The benchmark BSE Sensex plunged by 630 points today to below 27,000-level on across-the-board selling over concerns that key reform bills may get delayed, while weakness in global bond markets also hit sentiment.
In addition, rupee depreciated by 35 paise to Rs 64.20 against the dollar in intra-day trade today.
Key bills, Goods and Service Tax (GST) amendment bill and the land acquisition bill, got stuck in Rajya Sabha, raising fears of further delay in government’s economic reforms, traders said.
Market Outlook by Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services
Culmination of factors have led to the recent sharp correction. The recent phase of range-bound correction is led by FIIs, in spite of setting up a high level committee to decide MAT issue. Factors like increase in Europe bond yield, outperformance by other EMs and currency depreciation is impacting global inflow. Besides these, when the domestic earnings are downgrading and outcome from parliament session is shaky (GST/ Land Bill), market is not taking it well.
Participants were also cautious ahead of the release of retail inflation data for April and IIP data for March.
Globally, volatility in the bond markets weighed on global stocks, adding to investors’ anxiety over Greece’s finances.
Ten-year US Treasury yields hit their highest since early December, while German yields added 8 bps to 0.67 percent.
Market Wrap Up by Alex Mathews, Head Research, Geojit BNP Paribas Financial Services
Nifty opened with a marginal uptick and later it started trading in the red due to weak rupee, weak global cues uncertainty over land acquisition and tax reforms. As the outlook and breadth of the markets are turned out to be negative, any negative news flows can have bigger impact on the market in the days to come. Nifty has lost its key support at 8282 it is difficult the market to gain its lost momentum in the near term, and there are chances that it may test 7950 or even lower.
Today Nifty opened at 8326, made an intraday high and low of 8326 and 8115 and finally closed at 8126 down around 198 points. The market breadth turned to negative from positive as there were seen 765 stocks advancing against 1941 stocks declining. The Nifty volatility index, India VIX stood at 20.5450 up around 10.30%.
The mid-cap and small – cap sectors indices closed down around 1.72% each.
All the sectors ended in red and the major losers for the day were Realty and Power, which closed down around 3.30% and 3.12% respectively.
In the stocks’ front, the major losers were Bank of Baroda and Tata steel which closed down around 7.48% and 6.39% respectively whereas the mild buying was seen in Dr Reddy and Hero Motocorp closed up around 3.43% and 3.30% respectively.
The FIIs were buyers in the cash market segment on 11 May 2015, Monday, bought shares worth Rs 169.97 crore. The DIIs on the other hand were also buyers on 11 May, bought shares worth Rs 328.57 crore in the capital markets segment.
European markets fell as the investors’ focus was shifted towards the Greek bailout talks and the US index futures were also trading lower.
Companies like Lupin, Adani ENT, Ashoka, Aarti Industries, Deepak Nitrite, Emami Ltd, ABCIL and Smart Link may announce their earnings tomorrow.
Back home, the 30-share BSE index opened in the negative zone after rallying for the last two days. A major sell-off in blue-chips dragged the index below the psychological 27,000-mark to touch a low of 26,837.39.
The index finally settled down by 629.82 points or 2.29 per cent at 26,877.48. It had rallied by 908.19 points in the last two session on government’s move on MAT issue and hopes of an RBI rate cut.
The 50-issue Nifty slipped below the 8,200-level by falling 198.30 points or 2.38 per cent to close at 8,126.95. Intra-day, it moved between 8,326.65 and 8,115.30.
Market View by Anand James, Co Head Technical Research Desk, Geojit BNP Paribas
Post the MAT induced shake up, Indian markets continue to be vulnerable to global cues with European markets slipping, even as bond yields rose across the Eurozone. Volumes in cash market across exchanges have been largely on a decline lately, and volatility, denoted by Nifty VIX has risen above 20 levels. The 8000-7780 view for Nifty is now back in play, but given the rise in volatility, it may take a few days’ consolidation before a directional move on either side evolves.
Of 30-Sensex stocks, 28 ended lower, while Dr Reddy’s and Hero MotoCorp managed to finish in the green.
Dr Reddy’s rose 3.31 per cent after it reported a 7.73 per cent rise in its consolidated net profit to Rs 518.84 crore for the quarter ended March 31.
The broader markets too saw selling activity. The BSE mid-cap and small-cap indices ended lower by 1.72 per cent each.
Meanwhile, stock markets in Asia ended with a mixed bias and European markets were trading lower in their morning session.
No respite in sell-off of low-risk bonds
Reuters – Low-risk bonds sold off again on Tuesday driving down stocks and helping push the euro higher against the dollar.
Ten-year U.S. Treasury yields, the benchmark for global borrowing costs, hit their highest since early December, while German 10-year yields added 8 basis points to 0.67 percent.
Volatility in the bond markets weighed on stocks, adding to existing investor anxiety over the perilous state of Greece’s finances. Shares in Europe and followed Wall Street lower.
“It’s a matter of concern for the market. When any particular asset class goes through periods of extreme volatility in a short space of time, people feel the pressure to take their risk exposure lower,” Ian Richards, global head of equities strategy at Exane BNP Paribas, said.
Less than a month ago German 10-year yields hit a record low of 0.05 percent, driven down by a 1 trillion euro European Central Bank bond-purchase scheme intended to kick-start inflation.
Traders, who struggle to fully explain the recent yield surge, blame it on a rise in inflation expectations, higher oil prices, and restricted liquidity, caused by ECB purchases, as investors sought to exit a crowded trade.
“It’s clear that the market hasn’t stabilised. Before the sell-off started the common perception was one of low volatility. Now investors are more cautious, asking for a premium for the volatility we’ve seen recently,” said Jan von Gerich, chief fixed income analyst at Nordea.
Higher German yields lifted the euro 0.7 percent to $1.1233, having fallen close to Monday’s low of $1.1131 in Asian trade. It was also up 0.7 percent at 134.80 yen.
The dollar index, which measures the U.S. currency against a basket of major peers, fell 0.5 percent. The yen was 0.1 percent higher at 120 per dollar.
U.S. 10-year yields, which have been driven higher in recent weeks by German Bunds, last stood at 2.29 percent, up 2 basis points on the day, having earlier hit 2.31 percent, their highest since Dec. 8.
Elevated U.S. yields mean higher corporate borrowing costs , which could hit shares across the world.
The pan-European FTSEurofirst 300 index fell 1.3 percent in early trade.
Investors have also been concerned that debt-burdened Greece could run out of cash. Euro zone finance ministers, who met on Monday, acknowledged progress in talks between Greece and its creditors but said more work was needed to close a cash-for-reforms deal.
Worries that higher yields could drive the dollar higher weighed on Japanese stocks. Tokyo’s Nikkei ended flat.
MSCI’s main gauge of Asia-Pacific shares outside Japan fell 0.4 percent. Chinese shares, however, maintaining momentum after the central bank’s weekend cut in interest rates. The CSI300 index rose 1.2 percent.
Oil prices, up more than 50 percent from their January lows, rose further. Brent crude was up 34 cents at $64.25 a barrel.
Gold was little changed at $1,184.50 an ounce.