Sensex breaches 26,000; ITC, metal shares drag

Investors are worried that once the Fed starts raising interest rates, it will drain liquidity from global emerging markets

Markets have come under pressure in the morning trades mirroring cues from the global peers after the US Federal Reserve Chairperson Janet Yellen said that the US economy is growing sufficiently, thus, laying the groundwork for a December interest-rate hike- its first in almost a decade.

The decline in the markets is mainly on the back of metal and pharma shares.

At 10:15 am, the Sensex was lower by 155 points at 25,963 and the Nifty slipped by 48 points at 7,884.

The top losers on the Sensex are Vedanta, Tata Steel, Lupin , Hindalco, ONGC, down between 1-2%

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(updated 9:30 am)

Markets have started the session on a lower note after Federal Reserve Chairperson Janet Yellen said that the US economy is growing sufficiently, thus, laying the groundwork for a December interest-rate hike.

Investors in emerging markets, including India are worried that once the Fed starts raising interest rates, it will drain liquidity from global emerging markets and redirect it to developed economies.

Besides, the euro hovered near a 7-1/2-month low against the dollar as investors braced for the European Central Bank to roll out more stimulus, giving an extra boost to the US currency after it scaled new heights on the prospect of a Federal Reserve rate hike.

By 9:30 am, the Sensex was lower by 61 points at 26,057 and the Nifty slipped by 23 points at 7,909. Broader markets are trading flat with positive bias.

"A combination of ‘5 & 20 EMA’ on the daily chart has confirmed a positive crossover. Thus, going forward, if the index manages to sustain above 7,900 then we may witness continuation of this recent bounce towards 8,050. On the flipside, 7,900 – 7,875 would now be seen as important support for the index. Traders are advised to initiate positions with a proper exit strategy," says Angel Broking's morning report.

Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 60.61 crore yesterday as per provisional data released by the stock exchanges.

Asian stocks slipped and the dollar advanced on Thursday after hawkish comments from Federal Reserve Chair Janet Yellen reinforced the case for an interest rate hike later this month.

Japan's Nikkei lost 0.3%, moving in a tight range as a wait-and-see mood prevailed ahead of the European Central Bank's policy decision later in the day.

Back home, the RBI said on Wednesday it would be buying Rs 10,000 crore worth of bonds from the secondary market under its open market operations (OMO) programme.

Shares of metal companies are reeling under selling pressure. Vedanta, Hindalco and Tata Steel are down 1-2%.

ONGC has slipped over 1%. International oil and gas consultant DeGolyer & MacNaughton (D&M) on Tuesday gave its final report on the dispute between Oil and Natural Gas Corporation (ONGC) and Reliance Industries (RIL), establishing natural gas — believed to be worth Rs 11,000 crore.

Wipro has gained over 1% after the company signed an agreement with German-based Landesbank Baden-Wuerttemberg (LBBW) to acquire cellent AG for euro 73.5 million which provides information technology consulting and software services, is a fully-owned subsidiary of LBBW, a provider of banking and financial services.

Axis Bank has launched a 'display variant' debit card which does away with the hassles of generating one time password (OTP) over SMS while transacting. The stock is up 0.5%.

Telecom operators, including Bharti Airtel and Vodafone, will offer free talktime and data to people in Chennai. Shares of Bharti Airtel are up 0.5%.

Bhushan Steel says it is in the process of getting Rs 3,000 crore from sale and lease-back arrangements for two of its assets, oxygen and coke oven plants, in Odisha. The stock is up over 10%.


With Reuters input