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Indian equities stage major recovery after early decline

Mumbai, Nov 9 (IANS) The Indian equity markets remained deep in the red during most of the trading hours on Wednesday, but finally recovered towards the fag-end to close lower by slightly more than a per cent.

Following global cues, as also domestic developments, key Indian indices had reacted adversely to the victory of Republican candidate Donald Trump in the US presidential election and the government’s decision the previous evening to demonetise Rs 500 and Rs 1,000 currency notes.

After crashing 1,688 points, or 6.12 per cent, in early trade on Wednesday, a key Indian equity index, the 30-share sensitive index (Sensex) of the BSE, regained a large part of the losses to close lower by around 338.61 points, or 1.23 per cent, at 27,252.53 points against the previous close of 27,591.14 points.

The 30-share Sensex opened as much as 1,339.76 points, or 4.86 per cent, lower on Wednesday at 26,251.38 points. It then drifted 350 points further lower immediately thereafter. But gradually, a large part of the losses were recouped.

By the time Democratic Hillary Clinton admitted defeat and Trump gave his victory speech, the index had significantly risen from the lows following short-covering and bargain-hunting to quote at 27,207.92 points, down 383.22 points, or 1.39 per cent.

The Sensex touched a high of 27,397.38 points and a low of 25,902.45 points during the intra-day trade.

The BSE market breadth was skewed in favour of the bears — with 2,157 declines and 610 advances.

At the National Stock Exchange, the Nifty closed at 8,432 points, down 111.55 points, or 1.31 per cent.

The equity markets had lost nearly three per cent during the intra-day trade. Both the key indices — the Sensex and the Nifty also touched their lowest intra-day levels in around five months.

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, CNX Nifty traded with volatile sentiments throughout the session on selling pressure from traders.

“However, it witnessed smart recovery from lower levels in the second half of the session due to short covering and lower levels buying,” Desai told IANS.

“IT stocks traded with bearish sentiments, while banking, pharma, auto, oil-gas, textile and aviation stocks recovered from day’s low. Similarly, media-entertainment, cement and power stocks traded lower, whereas most FMCG stocks managed to give a positive closing.”

Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services elaborated that the disruptive nature of Prime Minister’s overnight announcement caught equity markets by surprise, and deflated sentiments which were already on a low following global cues.

“However, markets soon appreciated the long term positives of the drive, which was followed by value buying across the board,” James said.

James added that the government’s measure to demonetise Rs 500 and Rs 1,000 notes stoked expectation of further monetary policy easing rates this fiscal due to better control over liquidity, inflation, fiscal deficit.

On the other hand, rupee’s strengthening boosted sentiments. The Indian rupee appreciated by 19 paise to 66.43 against a US dollar from its previous close of 66.62 to a greenback.

In terms of investments, provisional data with exchanges showed that the foreign institutional investors (FIIs) sold stocks worth Rs 2,095 crore, and the domestic institutional investors (DIIs) purchased scrip worth Rs 1,116.31 crore.

Sector-wise, the S&P BSE automobile index plunged by 561.73 points, the consumer durables index declined by 521.82 points, and the IT index edged down by 323.20 points.

In contrast, the S&P BSE healthcare index surged by 225.37 points, the banking index rose by 39.63 points, and the oil and gas index inched up by 1.85 points.

Major Sensex gainers during Wednesday’s trade were: Dr.Reddy’s Lab, up 5.04 per cent at Rs 3,271.70; Sun Pharmaceuticals, up 4.07 per cent at Rs 661.10; State Bank of India (SBI), up 2.83 per cent at Rs 259.75; Power Grid, up 1.95 per cent at Rs 180.45; and Gail, up 1.44 per cent at Rs 445.15.

Major Sensex losers were: Tata Consultancy Services (TCS), down 4.93 per cent at Rs 2,171.05; Maruti Suzuki, down 4.68 per cent at Rs 5396.70; Hero MotoCorp, down 3.97 per cent at Rs 3,235.70; Mahindra and Mahindra (M&M), down 3.43 per cent at Rs 1,337.15; and Adani Ports, down 2.97 per cent at Rs 282.25.

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