 "Bear market")
Snapping two-session long gaining streak, benchmark indices settled in red after rupee touched fresh lows of 68.87 against dollar during the day due to strengthening US dollar as selling continued amid fund outflows and demoentisation woes.
Sensex cracked as much as 251 points during intra-day while Nifty 50 again fell below 8,000 mark dragged by banking, auto and realty sectors on November F&O expiry. Nifty posts biggest loss in a series since August 2013.
The S&P BSE Sensex ended 192 points down at 25,860 and the Nifty50 was trading at 68 points lower at 7,965. Among broader markets, BSE Midcap index is down 0.13% whereas the Smallcap index ended 0.1% lower.
Investors also remained cautious following uproar in parliament as opposition continued debating cash crunch post demonetisation. “This will hurt agriculture, small industry and everyone in the unorganised sector. GDP growth can fall by 2 per cent and that is an underestimate,” said the former PM Manmohan Singh. Meanwhile, the much-awaited Goods and Services Tax (GST) Council meeting, slated for Friday, has also been postponed by a week.
"Continued weakness in rupee against dollar, last hour of expiry square-off and the disruptions in Rajya debate over demonetization have dragged the market. This phase of consolidation is likely to continue in the near-term given the domestic setbacks and losing strength of the EMs due to buoyant bond yield," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
"F&O expiry dynamics dominated the day, with stocks and indices turning volatile in the latter half of the day. Nifty saw a rollover of just over 50% which was lower than a 3 month average, and bank nifty rollover was no different. The tepid interest in rolling over suggest that traders are a bit circumspect, especially with RBI and FOMC rate decisions scheduled in the early part of December. Though the day ended on a weak note, the premium given to Nifty December futures suggests that bulls have not given up yet," Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services said in a technical note.
Gold prices also fell as the dollar strengthened on growing expectations of a Federal Reserve rate hike in December following positive US economic data.
Sectors and stocks
Banking index was the top sectoral loser, down almost 1.5% with Axis bank shedding 2.72% while HDFC Bank and ICICI Bank closed 1.7% and 1.96% lower respectively. Following the trend, BSE Auto closed 1.34% lower and BSE Realty fell 1.25%.
Power Grid (1.68%), TCS (1.5%), Infosys (1.23%) and Tata Steel (1.36%) are top gainers in the Sensex. Among losers are Tata Motors (4%), Sun Pharma (2.72%), M&M (2.53%) and NTPC (2.5%).
IT stocks rallied as rupee continues to skid, were up over 1% on both the headline indices with Infosys, TCS and Wipro settling the day in green.
“IT is a pure-valuation play. These stocks correlate very positively to US bond yield, which reflects underlying growth in the US. If yields are rising, growth in the US is improving and that means US companies will start investing, and they will give more contracts to Indian companies. There’s a three-months lag for this,” said Ridham Desai, Head of India Research & India Equity Strategist, Morgan Stanley.
Rupee hits all time low
Rupee today hit fresh low of 68.87 against dollar due to broad strength in the U.S. dollar and capital outflows from emerging markets.
The low surpassed the rupee's previous all-time nadir of 68.85 hit in August 2013, when the country was mired in its worst currency crisis in more than two decades.
The rupee has fallen around over 3.6% so far this month, its biggest fall against the dollar since August 2015, though it has fared better than many other emerging market currencies have done since Donald Trump's shock win in the U.S. presidential election.
“FPI flows have turned negative since US election. Rising US bond yields and strong dollar overseas is a major headwind for an Emerging Market (EM) currency like Rupee. At the same time, falling interest rate differential post demonetisation and concerns over growth, is adding to the pressure on Rupee. However, we except RBI to remain vigilant. A range of 68:00-69:00 is seen on spot,” said Anindya Banerjee, Associate Vice President Currency Derivatives, Kotak Securities.
Traders spotted the RBI intervening when the rupee fell to around 68.83 per dollar and more heavily later in the morning, sending the rupee sharply higher to 68.74. The central bank likely sold around $500 million so far in the morning, the traders said.
Global Markets
Most Asian stock markets fell on Thursday as upbeat economic data strengthened the prospect for higher US interest rates, while the dollar's bull-run continued with US bond yields propelled to multi-year highs.
Japanese stocks swam against the tide and rose to a near 11-month high as the yen weakened.
European shares edged up on Thursday, remaining within a recent range, as a boost from chemical and insurance companies was partly offset by weak telecoms and utilities.
The STOXX Europe 600 index was up 0.1 at 341.02 by 0924 GMT, still down 0.5% from Tuesday's high for the week. The session was expected to remain quiet, with Wall Street shut for its Thanksgiving holiday.
