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Benchmark indices ended lower amid volatility after profit booking emerged during late noon trades in banks, auto and RIL shares erasing early gains.
The 30-share S&P BSE Sensex ended lower by 152.45 points at 28,469.67 and the 50-share CNX Nifty fell 51.25 points at 8,634.65. Both the indices had gained more than 1% in early trades after the US Federal Reserve's outcome that it will wait for more reassuring cues from the economy before any hike in key rates.
Among broader markets, BSE Midcap and Smallcap indices was down 0.6%. Market breadth in BSE ended negative with 1,724 declines against 1,103 advances.
"This fall in index has completely engulfed the rebound of last three sessions, which indicates further fall in the coming sessions. And, we are still upholding our downside target of 8475 in Nifty. Considering the market volatility, traders should maintain extra caution and avoid overleveraging at current levels. Among the sectors indices, PSU banking looks weakest, followed by energy, realty and metal so one can consider stocks from these pivots for fresh shorts," said Jayant Manglik, President-retail distribution, Religare Securities.
US FED'S STANCE
The US central bank removed a reference to being "patient" on rates from its policy statement, opening the door wider for a hike in the next couple of months while sounding a cautious note on the health of the economic recovery. Given the developments, analysts feel that the US Federal Reserve could delay interest rate hike beyond June. Among the emerging markets (EMs), India is placed relatively better to weather the interest rate hike related storm, they say.
Adds Debopam Chaudhuri, VP- Research, ZyFin Research, “The Fed announcements were quite expected. For long, markets across the globe have been aware that US rates are slated to rise by mid-2015, and that was what was reiterated by the Governor even yesterday. India, is in a much better spot now compared to last year to wither any sharp volatility in currency, with a strong foreign reserve and well managed deficits. Being the strongest country among today’s emerging nations, especially BRICS, India would continue to be a major puller of foreign investments."
Meanwhile, foreign institutional investors were net sellers in equities to the tune of Rs 457.43 crore on Wednesday, as per provisional stock exchange data.
On the currency front, the rupee strengthened to its highest level in two weeks on Thursday after a dovish statement by the US Federal Reserve.
BANKS WEAK
Banking stocks came under pressure today, with the Bank Nifty slipping nearly 600 points from its intra-day high level.
Among individual stocks, Punjab National Bank, Axis Bank and Bank of Baroda were dipped 3%-4%, while IndusInd Bank, YES Bank, Canara Bank, Bank of India and State Bank of India were down 2% each on the National Stock Exchange (NSE).
While analysts remain positive on the private banking space, they suggest that the public sector banks (PSB's) still remain a sore point in the banking system.
"In the post-election rally, all the stocks across the banking space witnessed a sharp appreciation in prices on expectations of an economic revival and in turn an improvement in the performance of the banks. We believe that an improving economy after a prolonged period of slowdown has led to buoyancy in the valuations for banks. However, only the banks which report an improved performance will continue to command higher multiples,"said Ankit Ladhani, an analyst tracking the sector with Karvy Research in a recent report.
"Among these, we expect private banks reporting strong growth coupled with stable asset quality and high return ratios to witness an improvement in valuations. We prefer Axis Bank, DCB Bank, Federal Bank, ICICI Bank and YES Bank in this space," he adds.
GLOBAL MARKETS
Japan's Nikkei benchmark dropped from 15-year highs on Thursday as investors took profits on recent gainers such as banking shares, which could suffer from a fall in Japanese bond yields.
The yield on the benchmark 10-year Japanese government bond skidded to a six-week low after the US Federal Reserve struck a dovish tone on interest rates, driving down Treasury bond yields.
The Nikkei share average ended 0.4% lower at 19,476 in choppy trade. In early trade, it briefly hit a 15-year intraday high of 19,557.
US stock markets closed sharply higher yesterday, 18 March 2015, as investors cheered the Federal Reserve's statement that indicated a rate hike would come later rather than sooner.
SECTORS & BUZZING STOCKS
BSE Bankex and BSE Realty index fell over 1.5%. Sectors like Capital Goods, FMCG, Oil & Gas and Power slipped between 0.6-1.1%. However, BSE Consumer Durables and Healthcare indices gained marginally.
Apart from prominent banks, other notable losers were BHEL, Sesa Sterlite, L&T, ITC, Tata Motors and Tata Power.
Shares of HCL Technologies ended lower by 2.4% on the NSE, after the stock turned ex-bonus today in the ratio of 1:1. Tech Mahindra also slipped 2% after the stock turned ex-bonus and ex-stock split today.
As markets watchdog Sebi plans a capacity augmentation of its fraud detection system, IT majors, including Wipro, HCL, Tech Mahindra and L&T Infotech, have evinced interest in bagging the contract.
Shares of Mumbai-based Wockhardt surged 1.6% after it said the US health regulator didnot find any issues with its Chikalthana plant in a recent inspection.
KPIT Technologies ended lower by 5.5%, extending its 6% fall in past two trading sessions on the BSE, after the information technology (IT) company reduced its January-March 2015 quarter (Q4FY15) guidance due to cross currency headwind.
Jewellery stocks were in limelight today and ended higher in the range of 4% - 12% on the bourses on back of heavy volumes.
Rajesh Exports, PC Jeweller, C Mahendra Exports, Tribhovandas Bhimji Zaveri, Thangamayil Jewellery, Gitanjali Gems and Titan Company gained between 5-10%.
Hester Biosciences was locked in upper circuit of 10% at Rs 488 on the National Stock Exchange (NSE) after the pharmaceutical company launches its PPR (Peste Des Petits Ruminants) vaccine and Goat Pox vaccine.
