India’s stock markets on Tuesday fell to a four-month low on the back of negative global cues and a weakening rupee. The deferment of the General Anti-Avoidance Rule (GAAR) by Finance Minister Pranab Mukherjee yesterday failed to lift investor sentiment. Benchmark index Sensex fell 366 points or 2.17 per cent to close at 16,546 due to heavy selling in information technology, capital goods and banking sector stocks.
The broader index, S&P CNX Nifty, dropped 114.20 points or 2.23 per cent to 4,999. According to analysts, the French and Greek election results cast a shadow on the euro zone’s ability to overcome its crisis. Brokers said traders were booking profits after yesterday’s short-covering, which had pulled the Sensex up by more than 300 points from the day’s low.
The outcome of the French election had largely been priced in by the markets, but the political deadlock in Greece after the election impacted investor sentiment. Both countries have elected leaders who are against austerity measures.
The Nifty failed to close above the 200 day moving average (DMA) on Tuesday despite a dramatic recovery yesterday. The 200 DMA is a strong support for stocks or indices. A key support level was 5,040, which was breached on Tuesday.
| PAIN ACROSS MAJOR GLOBAL INDICES | ||
| 8-May | % chg* | |
| ASIA | ||
| Nikkei 225 | 9,181.65 | 0.69 |
| Kospi | 1,967.01 | 0.54 |
| Jakarta Composite | 4,181.07 | 0.53 |
| Taiwan Taiex | 7,545.71 | 0.1 |
| Shanghai Se Composite | 2,448.88 | -0.12 |
| Hang Seng | 20,484.75 | -0.25 |
| Sensex | 16,546.18 | -2.17 |
| Nifty | 4,999.95 | -2.23 |
| THE US (Till 2330 Hrs IST) | ||
| Nasdaq Composite | 2,922.01 | -1.21 |
| S&P 500 | 1,354.20 | -1.12 |
| Dow Jones Indus Avg | 12,855.95 | -1.17 |
| EUROPE (Till 2330 Hrs IST) | ||
| CAC 40 | 3,124.80 | -2.78 |
| DAX | 6,444.74 | -1.9 |
| FTSE 100 | 5,554.55 | -1.78 |
| *Over previous close Compiled by BS Research Bureau Source: Bloomberg | ||
“We believe the downgrade cycle is not over yet,” said Sandeep Singhal, co-head of institutional equities at Emkay Global Financial Services. According to Singhal, the new worry for investors is that India's personal savings rate is dipping swiftly and spending too has gone down, which will affect corporate earnings.
|
Price |
% chg* | |
| Brent crude ($/bbl) | 111.99 | -1.03 |
| Nymex gold ($/oz) | 1,603.70 | -2.16 |
| *Over previous close; Figures till 2330 Hrs IST | ||
“We believe the Sensex will record single-digit growth in the next financial year as corporate earnings will take a further hit. Saving in the hands of people in India is on a decline and spending too is down, as personal income has not risen for the past several months now,” said Singhal.
However, Kishor Ostwal, managing director of CNI Global Research, said the silver lining for the markets could be the fall in commodity prices, mainly crude oil.
“Global crude oil prices have cooled off. Also, inflation and commodity prices in India may fall if people curb spending. All eyes are on the presidential election. If the Congress is able to manage it well, reforms like multi-brand retail FDI (foreign direct investment) may follow,” he said.
IT major TCS fell the most among Sensex stocks on Tuesday. It was down 5.77 per cent to close at Rs 1,200.35. Another IT giant, Infosys, fell 1.59 per cent to Rs 2,391.95. FMCG major ITC fell 3.97 per cent to Rs 227.30 and Larsen & Toubro was down 3.7 per cent to Rs 1,158.40. Yesterday, FIIs sold stocks worth Rs 631 crore. According to provisional figures on Tuesday, FIIs sold stocks worth nearly Rs 400 crore.
