Sensex, Nifty fall over 1% on Indo-Myanmar border tension; banks drag

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Benchmark indices fell over 1% on Wednesday, losing for seventh straight session after army conducted operation along India-Myanmar border. The BSE Sensex settled at a 3-month low while the broader Nifty50 index ended at 1.5 month low ahead of the September F&O expiry.

Investors were also on edge after rupee sank to a more than six-month low on foreign fund outflows. 

The sentiment was also dampened after a Reuters poll said that the Reserve Bank of India will hold policy steady at its October 4 meeting, and well past next year, amid weak economic growth and signs inflation may soon overshoot its target.

The latest poll of 60 economists showed although the RBI will hold its key repo rate at a seven-year low of 6 percent next week, it will downgrade its growth forecast again following disruptions caused by GST.

In August, despite a neutral policy bias, India's central bank cut the key policy rate after lowering its economic growth forecast in June to 7.3% from 7.4% for the current fiscal year.

Expectations of a rate hike by the US Federal Reserve and lingering North Korean worries also dented risk appetite.

Foreign investors have net sold $777 million worth of Indian shares so far this month. They sold nearly $2 billion worth of equities in August as stretched valuations and simmering North Korea tensions saw foreign investors pulling out.

The US Federal Reserve last week reiterated it would continue gradually raising interest rates, including once more this year.

3:52 PM

Market rundwn by Anand James, Chief Market Strategist of Geojit Financial Services

 

Updates of military action in the Eastern border impelled the market to hasten the market’s falls which was already in a slippery slope ahead of F&O expiry. Sharp weakness in rupee and a rise in VIX also meant that risk takers were few. FII being reluctant buyer in Indian equities this month, and a volley of IPOs had earlier meant that the secondary market was finding hard to sustain at the 20 month peaks.

3:45 PM

Pharma was one of the biggest sectoral loser, down nearly 3% with Divi's Lab down over 10% for the day.

Source: NSE

3:43 PM

Markets Check

Nifty ended the day at 1.5 month low while the BSE Sensex settled at 3-month low. In broader markets, the BSE Midcap and BSE Smallcap indices shuts at 5-week low

3:42 PM

Sectoral Trend

Source: NSE

3:39 PM

Nifty PSU Bank index ends at 2.5 month low

Nifty PSU Bank index fell over 3% with all constituents trading in red. 

Source: NSE

3:36 PM

Top Sensex gainers and losers

Source: BSE

3:35 PM

Broader Markets

The broader markets underperformed the benchmark indices with the BSE Midcap and BSE Smallcap indices down 2% each

3:34 PM

Markets at close

Benchmark indices fell over 1% on Wednesday, losing for seventh straight session, their longest losing streak in over nine months, after army conducted operation along India-Myanmar border.

The S&P BSE Sensex settled at 31,159, down 439 points while the broader Nifty50 index ended at 9,735, down 135 points

3:26 PM

Army conducts operation along India-Myanmar border

 

The Army today inflicted "heavy casualties" on NSCN(K) cadre during an operation along the India-Myanmar border, the Eastern Command said today. READ MORE

3:14 PM

Buzzing Stock

Alstom shares rose nearly 5% following confirmation that the French firm will merge with Siemens.

 

The companies will merge their rail operations and have decided to make Alstom's Henri Poupart-Lafarge their chief executive.

3:06 PM

Market Check

The benchmark indices extended losses amid Indo-Myanmar border tensions. At 3:06 pm, the S&P BSE Sensex was trading at 31,191, down 408 points while the broader Nifty50 index was ruling at 9,744, down 127 points.

2:59 PM

Over 700 new FPIs registered with Sebi in April-July

 

More than 700 fresh foreign portfolio investors (FPIs) were registered with Sebi in the first four months of 2017-18, indicating that India remains an attractive destination, latest data from the regulator showed.

 

This comes on top of close to 3,500 new FPIs registering with Sebi in the previous financial year.

 

According to Sebi data, the number of FPIs with the regulator's approval rose to 8,511 at the end of July 2017, from 7,807 at March-end, an addition of 704. READ MORE

2:53 PM

Nifty PSU Bank index hits 8-month low; down 7% in one week

 

Shares of public sector banks (PSBs) continued to trade under pressure with Nifty PSU Bank index falling 7% in the past one week on concerns of the growth slowdown.

 

Nifty PSU Bank index hit its eight-month low of 3,030 on the National Stock Exchange (NSE) in intra-day trade. The index was trading at its lowest level since January 23, 2017.

 

State Bank of India (SBI), Andhra Bank, Union Bank of India, Bank of India, Oriental Bank of Commerce and Bank of Baroda from the Nifty PSU Bank index were down in the range of 2% to 3%. READ MORE

2:47 PM

Sectoral Trend

Source: NSE

2:35 PM

Economy watch:

 

Poor gross domestic product (GDP) growth in two successive quarters - 4QFY17 and 1QFY18 - has changed the growth prospects for FY18, says India Ratings and Research (Ind-Ra). The combined effect of demonetisation and introduction of goods and services tax (GST) is proving to be more disruptive for the economy than was expected earlier. While the introduction of GST cannot be faulted on account of its eventual benefit to the economy, the same cannot be said about the impact of demonetisation. 

 

Ind-Ra believes GDP growth will recover quarter-on-quarter in 2QFY18 with impact of demonetisation waning, teething problem arising out of GST implementation being looked into by the government and the festival season round the corner. However, it is unlikely to meet the agency’s earlier projection of 7.4% and will come down to 6.7% during FY18. 

 

(Source: India Ratings note)