Mumbai, Sep 5: A good recovery in the last hour helped the market close with shallow cuts. The Sensex managed to recover over 250 points from its low point, while the Nifty shed about 70-odd points from its low points. Both indices closed in the red.
A combination of weak rupee as well as high crude oil prices weighed on sentiment on D-Street as investors rushed to sell stocks through the afternoon. However, a recovery in index heavyweights in the last hour, helped benchmarks erase losses. The Indian currency touched a record low of 71.97 per US dollar before seeing a pullback of around 12 paise.
“Higher crude prices is one of the key reasons behind the rupee’s fall. Along with it, there are worries over fiscal deficit as well as a widening current account deficit (CAD). Increase in government spending due to this being an election year is also weighing on sentiment. There are fears among participants of the currency hitting 75 per dollar as well,” AK Prabhakar, Head of Research at IDBI Capital told Moneycontrol.
Meanwhile, higher crude oil prices were also on the higher side as supply issues dominated cues on this front. A hurricane in the US along with supply threats from Iran on the back of upcoming sanctions also dented sentiment. Brent crude prices had almost touched USD 80 per barrel.
The recovery was led by automobile names, courtesy a good rally in Tata Motors. The stock rallied after its August JLR sales were stellar and helped in boosting auto names. There was a recovery in the metals segment as well, while pharmaceuticals, the sole gainer through the morning and afternoon, strengthened its position to end in the green. The Nifty Pharma and metal index were higher by a percent.
Among broader markets, the midcaps managed to end the day with a fall of around one-third of a percent. It had declined over a percent in the morning.
At the close of market hours, the Sensex is down 139.61 points or 0.37% at 38018.31, while the Nifty is down 43.30 points or 0.38% at 11477.00. The market breadth is negative as 1,053 shares advanced, against a decline of 1,680 shares, while 180 shares were unchanged.
Yes Bank, Vedanta and Hindalco were the top gainers, while HUL, Kotak Mahindra Bank and Bharti Infratel have lost the most.
Experts also recommended to look at the brighter side of things coming out of the day’s move.
“The RBI is caught in the noise and letting the rupee have a freefall. With USD 400 billion of reserves, there should be some action to instill confidence. The market, on the other hand, has shown extreme resilience. As such, it was very top-heavy earlier and this kind of a correction is inevitable. Amazon has hit USD 1 trillion market cap, and we could be looking at stories in India which will hit USD 100 billion next,” Sanjiv Bhasin, EVP-Markets and Corporate Affairs at IIFL said.
Stocks in news
Shares of Sunil Hitech Engineers fell as much as 5 percent on news report that the infrastructure firm is likely to be put under insolvency proceedings.
Shares of Tata Motors rose 1.3 percent as company’s JLR sales increased by 66 percent and 2 percent in UK and US, respectively. Tata Motors’ August JLR UK sales was up 66 percent at 3,444 units against 2,077 units in the same month last year.
Shares of Varroc Engineering slipped 2.3 percent even though the company reported marginally better number for the quarter ended June on YoY basis. The company’s Q1FY19 (April-June) consolidated net profit was up 2.1 percent at Rs 100.4 crore against Rs 98.4 crore, in the same quarter last fiscal.
The Ministry of Corporate Affairs has initiated an inquiry against L&T Finance Holdings, Tree House Education, DB Realty and at least a dozen other companies, to find if the companies have used the money raised through initial public offerings strictly for the purposes mentioned in their prospectuses, a source said. L&T Finance Holdings closed 1.9% lower, and Tree House Education ended 4.6% lower.
Equity markets in Asia were negative after there was weak handover from Wall Street. Facebook and Nike lead losses there. Nikkei 225 was down by 0.51 percent to close at 22,580.83.
Meanwhile, markets in Europe were lower as investors continued to be worried about global trade war fears. Stoxx 600 was down around 0.4 percent.