Indian equity markets seemed to have seen a ‘mini-correction’ in the last 6 to 7 days which have broiled the performance of headline indices Sensex and Nifty yet again after the weeks-long downturn that was observed in February-March 2018. In the corporate earnings-packed environment, stocks have been highly steered by the outcome of fourth-quarter earnings and the future guidance provided by the respective companies. Market participants have remained cautious on the ongoing developments between two-biggest economies of the world — US and China — with regard to the trade war, upcoming corporate earnings and specifically on crude oil price movements.
Meanwhile today, the domestic markets saw a rise for the second day in last seven days with Sensex and Nifty advancing nearly 1% as value-buying in blue-chip shares uplifted the market. The S&P BSE Sensex surged 318.2 points or 0.93% to close at 34,663.11 while NSE Nifty added 83.5 points or 0.8% to settle at 10,513.85 on Thursday. During the day, benchmark Sensex shuttled between the range of 34,741.46 and 34,367.83 whereas broader share indicator Nifty hovered between 10,535.15 and 10,430.35 on Thursday. With the rise in stock prices, volatility dropped among the market as India Vix shed 23.03% to a day’s bottom of 10.8975 before closing down 6.72% at 13.2050 on Thursday. Among the sectoral indices of NSE, Nifty Auto and Nifty Realty were the only two which ended in red. Nifty IT, Nifty Pharma, Nifty PSU Bank, Nifty Bank, Nifty Private Bank and Nifty Financial Services gained more than 1% each.
Shares of Bharti Airtel (up 4.11%), Infosys (up 3.09%), TCS (up 3.08%), Axis Bank (up 2.65%), Sun Pharma (up 2.23%), SBI (up 2.01%), ICICI Bank (up 1.9%), Tata Steel (up 1.7%), Kotak Mahindra Bank (up 1.57%), M&M (up 1.49%), HDFC (up 1.24%), Dr Reddy’s (up 1.2%), HDFC Bank (up 1.17%), Coal India (up 1.12%) and Asian Paints (up 0.94%) were the top gainers while shares of Tata Motors (down 6.56%), ONGC (down 4.5%), Bajaj Auto (down 1.41%), Maruti Suzuki (down 1.07%) and Yes Bank (down 0.93%) were the top losers among the components of BSE Sensex on Thursday. Amid the 300 plus shares under the ‘A’ group on BSE, shares of Eros Media (up 19.07%), NCC (up 8.8%), Kaveri Seed (up 7.47%), Astral Poly Technik (up 7%) and Just Dial (up 6.6%) shown the most while shares of GE T&D India (down 8.5%), Granules India (down 7.31%) and Jet Airways (down 7.01%) plunged the most.
Surprisingly, BSE Sensex may have ended with gains on Thursday but is still down 881 points in the last seven trading session. The 30-share barometer Sensex is down 880.83 points to 34,663.11 from a level of 35,543.94 as at the end of 15 May 2018. We take a look at four reasons behind the 900-point downtick in last seven days.
Ballooning crude oil
Crude oil prices have been broadly rising since late-June 2017 and have picked up the pace in October 2017 as Brent crude was quoted at about $49 a barrel at that time. Shockingly, in a span of around seven months, Brent crude price got appreciated by $30 a barrel. Earlier last week only, Brent crude breached the level of $80 per barrel, its highest since November 2014.
Foreign investors seemed to be in a sell-off mood as in the month of May only FPIs (Foreign Portfolio Investors) have taken out Rs 18,000 crore from the capital markets, up until 18 May 2018. In April, FPIs sold off about Rs 15,000 crore from capital markets.
Investors have keenly awaited the outcome of Karnataka election 2018 as the assembly elections in the state were termed as a litmus test before the Lok Sabha polls in 2019. In Karnataka elections results, Modi-led BJP (Bharatiya Janata Party) shown relatively good performance with garnering 104 seats but failed to clinch the half-way mark. Following which, BJP’s BS Yeddyurappa resigned from the post of CM within 48 hours of swearing in as CM ahead of floor test ordered by Supreme Court.
Weak Q4 sentiment
It has been observed that subdued corporate earnings show have always remained a factor for weaker markets over the year. In the last week, India’s second-largest PSU bank PNB reported a loss of Rs 13,416.91 crore which is biggest quarterly loss ever posted by any bank in India.