Rupee, heavyweights push Sensex, Nifty lower; PSU banks recover to end in the green
It was a volatile day of trade on Dalal Street Tuesday. The market erased gains in last hour of trade to close mildly lower, dragged by weak global cues and sharp correction in the rupee that fell one percent intraday against the US dollar.
Private banks, Reliance Industries and ITC drove the market lower, but losses were capped by technology and metals stocks. Nifty Bank index underperformed due to correction in private banks while all PSU banks recouped losses to end in the green on short covering.
The 30-share BSE Sensex was down 71.07 points at 33,703.59 and the 50-share NSE Nifty fell 18 points to 10,360.40.
Benchmark indices slipped more than 1.5 percent in three consecutive sessions, and lost around 7 percent in three weeks from all-time record closing highs on January 29, 2018.
The imposition of long term capital gains tax, higher fiscal deficit target in Union Budget FY19 and the recent alleged PNB scam has clearly impacted the sentiments on the domestic bourses, as evident from the fact that the indices have corrected sharply from their record highs over the last three weeks.
“This weakness could continue for a few more sessions, led by uncertain global cues and muted domestic sentiments,” Jayant Manglik, President, Religare Broking said.
However, any further correction at this juncture should be considered as a healthy buying opportunity for investors in quality companies with strong financials and bright outlook, he advised.
Meanwhile traders should remain cautious and keep their positions hedged, as volatility is likely to remain high, he said.
On the global front, Asian markets ended lower with the Japan’s Nikkei losing a percent. European stocks were mildly lower at the time of writing this article.
Back home, the Indian rupee was down 58 paise or 0.92 percent at 64.79 against the US dollar, the lowest level since November 22, 2017.
The sharp fall in rupee helped the Nifty IT index gain 0.33 percent. TCS, Infosys and Tech Mahindra gained 0.3-0.7 percent.
The Nifty Metal outperformed sectoral indices, rising over a percent as Vedanta rallied 2.6 percent.
Coal India was up 1.6 percent after Cabinet has approved auction of coal mines for private sector operators for commercial mining. Power & Coal Minister Piyush Goyal said commercial coal mining will help increase efficiency & productivity. “Coal India would be a beneficiary of government’s move and is on track to achieve target of 1 billion tonne production.”
Tata Steel gained 0.4 percent after CLSA bet big on the Indian steel industry, saying tightening demand-supply will aid stock performance. Macquarie too maintained outperform rating on the stock, saying the recent correction has made the risk-reward attractive.
Ambuja Cements gained 2 percent after the cement maker reported better-than-expected earnings for December quarter.
All PSU banks ended in the green with Nifty PSU Bank index recovering 2.7 percent from day’s low to end 0.83 percent higher on short covering.
PNB shares snapped four-day losing streak to end 0.1 percent higher while SBI and Bank of Baroda gained 0.4 percent each.
Private banks, however, closed lower and pulled the Nifty Bank lower by 0.73 percent. HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and Yes Bank were down 0.8-1.6 percent.
Reliance Industries, ITC and L&T among other were mildly lower.
The broader markets ended flat with a negative bias. About 1,474 shares declined against 1,257 advancing shares on the BSE.
Among midcaps, Tata Global, Biocon, Voltas, Radico Khaitan, Bhushan Steel and Just Dial were down 1-3 percent while Canara Bank, IDBI Bank, Indian Bank, Union Bank, Apollo Tyres, Titan Company and PC Jeweller gained 1-4 percent.
Fortis Healthcare rallied 5 percent after ace investor Radhakishan Damani’s firm Derive Investments picked up half a percent equity stake in the company.