Nifty, Sensex may try to bounce back from around 8,500 – Thursday closing report
We had mentioned in Monday’s closing report that Sensex, Nifty were lacking direction. The major indices of the Indian stock markets suffered a sharp correction on Thursday and closed more than 1.50% lower than Monday’s close. The markets had been closed for trading for two days. On Thursday, trading volumes were high confirming that the correction in indices was for real. The trends of the major indices in the course of the Thursday’s trading are given in the table below:
The Indian equity markets on Thursday plunged as investors were spooked ahead of the release of inflation macro-data and upcoming key quarterly results. Global cues such as increased chances of a US rate hike, disappointing China trade data and renewed fears of an early exit of Britain from the European Union (Brexit), too, dragged the key indices to end lower by more than 1.50% each. On the NSE, there were 349 advances, 1,290 declines and 57 unchanged. On the BSE there were 887 advances, 1,977 declines and 116 unchanged.
The benchmark indices opened on a negative note in sync with their Asian peers. The Asian, domestic and European markets plunged due to increased chances of US Federal Reserve (US Fed) going in for a rate hike in December. The September meeting minutes of the Federal Open Market Committee (FOMC) revealed that most members were in favour of a rate hike in the later part of the calendar year. A rate hike can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India, and is also expected to dent business margins as access to capital from the US will become expensive. In addition, sentiments were dampened by disappointing factory output data released on Monday and anxiety over the upcoming release of key quarterly results. India's factory output remained subdued for the second consecutive month -- decelerating by (-)0.7% in August from a decline of (-)2.49% in July and a 6.3% rise in the corresponding month of last year.
Global software major Tata Consultancy Services (TCS) on Thursday reported Rs6,586 crore net profit for second quarter (July-September) of 2016-17 fiscal, registering 8.8% year-on-year (YoY) growth of Rs6,055 crore. In a regulatory filing to the stock exchanges, the Indian IT major said revenue for the quarter under review (Q2) increased to Rs29,284 crore from Rs27,166 crore in same period year ago, posting 7.8% YoY growth. In dollar terms, net income grew 6.3% YoY to $984 million in Q2 from $926 million, while gross income increased by 5.2% to $4.4 billion from $4.2 billion in the same period a year ago, under the International Financial Reporting Standard (IFRS). The operating profit for the quarter was Rs7,617 crore and operating margin 26%, added the filing. TCS shares closed at Rs2,328.50, down 2.17% on BSE.
India's annual retail inflation eased last month to 4.31% from 5.05% in August and 4.41% reported during the corresponding period of last year, official data showed on Thursday.
The Indian rupee weakened by 41 paise to 66.93-94 against a US dollar from its previous close of 66.53 to a greenback.
In terms of investments, provisional data with exchanges showed that the foreign institutional investors (FIIs) sold stocks worth Rs911.53 crore, whereas the DIIs bought scrip worth Rs679.49 crore.
Sector-wise, only the S&P BSE IT index remained afloat. It inched up by 18.30 points.
The central parity rate of the Chinese currency renminbi, or the yuan, weakened 38 basis points to 6.7296 against the US dollar on Thursday, according to the China Foreign Exchange Trading System.
US Federal Reserve was closer to moving up interest rate, minutes of the Fed's latest monetary policy meeting showed on Wednesday. "Several (Federal Open Market Committee) members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfounded about as the Committee expected," the minutes of the Fed's September 20-21 meeting showed. "It was noted that a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labour market and inflation," said the minutes. The Fed kept its federal funds rate unchanged in its September meeting amid recent weak economic data and tepid inflation, but strongly signalled that the central bank could have one rate hike by the end of this year.
The minutes showed that policymakers still divided over their judgments about labour markets conditions. "Participants generally expected the unemployment rate to run somewhat below their estimates of its longer-run normal rate over the next couple of years, but they offered differing views about the extent of slack that currently remained in the labour market," said the minutes. Some policymakers held there was limited or no slack in the labour market, while some others saw room for further improvement. Some cautioned that a further delay in raising interest rate would increase the risk of the unemployment rate falling markedly below its longer-run normal level, thus calling for rapid rate increases which could dampen economic expansion. According to the minutes, many policymakers noted that there were few signs of emerging inflationary pressures. The US central bank is expected to hold its next policy meeting on November 1 and 2, just a few days ahead of the US general election.
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: