Sensex drops again, bank share prices plunge, Nifty support seen at 5,900

Written by fe Bureau | Mumbai | Updated: Jan 31 2014, 03:12am hrs
BSE SensexBSE Sensex slides 149 points to close at 20,498.25. (Reuters)
Markets continued to decline for the fifth day on Thursday with BSE Sensex losing 0.72% or 149.05 points at 20,498.25, while NSE Nifty was down 0.76% or 46.55 points at 6073.70. The selling was triggered by US Federal Reserve's decision to further scale back its stimulus package.

Markets Top Gainers, Markets Top Losers

Among sectoral indices, BSE Realty Index was down 2.60%, BSE Metal Index was down 2.52% and BSE Bankex was down 2.67%. Among individual stocks, State Bank of India (SBI) (-3.56%), Hero MotoCorp (-3.43%) and Sesa Sterlite (-3.38%) were the biggest losers on the Sensex. Metal stocks were under pressure with fall China's PMI Index stirring demand concerns.

Meanwhile, most Asian indices were in the red. Shanghai Composite (-0.82%), Hang Seng (-0.48%) and Straits Times (-0.68%) traded lower.

FIIs have net bought about $107 million worth of Indian shares in January but experts suggest the pace of buying is slowing down. Industry watchers believe that the recent cut in quantitative easing, might impact FII flows to emerging markets such as India.

On Wednesday, the Dow Jones Industrial Average had ended down 1.19%, while Nasdaq Composite was down 1.14%.

Sahaj Agrawal, Deputy Vice President- Derivatives Research, Kotak Securities:

Markets witnessed significant selling pressure throughout the January series. Tightening in the monetary policy along with reduction in QE by the FED led to further selling in domestic markets. On a monthly basis Nifty lost nearly 4 percent. Banking stocks lost ground as the Bank Index lost nearly 10 percent; similar losses were seen in the midcap index. IT stocks continued to gain. Strong rollover into the Feb series indicates possibility of continued selling pressure for the early part of the series.

Outlook: We expect strong support around 5,900 levels. We continue to remain positive on the FMCG, IT and Pharma space and advice stock specific accumulation in the high beta space.

US Fed taper pulls down Sensex by 149 pts to two-month low

(PTI) BSE Sensex today slipped 149 points to a two-month low on fears of capital outflows from emerging markets after the US Federal Reserve further cut its stimulus, extending the decline from a record close for the fifth day.

Selling due to expiry of monthly equity derivatives amid a weak global trend also affected the sentiment, traders said.

Banking, realty, metal and oil&gas led 10 of the 12 BSE sectoral indices lower. Consumer durables and auto gained.

The benchmark Sensex, which tumbled to 20,343.78 intra-day, saw some fag-end buying that helped halve losses. It settled at 20,498.25 -- a level seen on November 27 -- down 149.05 points or 0.72 per cent from Wednesday's closing level.

In five days, the Sensex has tumbled 875 points from 21373.66 on January 23.

In the 30-share index today, 19 constituents led by ICICI Bank, HDFC Bank, RIL, and SBI declined. Sesa Sterlite, Hindalco and Hero MotoCorp were among the biggest laggards.

The 11 Sensex gainers included Tata Motors and Bharti.

Across the BSE, 1,714 stocks declined while 866 gained.

"Markets witnessed significant selling pressure throughout the January series. Tightening in the monetary policy along with reduction in QE by the FED led to further selling in domestic markets," said Sahaj Agrawal, Deputy Vice President- Derivatives Research, Kotak Securities.

In January so far, the Sensex has lost 672.43 points.

The 50-scrip NSE Nifty index fell 46.55 points, or 0.76 per cent, to 6,073.70, after touching a low of 6,027.25.

The poor show by Indian indices was in line with falling Asian stock markets, extending a global rout on renewed fears about emerging economies after the Fed cut.

The Fed, the US central bank, yesterday said it would reduce its massive bond-buying programme by USD 10 billion a month to USD 65 billion, citing a pick-up in the US economy.

The move, which follows a similar announcement in December 2013, stoked fears of capital flows from emerging markets as the US Fed gradually winds down it stimulus.

Sectorally, the BSE Banking sector index suffered the most by losing 2.67 per cent, followed by Realty (2.60 per cent), Metal (2.52 per cent) and Oil & Gas (1.08 per cent).

HIGHLIGHTS

* BSE index falls 0.72 pct; NSE ends 0.76 pct lower

* NSE bank index touches lowest level since October

* NSE index closes below 100-day average since October

Indian shares hit 10-week low; inflows, emerging markets key

(Reuters) Indian shares fell for a fifth consecutive session on Thursday to their lowest in 10 weeks as blue chips including banks slumped with the U.S. Federal Reserve continuing to scale back stimulus despite the turmoil in emerging markets.

Risk aversion took a toll on Indian banks, knocking them off 2.7 percent. The NSE's banking sub-index, which has lost 9.4 percent in the last six sessions, hit the lowest since October.

Dealers warn the NSE may continue to fall in the medium term as it has breached the 6,100 level - which has served as an important resistance in January and July 2013 - and was around its 100-day moving average.

Traders say foreign inflows and developments in emerging markets would be closely watched. Foreign investors have sold $1 billion in Indian debt in the last five sessions to Tuesday and $412.26 million in shares over last four sessions to Wednesday.

"With most negative news such as rate hike, Fed tapering out of the way, flows and emerging market action would be the key for Indian shares," said G Chokkalingam, founder of research and fund advisory company Equinomics.

The benchmark BSE index fell 0.72 percent, or 149.05 points, to end at 20,498.25, marking its fifth consecutive day of falls.

The broader NSE index lost 0.76 percent, or 46.55 points, to end at 6,073.70.

Global equities hit 2-1/2-month lows on Thursday after the Fed announced a further $10 billion cut in its monthly bond purchases in a statement after its two-day policy meeting.

Bank shares led the fall, with ICICI Bank Ltd declining 2.7 percent and HDFC Bank Ltd losing 2.1 percent.

Among state-owned banks, State Bank of India fell 3.6 percent, while Bank of Baroda dropped 4.4 percent.

In other rate-sensitive stocks, DLF Ltd slumped 4.6 percent, while IDFC Ltd lost 2.5 percent.

Bank of India shares plunged 10.7 percent after its chairman gave muted outlook on asset quality, citing total debt restructuring pipeline of 15-17 billion rupees by March.

However among stocks that gained, Voltas Ltd rose 7.3 percent after the company's operating profit beat some analysts' expectations, dealers said.

FACTORS TO WATCH

* Euro falls to near-two-Month low of yen

* Oil lifted by cold weather, Fed trimming caps gains

* Stocks hit 2-1/2 mth lows as EM selloff continues

* Foreign institutional investor flows

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