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Sensex Struggles Amid Selling Pressure in Banking, Metal Stocks

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BSE Sensex and Nifty struggled on Tuesday amid mostly weak Asian markets. Traders were also wary ahead of US Federal Reserve meet on Thursday. The Sensex fell over 100 points at its day’s low while Nifty slipped to 7,829. A weaker rupee also weighed on the sentiment.

Here are the top developments:

1) Analysts say that Indian markets are likely to be volatile ahead of US Fed rate decision on Thursday.

2) Although the Fed has signalled it plans to lift interest rates in 2015, some analysts say turbulence in the global financial markets could prompt the US central bank to delay the rate hike. Worries over the growth of China’s economy have added uncertainty to global financial markets.

3) An interest rate hike in the US could accelerate the selling from foreign investors in Indian stock markets. Besides, a rate hike in the US would strengthen the dollar, putting further pressure on rupee.

4) The rupee today fell to 66.46/dollar against its previous close of 66.32.

5) Foreign investors sold a record Rs 16,877 crore worth of domestic stocks in August, leading to the recent selloff in Indian markets. They continued to sell Indian stocks this month though the selling pressure has eased in recent sessions.

6) Banking, metal and capital goods stocks led the decline today. Rate sensitive stocks like banking and real estate stocks had outperformed yesterday amid brightening hopes of a rate cut from Reserve Bank of India later this month. Frontline steel stocks mostly gave up early gains despite the government announcing 20 per cent safeguard duty on imports.

7) Hopes of a rate cut from the Reserve Bank brightened after inflation dived to a new low in August, helped by falling global commodity prices. Retail inflation, which the central bank tracks to set rates, eased to 3.66 per cent in August from a revised 3.69 per cent a month ago.

8) Many analysts see the Reserve Bank of India cutting rates by at least 25 bps later this month. The next RBI policy review is due on September 29.

9) Asian shares struggled on Tuesday as caution reigned ahead of this week’s US Federal Reserve decision on interest rates. The Bank of Japan today refrained from any new policy steps.

10) Japan’s Nikkei gained nearly 0.90 per cent while China’s stock markets slipped nearly 2 per cent.