BSE Sensex tanks to 6-1/2-month low on rupee, reform bill worries

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Mumbai | Updated: May 7, 2015 6:07:14 PM

Continuing its downward spiral, the benchmark BSE Sensex today tumbled by 118 points to settle at 26,599.11.

Sensex and niftyBSE Sensex today tumbled 118 points to end at 6-1/2 months low of 26,599.11 on persistent selling by foreign investors over taxation worries and delay in passage of key reform bills. (Reuters)

Continuing its downward spiral, the benchmark BSE Sensex today tumbled by 118 points to settle at 26,599.11 — its lowest closing in 6-1/2 months — on rupee breaching 64-level, rising oil prices and MAT worries.

The NSE Nifty also fell below the 8,000-level intra-day.

Persistent selling by foreign investors over taxation worries, delay in passage of reform bills and disappointing earning numbers bogged down markets, traders said.

Sentiment was also dampened as rupee breached 64-level to fall to a 20-month low, fading chances of a rate cut by the RBI at its meeting next month, they added.

Investor sentiment was also dampened after weakening of rupee to a 20-month low (intra-day) faded chances of a rate cut by the RBI at its meeting next month, brokers said.

Market Outlook by Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services
Market continues its consolidation with continuing FII outflows. Q4 earnings are impacting the market sentiments on FY16 outlook and hence the current consolidation could prevail until the extend of downgrading FY16E earnings is understood. Looking at the budget session, the progress in GST Bill has also not yet cheered the market as it is eager to know the ultimate outcome on GST and Land bills in budget session.

Globally, markets were unsettled on a sell-off in government bonds, stocks and the dollar as well a increase in oil prices showed little sign of relenting.

Weak show by Asian markets following downbeat closing on Wall Street had a negative rub off on markets here.

“Concern over surging oil prices, rupee depreciation against the dollar and Greece are the key issues, which are spooking the markets. Besides, participants are also cautious due to uncertainty over the GST bill,” said Jayant Manglik, President of Retail distribution at Religare Securities.

Market Wrap Up by Alex Mathews, Head Research, Geojit BNP Paribas Financial Services
Market opened with a negative bias and later in the first half it made a high at 8122, but due to sustained selling by investors and weak rupee; Nifty reversed its direction and made a low at 7997.15 and finally it closed at 8057 down by around 0.49%.  The market outlook is not very rosy because the market is still not entered in the oversold region and weak rupee is also affecting the investors sentiment negatively, but can enter in the oversold region may be in a day or two. Nifty has support at 7997 and 7962, and there are chances that Nifty may test these levels before marking a strong reversal.
The market breadth was negative as there were seen 813 stocks advancing against 1858 stocks declining. The Nifty volatility index, India VIX stood at 19.6500 was down by 0.10%., indicates uncertainty to continue.
The major sectorial gainers for the day were IT and Cement, among these BSE IT index closed higher by around 1.63% on weak rupee, rupee lost its key support at 64 against dollar.
The European markets were down.  The US index futures were also started trading in the negative territory ahead of the pay roll data.Companies like Ajantha Pharma, Nerolac, HUL, Gillette, Neuland Lab, SML Isuzu, PNB, IOB, Eicher Motors may announce their earnings tomorrow.

The 30-share Sensex fell 118.26 points or 0.44 per cent to close at 26,599.11, its weakest closing since October 21.

The gauge shuttled between 26,423.99 and 26,850.37 intra-day.

Yesterday, it had collapsed by 722.77 points or 2.63 per cent.

Today was the third-straight session of decline with the index having lost 891.48 points during this period.

The NSE Nifty index also ended with a loss of 39.70 points or 0.49 per cent at 8,057.30 — its weakest close since December 17. Intra-day, it dipped below the crucial 8,000-level to touch a low of 7,997.l5.

Meanwhile, Sensex has retreated by 3,425.63 points or 11.40 per cent from record high of 30,024.74 reached on March 4, while Nifty plunged 1,061.90 points or 11.64 per cent from its record high of 9,119.20 touched on March 4.

Technical Market View by Anand James, Co Head Technical Research Desk, Geojit BNP Paribas
If oil’s return to $60 united bears yesterday, it was rupee’s steep jump by over 1 percent that added momentum to today’s stock market’s fall.  Meanwhile, exporters, especially in the IT spectrum remained firm. If MAT fears were prominent during the last couple of weeks’ sustained FII outflows, potential for more exodus rests on the nature of economic data from US that could shape its rate hike plans.
Horizontal supports of 8000 and 7817 are attracting prices now, a break below which could set in panic, which may not ease until 6400 is seen. However, this ongoing fall could still be dismissed as part of bull market volatility if 8000-7817 region holds. To this end, Friday’s US pay roll data could be key in setting further course.

Banking, realty, consumer durable, oil&gas, healthcare and auto stocks were at the receiving end.

The broader markets remained under heavy selling pressure from cautious retail investors with the BSE midcap and smallcap indices falling by 1.95 and 1.68 per cent, respectively.

Foreign portfolio investors sold shares worth Rs 1,699.60 crore and Domestic institutional investors bought shares worth Rs 1,454.97 crore yesterday, as per provisional data.

