Key barometers turned range bound in negative terrain in mid-morning trade. At 11:16 IST, the barometer index, the S&P BSE Sensex, was down 160.33 points or 0.47% at 34,186.06. The Nifty 50 index was down 52.90 points or 0.50% at 10,501.40. Decent gains in IT shares supported the market at lower levels.
The Nikkei India Manufacturing Purchasing Managers' Index (PMI) fell to 52.1 in February 2018 from 52.4 in January 2018. The PMI registered above the neutral 50 threshold for the seventh consecutive month and indicated a modest improvement in operating conditions.
Trading sentiment was weak due to negative cues from Asian markets and overnight slump in the US stocks. Investors were concerned after comments from new Federal Reserve Chairman Jerome Powell revived fears about faster rate rises in the US. In his first public appearance as head of the US central bank on Tuesday, Powell vowed to prevent the economy from overheating while sticking with a plan to gradually raise interest rates. He acknowledged the economy had strengthened recently, a remark that prompted investors to increase bets on four rate increases in 2018. The interest rate hike in the world's largest economy has implications for emerging economies like India in the form of capital outflows.
After hitting a fresh intraday low in early trade, key indices recovered as the session progressed. The Sensex fell 131.53 points, or 0.38% at the day's high of 34,214.86 in mid-morning trade. The index fell 269.94 points, or 0.79% at the day's low of 34,076.45 in early trade, its lowest intraday level since 23 February 2018. The Nifty fell 46.35 points, or 0.44% at the day's high of 10,507.95 in mid-morning trade. The index fell 92.75 points, or 0.88% at the day's low of 10,461.55 in early trade, its lowest intraday level since 23 February 2018.
Among secondary barometers, the BSE Mid-Cap index was down 0.24%. The BSE Small-Cap index was down 0.14%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,353 shares fell and 918 shares rose. A total of 141 shares were unchanged.
IT stocks were in demand as the rupee edged lower against the dollar. Infosys (up 1.32%), MindTree (up 0.94%), Tech Mahindra (up 0.49%), Hexaware Technologies (up 0.38%), Persistent Systems (up 0.38%), TCS (up 0.06%), Oracle Financial Services Software (up 0.05%), Wipro (up 0.03%) and HCL Technologies (up 0.01%), edged higher. MphasiS was down 1.44%.
The partially convertible rupee was hovering at 65.085, compared with its close of 64.89 during the previous trading session. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Pharmaceuticals shares were mixed. GlaxoSmithKline Pharmaceuticals (down 0.66%), Piramal Enterprises (down 0.55%), Alkem Laboratories (down 0.37%), Divi's Laboratories (down 0.33%), Cadila Healthcare (down 0.28%), Lupin (down 0.27%), IPCA Laboratories (down 0.16%) and Aurobindo Pharma (down 0.08%), edged lower. Sun Pharmaceutical Industries (up 0.40%), Glenmark Pharmaceuticals (up 0.67%), Dr Reddy's Laboratories (up 0.68%), Strides Shasun (up 0.82%) and Wockhardt (up 2.38%), edged higher.
Drug maker Cipla rose 1.36% after the company announced partnership with Roche Pharma India to create greater access to key medicines. The announcement was made after market hours yesterday, 27 February 2018.
Cipla and Roche Pharma India announced that the two companies have entered in to an agreement under which Cipla will promote and distribute tocilizumab (Actemra) and Syndyma, the 2nd brand of Roche's cancer therapy, bevacizumab (Avastin) in India. This partnership is in line with Cipla and Roche's efforts to improve healthcare and increase access to innovative, life-changing medicines in India, particularly to patients who currently do not have access to them.
Sadbhav Infrastructure Project was up 1.49% after the company said it has been declared as lowest bidder for a stretch of highway project in Gujarat, being executed on a hybrid annuity model basis. The announcement was made after market hours yesterday, 27 February 2018.
The National Highways Authority of India (NHAI) project cost is Rs 894.24 crore. Bid project cost is Rs 1152 crore and bid price is Rs 1047.62 crore. The construction period is 910 days from the appointed date.
Dilip Buildcon gained 1.02% after the company said that it has won road project from National Highways Authority of India. The announcement was made before market hours today, 28 February 2018.
Dilip Buildcon has been declared lowest bidder (L-1) for a new hybrid annuity road project valued at Rs 2013 crore by the National Highways Authority of India in Andhra Pradesh. The length of the project is 50.8 kilometers. The construction period of the project is 30 months and operation period of the project is 15 years from commercial operations date.
Meanwhile, investors are keenly awaiting India's Q3 gross domestic product (GDP) data for the financial year 2017-2018. The government will announce Q3 GDP data after market hours today, 28 February 2018. GDP growth had recovered to 6.3% in Q2 September 2017 from 5.7% recorded in Q1 June 2017.
Overseas, Asian stocks fell across the board following a sharp pullback in US stocks after US Federal Reserve Chairman Jerome Powell's hawkish comments to Congress. Weaker than expected economic data from China and Japan also dampened sentiment.
China's official manufacturing purchasing managers' index fell to 50.3 in February from 51.3 in January, government data showed Wednesday. A score above 50 indicates an expansion; below 50 indicates a decline.
Japanese industrial production fell 6.6% in January from a month earlier, following December's 2.9% increase, according to the Ministry of Economy, Trade and Industry.
US stocks ended sharply lower on Tuesday, 27 February 2018, following the first public appearance of Jerome Powell as Federal Reserve chairman, replacing Janet Yellen. Powell conveyed an upbeat picture of the US economy but the market focused on his emphasis on coming rate hikes in 2018 and an end to easy-money policies as the central bank tries to stave off once-dormant inflation.
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