Wiping out its gains, the benchmark BSE Sensex today recorded its first drop in three sessions, falling over 41 points in a highly volatile trade due to profit-booking in auto, oil & gas, PSU and banking stocks, ignoring a rising trend in the global market.
The gauge opened on a subdued note, but in noon trade, it staged a strong comeback to hit the day’s high of 27,872.23, led by gains in IT, consumer durables and realty stocks.
Soon, profit-booking emerged at higher levels that ate into the gains and took the benchmark back to the negative territory, which closed down 41.77 points, or 0.15 per cent, at 27,645.53. The index had gained 481.24 points in the past two sessions.
Market Outlook by Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services
The broader index is moving higher this week on rate cut expectation being build. Added to this, the quantum of FII selling slowing in the week aids the sentiment. But, global factors can contribute to volatility and this has to normalize. However DIIs active buying is a positive sign and for the week, market would be weighed by Q4 results from Index heavyweights, rate cut expectation and global factors.
The 50-share NSE Nifty, after reclaiming the 8,400 mark, touched the session’s high of 8,427.80 intra-day, before succumbing to selling pressure at higher levels and settled the day lower by 8 points, or 0.10 per cent, at 8,365.65.
In the previous two sessions, the markets rose on the back of forecast of a timely monsoon, coupled with the government reporting fiscal deficit at 4 per cent of the GDP for 2014-15. Continued hopes of a rate cut by RBI on or before the policy meet early next month had helped too.
Of the 30-pack Sensex, 17 ended with losses and 12 finished higher. ITC ended flat at Rs 332.10.
Market Wrap Up by Alex Mathews, Head Research, Geojit BNP Paribas Financial Services Ltd
Nifty opened with a negative bias and later it made a high at 8427, but in the second half it closed at 8365 down around 8 points, despite strong international cues. The European markets were trading in positive zone on news that the ECB is planning to increase bond buying in May and June. In the economic front, the UK inflation rate fell below zero for the first time since 1960. The US index futures were also trading higher. In Japanese front, balance of trade, inflation, core inflation, industrial production and construction orders are the data.
Traders and investors are cautious about the FII activities, whenever there is an opportunity FII are reducing equity exposure on concerns of poor quarterly numbers, MAT issues and lack of positive triggers. The FIIs were sellers in the cash market segment on 18 May 2015, Monday, sold shares worth Rs 202.12 crore.
The Nifty volatility index, India VIX stood at 18.2700 up around 2.05%. But the market breadth remained positive as there were seen 1452 stocks advancing against 1297 stocks declining.
The major gainers in the sectorial front for the day are IT and Consumer Durables which ended up around 0.73% and 0.54% respectively. The losers on the other end are Auto and Oil & gas sector which ended down around 0.77% and 0.45% respectively.
In the stocks’ front, the major gainers were Hero Motocorp and Ultratech cement which closed up around 2.32% and 1.79% respectively whereas the selling was seen in HDFC and Tata Motors closed down around 2.23% and 2.10% respectively.
The DIIs on the other hand were buyers on 18 May, bought shares worth Rs 618.54 crore in the capital markets segment.
Companies like JB chempharma, Tata steel, DLF, Bharat Forge, Bajaj Finserv, Whirlpool, Aarti Drugs, Bajaj Finance and SKM Egg products may announce their earnings.
Investors, after remaining buyers in the past two sessions, were seen booking profits in heavy-weight stocks, brokers said.
A higher closing at other Asian markets and a better opening in Europe following yesterday’s record closing on the US markets influenced sentiment, they added.
The losers which contributed to the fall include HDFC, Tata Motors, ONGC, Bajaj Auto, Hind Unilever and Axis Bank.
Bucking the trend, Hero MotoCorp, Wipro, Vedanta, Infosys, Tata Steel and Tata Power ended higher, thus cushioning the impact.
