down by 3.90%, Ambuja Cements down by 3.64%, JP Associates down by 3.09% and Powergrid was down by 3.03%. (Provisional)

All the major European markets were trading in red; France’s CAC 40 was down 0.79%, Germany’s DAX was lower by 0.73%, while UK’s FTSE 100 declined by 0.84%.

The Asian markets barring KLSE Composite concluded Thursday’s trade in red, with Indonesia’s rupiah falling the most in three months, after the head of the Federal Reserve suggested US interest rates could start to rise from early next year . Japan’s annual export growth in February was short of market expectations, and a Bank of Japan policy-maker warned about the outlook as the world’s third-largest economy faces a sales tax hike next month that could dent economic activity. The exports rose 9.8% in February from a year earlier, following a 9.5% gain in the previous month, as shipments of cars to China and Asia recovered from a Lunar New Year slowdown.

The median monthly wage of Hong Kong employees rose across the board last year for the benchmark period of May-June. The median monthly wage was $14,100, up 5.2% over a year earlier and higher for both male and female employees and for all age groups, educational attainment levels, occupational groups and industry sections. Hong Kong’s inflation eased in February. The consumer price index rose 3.9% in February from a year back, after growing 4.6% in January.