Sensex sheds 316 pts, PSU banks hit hard; Nifty holds 10,100 but ends week 2.5% down

It was a weak start to the December series on Friday as the Nifty slipped below 50-DMA (daily moving average) to end at 2-week closing low despite encouraging Q2 GDP data. All sectoral indices ended in red, with PSU Bank falling sharply.

Benchmark indices started off day on a positive note, reacting to macro data but cautious investors chose to sell stocks in last couple of hours of trade ahead of big events.

Widening fiscal deficit and rising crude oil prices concerns continued to hurt sentiment. Investors turned cautious ahead of major events in the month ahead – RBI policy, FOMC meet and Gujarat assembly elections.

The 30-share BSE Sensex closed below 33,000-mark, falling 316.41 points or 0.95 percent to 32,832.94 while the 50-share NSE Nifty plunged 104.70 points or 1.02 percent to 10,121.80.

The broader markets which were outperforming benchmarks from opening also lost ground in last hour of trade. The Nifty Midcap and BSE Smallcap indices shed 1 percent each. About two shares declined for every share rising on the NSE.

In the near term, market may remain volatile given RBI policy next week and US Federal Reserve meet in the second week of December, Jayant Manglik President Retail Sales Religare Securities said who advise traders to avoid overleveraging and keep their positions hedged until the outcome of RBI policy.

However, he believes with steady reform implementation and improved corporate earnings, India would continue to remain a preferred investment destination for FIIs and DIIs despite its premium valuations compared to other emerging markets.

For the week, the Sensex and Nifty lost 2.5 percent while Nifty Midcap shed over a percent.

On the macro front, India’s gross domestic product (GDP) grew to 6.3 percent in quarter ended September 2017, from 5.7 percent recorded in the previous quarter ended June 2017. The Nikkei India Manufacturing Purchasing Managers’ Index rose to 52.6 in November from 50.3 in October indicating a substantial improvement in manufacturing sector.

Banking & financials were biggest losers today and amongst them, PSU banks and NBFCs hit hard. Nifty PSU Bank index shed more than 2 percent, followed by IT, Metal, Pharma and Realty that declined 1.5-2 percent.

Auto index lost 1 percent on the day of November sales data. Ashok Leyland was up 1.7 percent as a low base and parallel growth in both light commercial vehicle and medium & heavy commercial vehicle segments spurred growth in November sales that increased 51 percent YoY.

Maruti’s compact and utility vehicle segments continued to post robust growth. The stock touched a fresh record high of Rs 8,695 per share intraday after CLSA hiked its price target for the stock to Rs 10,000. It ended 0.2 percent higher.

Bajaj Auto’s sales came in a tad below estimates while M&M’s tractor sales beat analyst expectations but automotive segment missed estimates.

Indiabulls Housing Finance and Tata Power were biggest losers among largecaps, falling 5 percent each. Reliance Industries, Infosys, Vedanta, SBI, IOC, HDFC, Eicher Motors, Adani Ports and Tata Motors were down 1-3 percent while Kotak Mahindra Bank, Bharti Infratel, M&M and Ambuja Cements ended mildly higher.

Radico Khaitan, Syndicate Bank, Bank of India, South India Bank, PNB, Union Bank, L&T Finance, Manappuram Finance, PNB Housing, Equitas Holdings, Ujjivan Financial, Voltas, Granules India, Jet Airways, HDIL, KPIT Technologies and Bhansali Engineering declined 1-9 percent.

Biocon gained 3.3 percent as European Medicines Agency accepted its marketing authorisation application for cancer drug Trastuzumab. SAIL was up 1.8 percent as Phillip Capital has upgraded the stock to buy from its sell rating earlier and hiked target price to Rs 120 from Rs 44 per share earlier.

On the global front, Asian stocks ended mixed while European markets were trading lower as lobal investors awaited the US Senate’s vote on tax reform legislation. France’s CAC and Germany’s DAX were down 1 percent at the time of writing this article.