Volatility grips Dalal Street as Sensex slips 174 pts ahead of Fed rate decision

In what could be termed as a volatile day of trade on D-Street, benchmark indices witnessed wild swings in both directions, before ending the day on a weak note. Investors could be cautious ahead of key events such as US Fed meet outcome, along with Gujarat elections’ second phase and the opinion polls which will be out on Thursday. Sentiment could also have been hit on the back of subdued economic data.

A gap-down opening was seen on the Indian market, but the index soon trimmed some of those losses to trade rangebound in the afternoon. But things took a turn for good, when a rally in banks, along with other frontline indices helped them trade positively. Sensex gained around 176 points intraday, before witnessing a sudden U-turn and falling over 200 points intraday in the penultimate hour of trade. The Nifty, too, had gained around 59 points intraday.

The Sensex closed down 174.95 points or 0.53 percent at 33053.04, while the Nifty was down 47.20 points or 0.46 percent at 10193.00. The market breadth was negative as 944 shares advanced, against a decline of 1718 shares , while 150 shares were unchanged.

Kotak Mahindra Bank, ONGC, HPCL and IOC were the top gainers, while BHEL, Tata Motors DVR, Vedanta and Cipla lost the most.

Nifty Midcap was down 1 percent. About two shares declined for every share rising on the NSE. All sectoral indices ended in red. Metal, pharma, realty and PSU bank fell the most, down 1-2 percent, followed by auto, FMCG and IT.

“It was another day of losses on the bourses as key indices started the day on a subdued note and traded in the negative zone on mixed Asian cues and data showing a surge in India’s consumer price inflation and a moderate growth in industrial production. This becomes a very tricky situation for the Central Bank to handle. While lower interest rates in the economy should likely give a boost to economic growth, higher inflation discourages the Central Bank to reduce rates as it might further spike inflation. This means that the markets could be more volatile in the near future as indecisiveness dominates sentiment. Both the benchmark Sensex and the Nifty finally closed the day with losses,” Karthikraj Lakshmanan, Senior Fund Manager – Equities, BNP Paribas Mutual Fund said in a statement.

Meanwhile, oil stocks IOC, HPCL, BPCL bounced back, up 1.5-2 percent, after Brent crude cooled off after hitting USD 65 per barrel in the last two days.

Shree Cement, UltraTech Cement, JK Lakshmi Cement, JK Cement and Prism Cement gain 1-6 percent post SC order that allowed the use of petcoke.

Canara Bank, Allahabad Bank, LIC Housing Finance, Manappuram Finance, HDIL, DLF, Peninsula Land, Indiabulls Real Estate, Voltas, Havells, Petronet LNG, Century Textiles, Tata Elxsi, Religare Enterprises, HEG, Graphite India and Rain Industries were down 1-5 percent.

Bharti Airtel shares closed over 1.3percent lower after gaining nearly 2 percent intraday after the company decided to sell 20 percent stake in its DTH arm to US private equity firm. The rally had spilled over to Dish TV as well, which gained 4 percent, before falling around one percent.

InterGlobe Aviation shares fell 4 percent on equity dilution by promoter entities through offer for sale that opened for subscription. Two promoter entities of the IndiGo owner planned to offload shares worth at least Rs 1,245 crore through the offer for sale route on Wednesday and Thursday.

JB Chemicals & Pharmaceuticals ended flat, before gaining 3 percent on receiving approval from the US health regulator for anti-hypertensive drug.

Rico Auto Industries shares rallied more than 3 percent intraday Wednesday on signing a joint venture agreement with Singapore-based company. The stock ended 0.20 percent higher.
“Markets continue to look weak overall with the real estate sector beginning to sell off too; what went up the highest in the preceding rally, looks to be correcting now. Ahead of the Fed policy decision tonight and the Gujarat exit polls soon after, we recommend a wait-and-watch policy at this juncture with a bias on the short side,” Nikhil Kamath, Co-Founder and Head of Trading, Zerodha said in a statement.