Markets are set to end the weak on a negative note due to weakness in financial shares as investors turned jittery on expectations of 25 bps rate hike by Reserve Bank of India next week.
Nifty opened in the green and moved between gains and losses before giving into to selling pressure in the noon trades. Nifty extended the fall in the last leg of trade and slipped below the 200 DMA (Daily Moving Average) of 5740. The S&P CNX Nifty was down 61 points, at 5723 and the Sensex declined 208 points, at 19,079. HDFC, HDFC Bank and State Bank of India were dragging the benchmark index down by 70 points.
India has also underperformed Asian peers in the past week which posted gains due to weakness in the Dollar Index. Rajesh Iyer, Head Products & Research, Kotak Wealth Management said, “Indian markets have shown a mild correction this week on account of the F&O expiry. In the near future Nifty should range between 5500-6000, with slightly higher volatility because of the result season and fluctuating crude prices. Forthcoming RBI policy could have an impact on Indian equities in RBI raises repo rate by 50 bps."
Banking shares witnessed selling pressure led by weak corporate results and expectations of rate hike next week. The BSE Banking index was down 1.9%. Top losers from the banking space were Union Bank, down 6%, Bank of India declined 5.8% and Axis Bank was down 4.5%. Frontliners State Bank of India and HDFC Bank dipped over 2% each.
BSE Capital Goods index also weighed on the markets, the index was down 2.4%. Shshank Mehta, Derivatives Strategist from Nirmal Bang said, “capital goods counters looked weak because there is a buzz that international player Alstom's tie up with Shanghai Electric in boilers will create competition for BHEL.
BHEL was off 0.1%, but peer Larsen & Tourbo dipped 4%, dragging the Sensex down 44 points. Suzlon Energy and Praj Industries were off 4% each. Crompton Greaves fell 10% after fourth results disappointed. Net profit was up 5% at Rs 270 crore y-o-y and margins were hit due to higher input costs.
Top losers on the Sensex were Jindal Steel, down 4.2%, JP Associates was off 3.3% and DLFC declined 3%. Only 4 components on the Sensex were trading in the red, Hindustan Unilever up 2.1%, Wipro up 0.8% and Maruti Suzuki climebd 0.7%.
Broader markets also succumbed to profit booking, the midcap and smallcap indices were down over 1% each. Market breadth was very negative, 2003 stocks declined for 854 stocks which advanced.