Markets weekly: Sensex plunges 187 points on US rate hike worries; P-note tightening

By: | Published: May 21, 2016 10:05 AM

Concerns over record losses posted by public sector banks and possibility of an interest rate hike by the US Federal Reserve as early as June impacted market sentiments this week.

Stocks that made news todayConcerns over record losses posted by public sector banks and possibility of an interest rate hike by the US Federal Reserve as early as June impacted market sentiments this week. (Photo: Reuters)

Concerns over record losses posted by public sector banks and possibility of an interest rate hike by the US Federal Reserve as early as June impacted market sentiments this week. As a result, benchmark indices BSE Sensex and NSE Nifty shed nearly a percentage point for the week ended May 20.

The 30-share index retreated 187.67 points, or 0.74 per cent, to 25,301.90 on May 20 from 25,489.57 on May 13. The 50-share index also slid 65.20 points, or 0.83 per cent to 7749.70 from 7814.90 during the week under review.

Sentiments further dampened on account of tighter P-Note norms. SEBI on Thursday made rules tougher on controversy-ridden P-Notes, making it mandatory for all end-users of these overseas instruments to follow anti-money laundering law in India and asked their issuers to report any suspected breach immediately.

In the Nifty 50 index, 16 components ended the week in green, rest all other settled in red with Bank of Baroda falling the most — 12.96 per cent, followed by State Bank of India (down 7.11 per cent), Adani Ports (down 5.65 per cent) and Lupin (5.21 per cent). On the other hand, ITC, ONGC, Dr Reddy’s Labs and YES Bank gained 5.84 per cent, 4.54 per cent, 4.21 per cent and 3.11 per cent, respectively.

Sanjeev Zarbade, vice-president–PCG research, Kotak Securities said, “Global markets remained lacklustre during the week. The major developments included the FOMC April minutes, which spoke of labour market and inflation as the key factors that the Fed would consider while deciding on the June rate hike. With the latest reading on inflation showing signs of strengthening, the probability of a June rate hike has increased.”

Barring the BSE Realty index (down 2.13 per cent), all other sectoral indices also ended the week in red. The BSE Capital Goods index, the BSE Telecom index and BSE Power index slid 2.27 per cent, 2.25 per cent and 1.95 per cent, respectively, during the week.

Jimeet Modi, CEO, SAMCO Securities said, “Rising dollar unnerved equities and commodities markets globally. Dollar has given a powerful breakout above 67 on fears of US Fed can raise the interest rate as early as June however such repercussions could be serious for the equities market.  PSU banks had worst numbers, but stock prices surprisingly stood resilient indicating that the worst is more or less discounted. Overall, results were a mixed bag of positive and negative surprises.”

During the week, Punjab National Bank reported Rs 5,370 crore net loss for the fourth quarter ended March 2016. It is the biggest in the banking history, purportedly cleaning all the past messes. Syndicate Bank reported Q4 loss of Rs 2,160 cr, Bharat Forge Q4 PAT was down by 19 per cent, on the other side Piramal Enterprises Q4 PAT increased by 88 per cent.

Foreign institutional investors (FIIs) remained net buyers in the domestic equity markets as they bought shares worth of Rs 1,973 crore in the past five trading sessions. Rupee depreciated around 1 per cent to 67.41 on May 20 from 66.76 on May 13.

In the BSE 500 index, Jaypee Infratech, Sunrise Asian, Bharat Forge, Thomas Cook, United Breweries, Jaiprakash Power Ventures, Jaiprakash Associates, Ipca Laboratories, Videocon Industries and Swan Energy are some of the stocks which hit their fresh 52-week low during the week.

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