India : Sensex, Nifty close lower on caution ahead of Fed meet outcome
Wed Dec 14 2016
Rajesh Sharma (2002 articles)

India : Sensex, Nifty close lower on caution ahead of Fed meet outcome

Equity benchmarks reversed some of previous day’s gains amid volatility on Wednesday as investors maintained caution ahead of the outcome of Federal Reserve policy meeting.The 30-share BSE Sensex was down 94.98 points at 26602.84 and the 50-share NSE Nifty fell 39.35 points to 8182.45. The broader markets also lost shine in last couple hours of trade, with the BSE Midcap and Smallcap indices falling 0.8 percent each on weak breadth. About two shares declined for every share rising on the exchange.

A 25 basis points rate hike is largely priced in. Hence, the most important factor to watch out for would be Federal Reserve’s commentary on economic outlook, inflation and further rate hikes, experts say. Hawkish commentary, if any, may drive emerging markets lower on Thursday.

Chidu Narayanan of Standard Chartered says he does not expect the US Fed to surprise the market by not hiking because they may not want to create further volatility in the markets.

The dot plots suggest two potential rate hikes for the next year but the house expects only one rate hike, says Narayanan.

Also read – It’s a sell-on-rally market; Q4 to be worse than Q3: Dimensions

Jayant Manglik of Religare Securities suggests traders to wait for the markets to settle down first on Thursday, before taking any fresh position. Also, keep a close watch on the banking pack as it holds the key for next directional move in Nifty, he says.

European stocks were lower as investors focused on an upcoming rate decision by the US Federal Reserve. France’s CAC, Germany’s DAX and Britain’s FTSE fell 0.3-0.6 percent at the time of writing this article. Asia ended mixed.

Meanwhile, wholesale inflation rate in November moderated to 3.15 percent from 3.39 percent in October as cash crunch has depressed the consumer demand. Even retail inflation slowed sharply to 3.63 percent from 4.2 percent, which may pave the way for rate cuts in the upcoming RBI policy meeting.

Banking & financials, FMCG, metals, infra, healthcare and telecom stocks ended lower while technology stocks bucked the trend.

Coal India was the biggest loser among Sensex 30 stocks , down more than 4 percent as analysts slashed target price and EPS estimates after disappointing performance in the quarter ended September 2016.

Axis Bank gained over 3 percent despite a media report indicated that the government has asked the bank to set its house in order after a series of irregularities linked to the exchange of old notes were detected.

Aurobindo Pharma shed 2 percent after police filed a case against the company for blast at Andhra unit. However, the company said there was no material impact on operations due to fire incident at Vizag API unit.

ICICI Bank, ITC, HDFC, ONGC, HDFC Bank, L&T, ONGC, SBI and Bharti Airtel dropped 0.5-2 percent whereas Reliance Industries (up 2 percent), Infosys (up 0.91 percent) and Tata Motors (up 0.5 percent) capped the market fall.

Rajesh Sharma

Rajesh Sharma

Rajesh Sharma is Correspondent for Stock Market of South East Asia based in Mumbai. He has been covering Asian markets for more than 5 years.

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