The market showed smart recovery in late trade, though it ended in red. The Sensex fell 432 points intraday following global weakness, but consistent domestic institutional investors support and buying in capital goods, auto and select banking stocks helped benchmark indices cut significant losses. There was some profit booking too, as market rallied more than 3 percent in previous two sessions.
The 30-share BSE Sensex dropped 97.41 points to 25622.17 and the Nifty lost 30.50 points to 7788.10. However, the BSE Midcap outperformed benchmarks, up 0.65 percent. Even the market breadth improved, though it remained in favour of declines. About 1482 shares declined against 1122 shares advanced on the Bombay Stock Exchange compared to 5:1 ratio in favour of declines in morning trade.
Adrian Mowat of JPMorgan says there is a risk to more downgrades in emerging markets, but India may not fall as much as other markets. Within India, he recommends adding positions to private sector banks.
Domestic institutional investors have consistently been net buyers since August 11 and they have bought more than Rs 22,000 crore worth of equity shares in August & September (according to provisional data). Today, they have purchased Rs 66.6 crore worth of shares while foreign institutional investors sold Rs 121.19 crore worth of shares (who have sold more than Rs 22,000 crore worth of shares in August & September – actual data), as per provisional data.
Asian and European markets remained weak following negative lead from Wall Street. In Asia, Hang Seng lost 2.6 percent. Nikkei slipped 2.5 percent after core machinery orders fell 3.5 percent in July while in China, producer price index declined 5.9 percent, the 42nd consecutive month of declines. Shanghai Composite was down 1.5 percent. European markets like France’s CAC, Germany’s DAX and Britain’s FTSE were down 0.3-0.6 percent post weak data from Asia’s two largest economies, Japan and China (at 16 hours IST). Brent crude was at USD 48.08 a barrel, up 1 percent and NYMEX crude rose 1.4 percent to USD 44.82 a barrel.
Meanwhile, Standard & Poor’s downgraded Brazil’s credit rating to BB-plus, the highest junk rating, from BBB-minus. The outlook on the new rating remains negative, which means additional downgrades are possible in the near term.
Back home, the rupee also recovered in late trade, though it closed in red. The currency weakened to 66.43 against a close of 66.41 a dollar in previous session on sustained dollar demand from importers.
HDFC, State Bank of India, HUL, ONGC, Dr Reddy’s Labs, Wipro and Bharti Airtel were prominent losers in Sensex, down 1-2 percent followed by Infosys, Reliance Industries and HDFC Bank with marginal losses.
However, Tata Motors rebounded quite nicely in late trade, up 2.7 percent despite weak Jaguar Land Rover sales data in August.
Mahindra & Mahindra rose 0.6 percent. After nearly 12 months, the utility vehicle maker made a splash in the compact SUV space, launching the TUV 300, which is priced at Rs 6.9 lakh.
ICICI Bank, Larsen & Toubro, Bajaj Auto and BHEL were other gainers, up 1-1.7 percent.