Sun May 28 2017
Rajesh Sharma (2002 articles)

Global selloff weighs on market; Sensex falls over 200 points, Nifty ends below 9500

Dragged by a selloff in global indices, the local market tanked over 1 percent Thursday. The 50-share Nifty and 30-share Sensex snapped their key milestones of 9,500 and 30,500, respectively.

Wall Street, Asian, and the European markets fell on the back of a crisis in the US following reports of Donald Trump passing on classified information to Russia.

A correction in the midcaps following its bull run in the past few months also pushed indices lower. Likely profit booking by investors could have hurt the segment. This was followed by a fall in autos, banks, energy, FMCG as well as pharmaceuticals.

The saving grace for the Street was a phenomenal gain in information technology (IT) stocks on reports of possible trouble for US President Donald Trump over a memo by former FBI Director James Comey. A weaker rupee also aided the sector.

The Sensex closed down by 223.98 points at 30434.79, while the Nifty fell 96.30 points at 9429.45. The market breadth was negative as 705 shares advanced against a decline of 2,040 shares, while 167 shares were unchanged.

Gold prices maintained an upward trend for the second straight day today, gaining Rs 225 to Rs 28,985 per 10 grams at the bullion market on firm global cues and increased buying by local jewellers.

On the other hand, silver cracked below the Rs 39,000- mark by falling Rs 500 to Rs 38,800 per kg due to reduced offtake by industrial units.

“Indian equities failed to hold its own amidst global rout following political turmoil in US and tensions surrounding North Korea. VIX rising by almost 10 percent also prompted investors to lock in profits. The sharp weakness in rupee was also surprising, but was seen supporting IT stocks,” Anand James, Chief Market Strategist, Geojit Financial Services said in a statement.

Among stocks, midcaps dragged the indices lower, with major names such as IDFC Bank, Adani Power, Torrent Power, IDBI, JSW Steel, Reliance Infra, among others, falling the most.

Large cap names such as Eicher Motors, Tata Motors, Yes Bank, Grasim, Hindalco, ITC, IndusInd Bank, Mahindra and Mahindra, Reliance Industries and Larsen & Toubro, among others, seeing a huge decline.

CESC closed 15 percent lower on the back of announcement of restructuring scheme. The company announced restructuring scheme which includes amalgamation of CESC Infra, Spencer’s & Music World Retail with the company. The company is planning to list Haldia Energy, RP-SG Retail, RP-SG Biz Process Services on the exchanges. It also announced stock split of equity shares from Rs 10 per share into 2 shares of Rs 5 and will demerge its business into 4 units, which includes generation business, IT & 2 retail business.

Apart from them, Bajaj Auto fell 2 percent post its Q4 results, while Hindustan Unilever closed 2 percent lower as well.

Bajaj Auto, the country’s third largest two-wheeler manufacturer, posted 13.45 percent drop in net profit for the quarter ended March 31, 2017 driven down by demonetization, poor exports and the Supreme Court ruling on BS 3 vehicles.

The Pune-based company clocked consolidated net profit of Rs 862 crore for the quarter as against Rs 996 crore posted in the year-ago period.

Among gainers was solely the information technology (IT) space, which surged on the back of positive sentiment post crisis in the Trump administration as well as a weak rupee.

Tata Consultancy Services, Wipro, and Infosys gained 3 percent, 2 percent and 1 percent, respectively, all of which held the market from having a complete freefall.
“Markets are slightly overheated after the recent rally and finally got the reason to lighten up. We feel 9350 would be crucial mark in Nifty ahead and any decisive slide below that level will derail the momentum. However, traders should see this as intermediate correction, which is normal and healthy for sustainability of the broader trend,” said Jayant Manglik, President, Retail Distribution, Religare Securities in a statement.

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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