The outcome of the Bihar elections, coupled with heightened chances of a US rate hike and disappointing quarterly results, plunged the Indian equities markets for the second consecutive week.
The key bellwether indices of the Indian equity markets lost over 1.30 percent each during the just-concluded weekly trade.
Both indices seemed to have lost the positive momentum provided by a massive lending rate cut by the country's central bank, easing of foreign investments in government backed bonds, contained inflation and rising factory output levels.
Besides healthy macros, investors seem to even ignored, the recent economic reforms, gold investment schemes and write-offs provide to the state electricity boards which will have a positive impact on the banking system as well.
The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE), fell by 391.59 points or 1.46 percent to 26,265.24 points from its previous weekly close at 26,656.83 points.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) posted losses for the weekly trade ended November 6. It was lower by 111.5 points or 1.38 percent to 7,954.30 points.
"Markets have given negative returns for two consecutive weeks with losses in nine out of the ten trading sessions," Vaibhav Agrawal, vice president, research, Angel Broking, told IANS.
"The uncertainties over the US Fed rate hike have kept market on tenterhooks. Earnings commentaries are not showing huge signs of optimism which is also impacting markets."
Fears of the US Fed raising rates in December due to stronger economic data and comments from the US central banks' has spooked global investors.
A hike in interest rates by the US Fed will send shock waves across the world's capital markets.
A rate hike could potentially lead to massive amounts of pull-back of foreign funds from emerging economies like India. The US dollar will also strengthen against emerging market currencies, gold and other assest classes.
It is also expected to dent business margins, as access to capital from the US will become expensive.
Other major factor which flared investors' anxiety was the outcome of the Bihar elections and its possible fallout on the country's economic reforms process.
"Investors were anxious about the Bihar elections outcome. The anxiety was further flared up after the exit polls failed to provide a clear picture," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
"Investors have been seen avoiding long positions ahead of the Bihar elections verdict which is due on November 8."
On Thursday, four out of six exit polls predicted a victory for Nitish Kumar-led "Grand Alliance", while two polls showed Bharatiya Janata Party (BJP) in the lead.
In addition to elections, quarterly results outcome have subdued market sentiments.
"The earnings season has been a huge disappointment, especially in large caps, such as BHEL and events like warning for Dr.Reddy's have not helped much. This contributed significantly towards market fall in the week that has gone by," Pankaj Sharma, equities head with Equirus Securities, pointed out.
Market observers cited that except for State Bank of India's (SBI) quarterly performance, other results have either been below expectations or have been given a pessimistic outlook.
Gaurav Jain, a director with Hem Securities, told IANS: "Continued selling pressure by foreign portfolio investors and depreciating rupee played havoc in the markets."
The data with the National Securities Depository Limited (NSDL), showed that the FPIs (Foreign Portfolio Investors) sold Rs.2,455.83 crore or $376.63 million in equity and debt markets from November 2-6.
The data with stock exchanges showed that the FPIs sold stocks worth Rs.1,462.05 crore in the period under.
The domestic institutional investors (DIIs) bought stocks worth Rs.1,017.49 crore during the last trading week.
On a weekly basis, the rupee weakened by 49 paise to 65.76 to a US dollar (November 6) from its previous close of 65.27 to a greenback (October 30).
On a day-to-day basis, the rupee closed Friday's trade weaker at 65.76 to a US dollar from its previous day's close of 65.75 to a greenback.
(Rohit Vaid can be contacted at rohit.v@ians.in)