Market View by Anand James, Co Head Technical Research Desk, Geojit BNP Paribas
Sentiments & Technicals
Though Nifty has risen over 5% from recent low, and though there has been FII buying in the last two days of the previous week, FII activity in equity is yet to show a clear pattern that could signal continued rise in stock market. The continued volatility is sign that more consolidation is in store before further directional move. Meanwhile it is uncertain how much weightage would the RBI give for improved prospects of timely monsoon in its rate setting meeting, but it is visible that rate cut hopes have steadily improved over the last few days.
Sector-wise, the BSE Auto index suffered the most by losing 0.77 per cent, followed by oil & gas (0.45 per cent), PSU (0.40 per cent), FMCG (0.22 per cent), banking (0.17 per cent) and power (0.04 per cent).
Aided by buying from retail investors, the small-cap index rose 0.36 per cent, but mid-cap index fell 0.15 per cent.
Euro, bond yields tumble as ECB hints at faster buying pre-summer
Reuters – The euro tumbled on Tuesday and the region’s stocks and bonds jumped after the European Central Bank suggested it may speed up its 1 trillion euro bond-buying campaign slightly to account for lower market liquidity in high summer.
World stocks were already testing all-time highs after another jump in Chinese stocks and a record close on Wall Street, and European markets shot up after top policymaker Benoit Coeure talked of adjusting the ECB’s buying programme.
He said the speed of the recent spike in bond yields, which has effectively wiped out the benefits of QE, was worrisome and said the ECB could “moderately” increase its buying in May and June to ensure it doesn’t fall behind on its target over the summer.
The euro was back at $1.12 for the first time in a week and the FTSEurofirst 300 jumped 1.6 percent as gains of 1.9 and 2 percent on Germany’s DAX and in Paris outpaced a 0.4 percent rise on London’s FTSE .
Bond yields, which move inversely to prices, also tumbled, with those on 10-year German Bunds down 7 basis points and Italian and Spanish equivalents down 12 basis points.
“There is a sense the comments from the ECB indicate a growing push back against the sell-off in bond markets that’s been in place for the past month or so, and a push back against both euro strength and market volatility,” said Manik Narain, a UBS strategist.
The moves came ahead of German sentiment data from the ZEW institute at 0900 GMT that will be closely watched after some mixed signals from Europe’s largest economy in recent weeks.
Fears of a Greek bankruptcy also rumbled in the background even as the country’s top politicians vowed to conclude a cash-for-reform deal with its lenders.
“I think we are very close (to a deal) … let’s say in a week,” Greek Finance Minister Yanis Varoufakis said in a TV interview on Monday night. “Another currency is not on our radar, not in our thoughts,” he added.
China’s surging stock market and a jump in the New Zealand dollar after a rise in inflation dominated attention overnight in Asia.
The CSI300 index surged 3.4 percent and the Shanghai Composite Index rose 3.0 percent, as investors welcomed Beijing’s 2015 guidelines for economic reform.
They prioritized a further opening of the country’s capital market and a restructuring of state enterprises.
“You need a vibrant stock market to push forward economic reforms, whether it’s about asset securitisation or industry consolidation,” said Tian Weidong, analyst at Kaiyuan Securities in Xian. “With such a policy backdrop, investors are emboldened to stay in the market.”
Japan’s Nikkei also ended up 0.7 percent at a three-week high as the dollar nudged down the yen.
Expectations of more easing from the Bank of Japan kept the Japanese currency in check. The BOJ meets on Friday and is seen expanding its massive stimulus programme in October, according to most economists polled by Reuters.
Among commodities, U.S. crude futures edged up after slipping on Monday on the stronger dollar and oversupply concerns triggered by a jump in Saudi Arabian exports
U.S. crude rose about 0.1 percent in Asian trade to $59.48 a barrel, while Brent edged down 0.2 percent to $66.15.
Safe-haven gold, meanwhile, fell for the first time in six sessions, dropping about 0.3 percent to $1,218 an ounce. It had hit a three-month high a day early after disappointing U.S. economic data dented expectations of Federal Reserve rate hikes this year.