The BSE Sensex crashed more than 2 percent on Friday to end at lowest closing level since July 2014. The sharp fall was mainly driven by consistent outflow of money on global worries. There was also a caution ahead of US jobs data due later today, which will decide whether Federal Reserve will hike rate or not.
The 50-share NSE Nifty saw worst closing level since August 2014, down 167.95 points or 2.15 percent to 7655.05. The 30-share BSE Sensex plunged 562.88 points or 2.18 percent to 25201.90, dragged by banking & financials, technology, oil and metals stocks.
The broader markets too saw heavy selling pressure with the BSE Midcap and Smallcap indices losing 1.9 percent and 2.5 percent, respectively. About four shares declined for every share advancing on the Bombay Stock Exchange.
Fears of lower agriculture output post widening monsoon deficit may also have caused selling pressure. Traders feel sovereign funds could be sellers in today’s trade. According to them, 7500 on the Nifty may be next crucial level to watch out for.
The fall was driven mainly by global cues, says market expert Ajay Bagga. According to him, it is not a bear market correction as confidence is still there in market, supported by consistent buying from mutual funds & insurance companies and high networth individuals.
Even lack of trigger domestically to take market higher also drove indices lower. RBI policy (September 29) and Federal Reserve meet (September 16-17) may be next triggers, says Bagga, who advises staying on sidelines with cash.
Madhu Kela, chief investment strategist of Reliance Capital says the ongoing correction is an opportunity for retail investors to enter this market .
Foreign institutional investors have sold Rs 1,287.12 crore worth of shares today (as per provisional data on exchange), taking the total selling to nearly Rs 4,000 crore in September. It was an addition to Rs 17,248.65 crore worth of shares sold in August. On the other side, domestic institutional investors bought Rs 1,128.7 crore worth of shares, who have been consistent buyers since August 11.
For the week, equity benchmarks saw biggest weekly loss in last four years. The Sensex shed 4.5 percent and Nifty dropped 4.3 percent.
Global markets remained nervous ahead of US jobs data. Experts feel a strong jobs data may increase chances of Fed hiking rates in the September FOMC policy. Asian markets closed lower with the Nikkei falling over 2 percent, and Straits Times, Kospi and Taiwan Weighted down 1-1.5 percent. Chinese markets remained shut for a four-day weekend to commemorate the end of World War Two in Asia-Pacific.
European markets extended losses with the France’s CAC and Germany’s DAX down 2 percent each followed by Britain’s FTSE with 1.6 percent loss (at 16 hours IST). Dow Jones futures, which slipped 1 percent, also pointed towards weak opening on Wall Street.
Weakness in equities and strength of dollar against most Asian and Emerging Market currencies put pressure on the rupee. Heavy capital outflows also weighed. The currency struggled around 2-year lows, falling to 66.50 a dollar intraday today. It closed at 66.46 a dollar, down 22 paise compared to 66.24 in previous session.
All sectoral indices ended in red, losing between 1 percent and 3 percent. Bank Nifty shed 2.6 percent today and 6.3 percent during the week (the biggest weekly loss since July 2014).
Vedanta, Hindalco Industries, GAIL and Taat Steel were prominent losers on Sensex, down 4-5 percent. Infosys, ICICI Bank, HDFC, TCS and Reliance Industries were the major contributors to index’s fall, losing 2-3 percent. Axis Bank, L&T, Sun Pharma, SBI and Tata Motors also lost 2-3.6 percent. However, Bharti Airtel and Coal India outperformed with marginal gains.
Cipla made a bold move today to boost its presence in the US generics market. It acquired two US based companies – InvaGen Pharma and Exelan Pharma for USD 550 million , which will add over USD 200 million to Cipla’s revenue. Subhanu Saxena, MD & Global CEO said the buyout will be EPS accretive from the first year itself. The stock lost 1 percent.
Meanwhile, the government said direct tax collections rose 8 percent so far in FY16, touching Rs 1,67,000 crore, which for the rest of the year need to grow by 13 percent to meet full year Budget target. Corporate tax collection grew 10.5 percent while personal income tax collections increased 4 percent.