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Sensex falls 323 pts, Fed eyed; midcap snaps 11-day gains

17:04

The News International Team

Equity benchmarks shed more than a percent as investors remained cautious ahead of FOMC’s two-day meet (will begin tonight). The fall was also because of setback for the BJP in the assembly by-polls.

The benchmark indices fell for the second consecutive session. The 30-share BSE Sensex tumbled 324.05 points to 26492.51 and the 50-share NSE Nifty closed below 8000 level, down 109.10 points to 7932.90 while the broader markets saw major selling pressure.

The BSE Midcap index snapped 11-day winning streak, down 3.4 percent while Smallcap index declined for the first time in last eight sessions, down 4 percent.

Experts feel the correction was expected as the market had seen big run-up. FOMC meet, by-polls results and profit booking are some triggers that brought indices from their record highs hit last week.

According to KR Bharat, MD, Advent Advisors, the real significant correction (about 7-8 percent) will probably come on the back of announcements in the US. What will stop the flow of liquidity going into equities is probably an announcement of an increase in rates in the US, he said, adding that is not likely in the immediate future but the market will get an indication very clearly that the event is going to happen sooner rather than later.

He expects rate hike in the first quarter of calendar year 2015 or latest by the second quarter of calendar 2015.

However, according to him, the real big bull run in India will probably come sometime in 2015, perhaps second half of 2015.

In the 33 assembly and three Lok Sabha seats by-polls results (on September 13), there was a major setback for the BJP that had seen land-slide victory in the Lok Sabha elections in May. The BJP managed to hold on to just two out of 11 assembly seats in UP, where the Samajwadi Party made a strong comeback with 9 seats.

Shockingly, the BJP has lost 3 seats to the Congress in Modi’s home state of Gujarat. Out of total 9 seats for by-polls, the BJP has won just 6 seats while in Rajasthan, the BJP has managed to win just one seat, out of the total four seats. The Congress has surprised everybody by winning 3 seats. However, there was some good news for the BJP in West Bengal, wherein it won (for the first time) a seat on its own. In Assam, the AUDF, Congress and BJP have won one seat each.

Stocks in action

All sectoral indices closed in red with the Realty, Power, Capital Goods, Oil and Gas, Metal and Bank falling 2-3.4 percent.

Tata Power was the biggest loser, down nearly 6 percent followed by Reliance Industries, L&T, ONGC, Axis Bank, Tata Steel, NTPC and Coal India with 2-3 percent loss. ICICI Bank, HDFC Bank and HDFC were down over a percent.

Top lender State Bank of India declined over 2 percent. The bank raised rates on deposits for 180-210 days to 7.25 percent from 7 percent while it cut rates on deposits for 1-3 years to 8.75 percent from 9 percent. The lender revised interest rates on retail term deposits below Rs 1 crore. “The reason for revision in rates is availability of liquidity,” said chairman Arundhati Bhattacharya.

Oil marketing companies BPCL, HPCL and IOC tanked 5-6 percent on profit booking as these stocks had rallied sharply in previous sessions on fall in crude oil prices. Diesel prices will not be touched till October 15, at least till Maharashtra and Haryana elections, reports CNBC-TV18 quoting unnamed government sources. OMCs didn’t revise petrol price as revision unwarranted, sources add.

Lupin declined nearly 4 percent. The company announced partnership deal with Merck Serono but it did not disclose any financial details of the transaction. Before the announcement, the stock had rallied over 9 percent to hit a record high of Rs 1,442.30 on the BSE since last Friday.

However, shares of ITC, Infosys, Bharti Airtel, Dr Reddy’s Labs, HUL, Sun Pharma and Mahindra and Mahindra bucked the trend, up 0.3-1.2 percent.

In the broader space, GMR Infrastructure, IDBI Bank, Apollo Tyres, Ashok Leyland, Bharat Forge, Eicher Motors, Hexaware, Crompton, Unitech, Motherson Sumi, Voltas, Canara Bank, Glenmark, Reliance Infrastructure and OBC tumbled 5-10 percent.

About three shares declined for every share advancing on the Bombay Stock Exchange.

Meanwhile, the rupee closed at 61.05 a dollar, up 8 paise compared to 61.13 on Monday.

On the global front, Asian markets ended the session lower with the China’s Shanghai falling 1.8 percent ahead of start of FOMC’s two-day meeting tonight. European markets were trading marginally lower (at 16:15 hours IST.

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