“Local indices slipped down for a third-straight session to end to their lowest close in nearly seven months on continued selling by foreign investors on worries over retrospective tax,” said Jignesh Chaudhary, Head of Research at Veracity Broking Services.

Overseas, key indices in China, Hong Kong, Singapore, Japan, South Korea and Taiwan dropped between 0.65 and 2.77 per cent.

European markets too were trading sharply lower in their late morning deals. The France’s CAC was down by 2.07 per cent, Germany DAX by 1.41 per cent and the UK FTSE by 1.50 per cent.

In New York, the US stocks ended lower yesterday, after Federal Reserve Chairwoman Janet Yellen warned of high share valuations, adding to anxiety over future interest rates.

Back home, out of 30 Sensex stocks, 18 ended in the red.

Axis Bank was the biggest loser with a fall of 2.95 per cent, followed by ONGC 2.94 per cent, Maruti Suzuki 2.52 per cent, Hindalco 2.47 per cent, ICICI Bank 2.44 per cent, Tata Power 2.32 per cent and Dr Reddy’s 2.19 per cent.

Among the BSE sectoral indices, bankex plunged by 2.33 per cent, realty 2.20 per cent, consumer durables 2.01 per cent, oil&gas 1.96 per cent, healthcare 1.37 per cent and auto 1.12 per cent, while IT firmed up by 1.63 per cent and teck by 1.31 per cent.

The market breadth remained negative as 1,858 stocks finished with losses, 813 stocks ended in the green, while 109 ruled steady.

The total turnover fell to Rs 3,182.30 crore from Rs 3,565.06 crore yesterday.

Asia slides, euro at 2-month peak as global bond rout rattles markets

Reuters – Asian stocks fell on Thursday, led by losses on Wall Street, while a rise in euro zone debt yields amid a global bond rout kept the euro near a two-month peak versus the dollar, while the pound lost ground ahead of Britain’s election later in the day.

The Conservative and the opposition Labour Party have been neck and neck in opinion polls that indicate Britain could be in store for a hung parliament and another coalition government.

The euro climbed as far as 74.49 pence, reaching a high last seen in mid-February. It was last at 74.41 pence.

Sterling was flat against the dollar at $1.5244. It has lost momentum after touching a two-month peak of $1.5498 last week.

Spreadbetters expected negative sentiment in equities to be retained in Europe, forecasting a slightly lower open for Britain’s FTSE, Germany’s DAX and France’s CAC .

As European deflation fears have ebbed, a seeming reversal of trades linked to the European Central Bank’s big quantitative easing has resulted in a sell-off in core European bonds and equities this week, rattling investors across asset classes.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1 percent as shares retreated in China, Hong Kong, Australia, South Korean and Malaysia.

The Shanghai Composite Index was down 1.4 percent on fears of fresh moves by regulators to reduce leverage in stock trading, extending its losses so far this week to 6.1 percent.

The index is still up an impressive 29 percent so far this year on expectations that China’s policy easing would shore up equities. The steep gains, however, have triggered expectations of a sharp correction.

“Another few such declines and some of the millions of retail investors who have recently piled into the market might start to wonder if it really is a guaranteed way to make 30-40 percent returns every year or not,” analysts at Rabobank wrote in a note.

Tokyo’s Nikkei lost 1.1 percent in its first trading day of the week. Japanese financial markets were closed from Monday to Wednesday for public holidays.

U.S. stocks ended weaker on Wednesday after U.S. Federal Reserve Chair Janet Yellen warned of high share valuations, adding to anxiety about future interest rates.

Weak U.S. indicators also added to uncertainty regarding when the first rate hike by the Fed could take place. Data on Wednesday showed tepid private job gains and a second straight quarterly decline in productivity.

Shrinking expectations for an early rate hike – a tightening in June appears less and less likely – weighed on the dollar and helped its counterparts like the yen and euro.

The euro was steady at $1.1343, not far from a two-month high of $1.1371 struck overnight. The dollar stood little changed at 119.49 yen, pulling further away from this week’s high of 120.51 touched on Tuesday.

The euro continued to get support from a surge in euro zone bond yields, notably on German Bunds, in light of an easing in deflation fears thanks to improving European data.

German 10-year bond yields hit a four-month high of 0.595 percent overnight. Just last month it had hit a record low of 0.05 percent, when hopes were high that the ECB’s trillion euro bond buying quantitative easing programme would drive the yield into negative territory.

French, Dutch, Belgian and Austrian equivalent bond yields also scaled 2015 peaks on Wednesday.

In addition to sending chills through financial markets worldwide, the retreat in euro zone bonds has also weighed on U.S. Treasuries and Japanese government bonds, pushing their 10-year yields to two-month highs.

“The focus is on whether ECB officials will express concerns over the euro’s rebound and weaker European stocks, and whether that would halt the rise in Bund yields,” said Masafumi Yamamoto, senior strategist for Monex, Inc. in Tokyo.

“The euro’s bounce could stop if Bund yields steady, but without hints of further ECB easing it could be hard to keep the currency from rising again.”

In commodities, U.S. crude slipped on profit taking following an overnight climb to 2015 peaks reached after a first drawdown in U.S. crude inventories since January.

U.S. crude was down 0.7 percent at $60.53 a barrel after reaching a five-month high of $62.58 on Wednesday.

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