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Markets extended drop in late-afternoon session this Thursday with 50-share Nifty falling below 200-Day Moving Average and hovered near 5,590 levels on back of broad-based selling across sectors.
Investors liquidated long positions amid brewing concerns over political instability at Asia’s third-biggest economy after UPA II government’s key political ally, DMK (Dravida Munnetra Kazhagam) withdrew its support last month and amid reports of an early election signalled by Bhartiya Janta Party (BJP) veteran LK Advani on Wednesday.
At 2:15PM, the Bombay Stock Exchange's 30-share index Sensex dropped 221 points at 18,583.81 while the National Stock Exchange's 50-share Nifty shed 79 points at 5,594.
“The political scenario back home is not conducive to invest. If Advani says elections can happen early then it can happen, may be in November,” said Deven Choksey, MD, KR Choksey today.
Mirroring the domestic macro-economic concerns, the foreign funds sold Indian stocks on Wednesday. Foreign institutional investors (FIIs) sold shares worth a net Rs 368.39 crore on 3 April 2013, as per provisional data from the stock exchanges.
Global risk appetite also remained frail after weak economic reports on hiring and service industry growth in the U.S fuelled concerns over growth recovery in the world’s biggest economy.
Asian shares were mixed with Japan's Nikkei rose 2% to 12,634.54 after Bank of Japan’s easing measures while Strait Times declined 0.3% to 3,313 today. Markets in Hong Kong, Taiwan and China were shut today for a holiday.
The next major global cue is on monetary policy from European Central Bank President Mario Draghi later in the day.
Back home, all the key sectoral indices dropped with real-estate, IT, banks, consumer durable sectors leading drop on BSE.
The laggards included counters such as Tata Steel and Jindal Steel dropping 3-4%, SBI and ICICI Bank fell 2-3%, Sterlite and Hindalco Industries shed 2% and 2.6% respectively on BSE.
The gainers on the Sensex were Coal India adding nearly 3%, Dr Reddy’s up 2% , while HUL rose 1.6% on BSE.
Shares of information technology (IT) companies are under pressure on the bourses on concerns of lower earnings growth for the four quarter ended March (Q4FY2013).
HCL Technologies, Infosys and TCS are trading lower by 2.5-3%, while Mahindra Satyam, Wipro and Mphasis are down by around 1% each on the Bombay Stock Exchange (BSE).
The notable movers at this hour include, Indraprastha Gas (IGL) has dipped 3% to Rs 270 on back of heavy volumes on reports that the Supreme Court has deferred its case hearing against Petroleum and Natural Gas Regulatory Board (PNGRB) to April 16.
Hyderabad-based pharmaceutical major Dr Reddy’s Laboratories (DRL) gained 2% as it launched zoledronic acid injection in the US market following approval by the United States Food & Drug Administration (USFDA).
The broader markets slumped with mid-caps and small-caps declining 1.5-2% on BSE.
The market breadth was weak. Out of 2,683 stocks traded, 1,780 stocks declined compared to 797 advances on BSE.
