Indian equities tumble on global cues, weak rupee (Market Review)

Mumbai, Dec 17 (IANS) The Indian equity markets ceded their initial gains during the just-ended trade week to close on a negative note, as global cues, along with rupee’s depreciation and the outflow of foreign funds, subdued investors’ sentiments.

Besides, a hike in interest rates by US Federal Open Market Committee (FOMC) and a wash-out of Parliament’s Winter Session due to the demonetisation issue hampered the risk-taking appetite of investors.

The key indices closed the week with substantial losses of more than a per cent each.

The barometer 30-scrip sensitive index (Sensex) of the BSE plunged by 257.62 points or 0.97 per cent to close the week’s trade at 26,489.56 points.

Similarly, the wider 51-scrip Nifty of the National Stock Exchange (NSE) fell by 122.3 points or 1.48 per cent and closed at 8,139.45 points.

“The hawkish tone of the US Fed on further rate hikes kept market participants across the world in a cautious mood. The recent outcome of the Italian referendum added to the political, economic and financial uncertainty in the European Union,” D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, told IANS.

“The domestic market continued to be nervous on the back of the concerns over the possible pull out of funds by the foreign market participants. Also, the concern that demonetisation would impact the Indian economy continue to weigh on the sentiment of the market participants.”

The week opened on a negative note as caution prevailed ahead of upcoming risks of global economic events such as the monetary policy review in the US and Britain and the announcement of domestic inflation data.

Global economic uncertainties like expectation of a further rate hike by the US Federal Reserve and a stronger US dollar post the presidential elections continued to hit the foreign fund flows.

In terms of investments, provisional figures from the stock exchanges showed the week witnessed a massive outflow of foreign funds worth Rs 3,610.10 crore. The domestic investors divested scrip worth Rs 23.42 crore during the week.

On the other hand, figures from the National Securities Depository (NSDL) disclosed that foreign portfolio investors (FPIs) were chiefly net sellers in the debt market. They sold equities and debt instruments worth Rs 2,341 crore, or $ 346.2 million from December 13-16.

However, a deceleration in key domestic macro-economic inflation data points failed to buoy investors’ sentiments.

Data released by the Commerce and Industry Ministry revealed that India’s annual rate of inflation based on wholesale prices (WPI) eased to 3.15 per cent for November, while the annual retail inflation (Consumer Price Index) eased to 3.63 per cent.

“Indian markets remained volatile as liquidity fled due to the US Fed rate hike leading. This also led to rupee depreciation,” Angel Broking said in a commentary to IANS.

“Metal prices moved lower as traders booked profits while crude oil moved higher over the OPEC (Organisation of the Petroleum Exporting Countries) decision to cut production.”

The rupee weakened by 35 paise to 67.77 against a US dollar from last week’s close of 67.42.

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, along with depreciation in the Indian rupee, the equity markets traded with bearish sentiments last week tracking selling pressure at higher levels.

Desai highlighted that investors’ sentiments were undermined after a report by industry body Confederation of Indian Industry predicted a slowdown in India’s economic growth on account of demonetisation.

“However, investors got some comfort with Chief Economic Advisor Arvind Subramanian’s assertion/comments/assurance that Indian economy is well cushioned to absorb the impact of US Federal Reserve’s rate hike,” Desai added.

“Some support also came with a private report stating that the Reserve Bank of India is expected to meet its inflation target ‘comfortably’ as CPI inflation is likely to remain well below 5 per cent over the first half of 2017.”

The top Sensex gainers were: Tata Consultancy Services (TCS), up 4.03 per cent at Rs 2,281.75, followed by Axis Bank (up 3.61 per cent at Rs 472.75), Reliance Industries (up 3.03 per cent at Rs 1,057.55), Tata Motors (up 1.82 per cent at Rs 472.50) and Infosys (up 1.71 per cent at Rs 1,004.20).

The losers were: Bharti Airtel (down 6.36 per cent at Rs 309.95), Coal India (down 6.18 per cent at Rs 288.20), ICICI Bank (down 4.75 per cent at Rs 255.60), Hero MotoCorp (down 4.67 per cent at Rs 3,128) and Asian Paints (down 4.38 per cent at Rs 900.90).

(Porisma P. Gogoi can be contacted at porisma.g@ians.in)

–IANS

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