The market started off first day of week on a sluggish note, tracking nervousness in global peers due to fall in commodities. However, the broader markets outperformed benchmarks. FMCG, metals stocks and HDFC twins dragged.
The 30-share BSE Sensex declined 49.15 points to 25819.34 and the 50-share NSE Nifty ended tad below 7850, down 7.30 points to 7849.25. However, the BSE Midcap index gained 0.4 percent and Smallcap rose 0.5 percent.
Analysts expect the market to consolidate in near term, especially ahead of RBI monetary policy due next week.
Adrian Mowat, JP Morgan says the big swing factor is RBI policy . “Monetary policy is too tight with rising real interest rates suppressing corporate capex and increasing non-performing loans (NPLs). Our economist’s forecast is an RBI on hold. If this is correct, growth will disappoint,” he explained.
India remains the best structural growth story in emerging markets (EMs), he feels.
Global markets were lower due to sharp correction in commodities. In Asia, Shanghai fell 0.5 percent and Hang Seng declined 0.4 percent while Nikkei ended flat with a positive bias. European markets like France’s CAC, Germany’s DAX and Britain’s FTSE were down 0.3-0.7 percent (at 16 hours IST). Nymex and Brent crude oil prices slipped 3 percent and 1.8 percent, respectively. Gold was down 0.8 percent.
Back home, the rupee also saw selling pressure, down 29 paise to end at 66.47 a dollar (the lowest level since September 11).
metals fell the most among Sensex 30 stocks. Vedanta, Tata Steel and Hindalco Industries lost 2-4 percent. The fall in Vedanta and Hindalco was also due to exclusion of these stocks from BSE Sensex. Asian Paints and Adani Ports gained more than 2.5 percent on addition in BSE Sensex.
Petronet LNG surged 6 percent as the company says it is in discussion with RasGas, the Qatar-based company but binding agreement has not been executed yet. GAIL gained 2.8 percent.
Cigarette major ITC was the major contributor to Sensex’s fall, down 2 percent while Lupin, Hero Motocorp and Bajaj Auto gained 1-3 percent.
Tata Motors was down 0.25 percent as Goldman Sachs has downgraded the stock to sell from neutral as it believes the stock has priced in better H2FY16 volume growth and margin after H1FY16 slump. The brokerage has also slashed 12-month target price to Rs 363 from 369 and cut FY16-18 earnings per share estimate further by 21-26 percent driven by JLR (Jaguar Land Rover) margin weakness and elevated depreciation & amortisation charges.
In broader space, Advanta trimmed gains to 0.5 percent from 12 percent while UPL fell 3.5 percent after amalgamation deal. UPL has decided today to merge Advanta with self by issuing one equity share and three preference shares to Advanta’s shareholders.
SeQuent Scientific rose 5.6 percent on acquisition of Turkey-based Topkim by its subsidiary Alivira Animal Health.
The market breadth remained positive throughout the session as about 1476 shares advanced against 1188 declining shares on the BSE.