Indian investors felt some tremors in the early morning trade as the benchmark indices crashed more than 1,000 points after a meltdown in the US markets yesterday. All three US benchmarks tanked more than 4 percent the previous day as inflation declined at a slower pace than expected. This kept the worries about an economic slowdown at the forefront for all investors worldwide.
After the huge crash, the Indian markets made a smart recovery and swung more than 1,100 points but pared some gains during the last session to close nearly 0.4 percent lower than the previous close. They also snapped their four-day winning run today.
At close, the BSE Sensex was down 224 points or 0.37 percent at 60,347 while the broader Nifty lost 66.3 points or 0.37 percent to close at 18,003.75.
“Although the opening hours of the domestic market mirrored the sharp sell-off in the global market, it steadily recovered as investors gained the confidence to bottom fish, thanks to the brighter prospects for the home economy:, said Vinod Nair, Head of Research, Geojit Financial Services.
The August CPI in the US soared to 8.3 percent on-year and 0.6 percent on-month as against an estimate of 8 percent and 0.3 percent, respectively. This spooked the Asian markets which incurred losses and the European markets also had a weak opening in the early sessions of the trade.
The surging inflation has raised the prospect of a more aggressive move by the US Fed. There is a 20 percent chance of a 100 basis point hike in the policy next week, according to whiffs in the market.
However, India’s easing WPI inflation numbers added optimism with banking stocks leading the recovery, while the IT sector’s performance was bleak due to recession fears in western markets.
The PSU Bank index was up 1.7 percent at the close while the Private Bank index gained 1.5 percent. The metal index rose 1.58 percent amid a broad-based buying in metal stocks amid talks of the abolition of export duty.
The growing fears of the US economic slowdown rattled the IT stocks today as the Nifty IT index tanked by 3.4 percent today. Pharma and Auto were the other losers today.
Bajaj Finserv, IndusInd Bank, NTPC, Power Grid and State Bank of India were the top gainers on the Nifty with gains ranging from 2.5 to 5.3 percent.
As expected, the IT stocks were among the losers of the day with IT giants like Infosys, TCS, Tech Mahindra, HCL Tech and L&T making it to the top 5 losers as each lost between 1.9 to 4.5 percent during the day.
Stocks & sectors
On the BSE, the BSE Metal index was the top gainer with gains of close to 2 percent while the bank and financials were up close to 1 percent. The BSE PSU Index also gained about 1 percent.
The broader indices ended largely on a negative note with both the BSE Midcap and Smallcap outperforming the Nifty yet again. The BSE Midcap ended marginally lower by 10 basis points while the Smallcap index ended on a flat note.
The India VIX, which indicates the degree of volatility traders expect over the next 30 days, jumped 4.6 percent from 17.5 to 18.3.
A long build-up was seen in Vedanta Ltd, India Cements and Dalmia Bharat while a short build-up could be seen in Infosys, L&T Technology Services and Coforge.
Among specific stocks, a volume spike of more than 500 percent was seen in India Cements while Canara Bank and Dalmia Bharat witnessed a volume spike of around 300 percent.
More than 210 stocks made their new 52-week highs on the BSE. These included Adani Enterprises, Ambuja Cement, Bank of Baroda, ICICI Bank, Indian Hotels, ITC, Mindspace and SBI.
Outlook for September 15
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd
On daily charts, the Nifty has formed a bullish candle but at the same time it is consistently facing resistance near the 18100 level. For the bulls, 17900 would be the key support level, and if the index sustains above the same it could move up to 18100- 18150 levels. On the flip side, a fresh round of selling could be seen only at 17900 and below the same the index could retest the level of 17750-17700.
Prashanth Tapse – Research Analyst, Senior VP (Research), Mehta Equities Ltd
The biggest catalysts and next direction for Nifty depends on the FOMC monetary policy meeting on September 20-21. For Thursday’s session, Nifty sees major hurdles at the 18115 mark. Above the same, aggressive buying could be seen with the next goal post at the psychological 18605 mark.
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