Bears retained tight grip on Dalal Street as equity benchmarks ended at 13-month closing low on Wednesday, continuing downtrend for the third consecutive session. Further fall in banking & financials in last couple of hours of trade pulled the market lower. However, buying in technology and index heavyweights ITC & Reliance Industries capped the downside.
The 30-share BSE Sensex fell 242.88 points or 0.95 percent to 25453.56, the lowest closing level since August 8, 2014. The 50-share NSE Nifty managed to claw back above the 7700 level in late trade (hitting day’s low of 7699.25), down 68.85 points or 0.88 percent to 7717, the lowest closing level since August 11, 2014.
The broader markets closed mixed; the BSE Midcap dropped 0.8 percent and Smallcap gained 0.15 percent. The market breadth was marginally weak as about 1398 shares declined against 1224 shares advanced on the Bombay Stock Exchange.
After recent global carnage led by fears of China slowdown and delay in economy & corporate earnings recovery forced brokerages to cut down their targets on equity benchmarks.
CLSA has lowered Sensex target by 6 percent to 30,000 for December 2016. A worsening global growth outlook would negatively impact corporate earnings, though lower input prices should partially cushion the impact on earnings, it said.
Ajay Srivastava of Dimensions Consulting remained cautious on the market. He said the government’s decision to accept the AP Shah panel recommendations offering relief to FIIs on retrospective minimum alternate tax will not help boost sentiment in a big way, because the market is grappling with bigger global issues at this point and investors are withdrawing from equities.
Foreign institutional investors have consistently been sellers since August 19. They have net sold Rs 17,248.65 crore worth of equity shares in August, the second highest amount of selling in the last 10 years. On the contrary, domestic institutional investors have been supporting the market as they bought Rs 16,437.53 crore worth of shares in August.
In global markets, China worries took Asian shares on a roller coaster ride today with Shanghai ending 0.4 percent lower. Nikkei lost 0.4 percent and Hang Seng declined 1.2 percent. European markets halved early gains with the France’s CAC, Germany’s DAX and Britain’s FTSE rising marginally (at 16 hours IST) after Asian equities pared losses in late trade. Crude oil prices fell further; Brent crude lost 1.7 percent to USD 48.73 a barrel and NYMEX crude declined 2.5 percent to USD 44.26 a barrel higher US crude inventory and weak manufacturing data.
Back home, the Cabinet has given its nod to auction 69 oil and gas fields that have been lying idle and were given up by public sector companies such as ONGC and Oil India. Petroleum Minister Dharmendra Pradhan said that around Rs 70,000 crore worth of resources will be monetised and the auction process of the 69 fields will start within three months. Both private and foreign firms will be allowed to participate in the auction.
Bank Nifty lost 1.7 percent today, in addition to 3.6 percent loss in previous session. State Bank of India, ICICI Bank and Axis Bank plunged 2-3.5 percent. Housing finance company HDFC was the biggest contributor to Sensex’s fall, down 2.8 percent.
Auto stocks continued downtrend post August sales data. Mahindra & Mahindra topped the selling list among auto majors, down 3.56 percent followed by Tata Motors, Maruti Suzuki, Bajaj Auto and Hero Motocorp with 0.7-2 percent loss. Vikram Kirloskar, Head of SIAM said it’s hard to tell whether the worst is over for the auto sector. However, Bajaj Auto and Honda Motors feel the festive season can bring some cheer to the street.
State-run power equipment maker BHEL was the biggest loser on Sensex, down 5 percent. L&T, ONGC, NTPC, Coal India and Cipla were down 2-3.5 percent.
However, TCS rallied 2.5 percent; Bombay High Court today has approved merger of CMC with the country’s largest software services exporter. Infosys rose 1 percent; Infosys Finacle has launched solutions for payments banks & small financial banks.
Shares of ITC, Reliance Industries, Lupin, Tata Steel and GAIL gained 1-1.6 percent.