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Market snaps two-week gains, sheds 2% on US rate hike fears

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Mumbai :The BSE Sensex fell nearly 2 per cent at 25,638.11 and Nifty tanked below the key 7,800-mark during the week under review amid fears of US Fed rate hike this month.

Stock momentum in the first two days was positive but lacklustre on higher July-September GDP data and likelihood of passage of the GST Bill.

Though RBI kept the key repo rate steady at 6.75 per cent, the market enthusiasm worn out from the third session amid combined worries over data of November PMIs manufacturing which fell to 25-month low, and stagnation in services sector after its four straight months expansion.

The selling pressure also aggravated by US Fed Chair Janet Yellen’s comments on first interest rate hike nearly over a decade spurring concerns of flight of capital from emerging market.

Sentiments also took a hit by the sell-off in global equities reacting to the much hyped higher stimulus measures from European Central Bank bond buying programme which was shunned and fell short of market expectations.
Domestic enthusiasm also dissuaded by heavy FII sell-off and volatile rupee valuation which lingered around over two year lows.

The Sensex resumed higher at 26,142.53 and hovered between a high of 26,256.42 and low of 25,623.71 before finishing the week at 25,638.11, showing a fall of 490.09 points or 1.88 per cent.

The 50-share Nifty also dropped by 160.80 points or 2.02 per cent to 7,781.90.

Selling was led by Banking, Auto, Consumer Durables,Teck, FMCG, PSUs, Power, Capital Goods and IT sectors. While the broader midcap witnessed selling, smallcap shares saw some buying activity.

The BSE Mid-Cap index fell 49.46 points or 0.45 per cent to settle at 10,935.11. The fall in the index was lower than Sensex’s decline in percentage terms. The BSE Small-Cap index rose 11.68 points or 0.1 per cent to settle at 11,557.52. The index outperformed the Sensex.

Among the 30-share Sensex pack, 23 stocks declined and rest of them rose during the week.

Major losers were Bharti Airtel (5.97 per cent ) followed by HDFC (4.73 per cent), Tata Motors (4.23 per cent), BHEL (4.15 per cent), SBI (3.45 per cent), ONGC (3.25 per cent), Hero Motoco (3.22 per cent), ICICI Bank (3.02 per cent), ITC (2.43 per cent) and M&M (2.39 per cent).

However, Tata Steel gained 3.89 per cent followed by Dr Reddy by 3.09 per cent, Sun Pharma by 2.18 per cent, Hindalco by 2.06 per cent and Maruti by 0.54 per cent.

Among the S&P BSE sectoral indices, Bankex fell 2.68 per cent, Auto 2.12 per cent, Consumer Durables 1.83 per cent, Teck 1.66 per cent, Fast moving Consumer Goods 1.56 per cent, Capital Goods 1.39 per cent, IT 1.29 per cent, Power 0.55 per cent and Oil & Gas by 0.23 per cent.

However, Metal rose by 1.91 per cent, followed by Healthcare by 0.85 per cent and Realty by 0.35 per cent.

The total turnover at BSE and NSE rose to Rs 14,943.39 crores and Rs 94,796.17 crores respectively from the previous weekend’s level of Rs 11,087.94 crores and Rs 69,864.40 crores respectively.

RBI adopted an accommodative stance while leaving the rates unchanged at its fifth bi-monthly policy review.

India’s economic growth accelerated to 7.4 per cent in the July-September quarter from growth rate of 7 per cent in the previous quarter ended June 30.

The rupee resumed lower at 66.78 per dollar as against the last weekend’s level of 66.76 at the Interbank Foreign Exchange and dropped further to more than two-year low of 67.01 per dollar on good dollar demand from banks and importers on the back of higher greenback overseas.

However, it recovered to 66.6250 per dollar on selling of dollars by banks and exporters before closing the week at 66.69, showing a gain of 7 paise or 0.10 per cent.

It had dropped by 202 paise or 3.12 per cent during the previous seven weeks.

The rupee had last touched 68.62 on September 4, 2013 during the intra-day trade and ended at 67.07 per dollar on the same day.

The domestic currency moved in a range of 66.6250 and 67.01 per dollar during the week.

“Rupee has remained range bound with positive bias.

Interest rate decision and dovish view of RBI Governor has given support to equity market,” Veracity Group CEO Pramit Brahmbhatt said.

Although investors have already increased their bets that the US Federal Reserve will start raising rates in the middle of this month, the pace of dollar purchases has slowed after a downbeat US manufacturing report hinted at gradual US rate increases next year.

PTI