Across-the-board selling triggered by a host of negative factors including announcement of macro economic data and concerns over the progress of monsoon kept the market under pressure for the third straight week as the BSE Sensex tumbled by 343 points in the week.
However, the market might get a push next week as the Index of Industrial Production (IIP) data surprisingly grew in April at an annual rate of 4.1% to a two-month high, but the consumer price index (CPI) inflation rose to 5.1% in May from 4.87 per cent in April.
Concerns that the US Fed will increase rates as early as September on better-than -expected jobs data, drought fears and RBI’s cautious stance on economic recovery continued to hit the sentiments.
Foreign investors turned cautious in anticipation of a inclusion of Chinese A shares in the MSCI Emerging Markets Index, which could see them move to Chinese markets, traders said.
After major index provider MSCI Inc decided against adding Chinese domestic stocks to its widely tracked emerging markets index for now, a major overhang was lifted from the Indian stock market. Such an inclusion would have resulted in a sharp increase in China’s weightage in the index, coming at an expense of other emerging markets including India.
The 30-share gauge, Sensex, began the week on a positive note to touch a high of 27,510.29 before plunging to a low of 26,307.07. Finally, it closed at an 8-month low of 26,425.30 — a level not seen since October 17, 2014 when it had finished at 26,108.53.
In straight three weeks, it has crashed by 1,532.20 points or 5.48%.
Similarly, the 50-share Nifty of the NSE also started higher and hovered in a range of 6,163.05 and 7,940.30 before concluding the week below 8,000-mark at 7,982.90, a fall of 131.80 points or 1.62% .
In three weeks in a row, it has stumbled by 476.05 points or 5.63%.
All-round selling was visible as the 12 sectoral indices closed in the red between 0.56% and 3.98% with realty, consumer durable, health care, metal, FMCG, Auto and IT segments taking the lead in the downslide.
Midcap and smallcap stocks too suffered heavily on profit booking by wary retail investors in the current uncertain scenario as their indices–the BSE-Smallcap and BSE-Midcap–dropped by 2.56% and 2.24% ,respectively, and underperformed at the sensex.
Meanwhile, on Thursday, RBI had said that Current Account Deficit fell sharply to its lowest level in a year at US $1.3 billion or 0.2% of GDP in the fourth quarter of 2014-15.
“Low visibility of capex recovery and slow credit growth are…Reasons for investors lightening their overweight stance on Indian equities,” said Hitesh Agrawal – Head Research, Reliance Securities.
“The recent disappointing Q4 earnings season, coupled with the somber management commentaries, has cast a shadow over the extent of recovery possible in the current fiscal,” added Agrawal.
The market is also looking for the next triggers to decide on its future course of action, including the progress of monsoon and June earnings by key companies.
Besides, bleak chances of any further rate cut by the RBI, too put pressure on the market.
IT stocks were also at the receiving end on reports that the US Department of Labour has initiated probe against two Indian companies — TCS and Infosys — for H1-B visa violations.
Foreign Portfolio Investors (FPIs) continued their selling spree and pulled out Rs 3,158.05 crore during the week, including provisional data of June 12.
23 scrips out of the 30-share BSE ended weak while others finished higher. Major losers were Cipla 6.49%, Tata Motors 4.74%, Tata Steel 4.28%, Sun Pharma 4.10%, Wipro 3.31%, Dr Reddy’s Lab 2.94%, Hindalco 2.83%, Hero MotoCorp 2.72%, ITC 2.59%, ONGC 2.58%, NTPC 2.50%, TCS 2.34%, Infosys 1.76%, Coal India 2.26%, HUL 1.94%, L&T 1.37%, RIL 1.87% and SBI 1.49%.
However, ICICI Bank rose by 3.99%, Bajaj Auto 3.92%, Tata Power by 2.83% and GAIL India by 2.44%.
Among the BSE sectoral indices, Realty plunged by 3.98%, CD by 3.25%, HC by 3.00%, Metal by 2.88%, FMCG by 2.24%, Auto 2.21% and IT 2.16%.
The total turnover during the week on the BSE and the NSE dipped sharply to Rs 10,888.10 crore and Rs 67,957.63 crore from Rs 16,643.47 crore and Rs 82,255.38 crore, respectively, last weekend.
PTI