The market extended losses on Friday with the Sensex shedding more than 600 points intraday, dragged by index heavyweights Reliance Industries, HDFC and Infosys. Reliance mixed Q2 earnings, likely change in H1-B visa norms by Trump Administration, liquidity concerns in NBFCs and weak global cues dented investors sentiment.
The 30-share BSE Sensex fell 463.95 points or 1.33 percent to close at 34,315.63 and the 50-share NSE Nifty slipped 149.50 points or 1.43 percent to 10,303.50. For the week, frontline indices dropped 1.2 percent and 1.6 percent respectively.
“The ongoing turmoil led by financial crunch in the domestic economy, global risk-off and worries over upcoming elections is likely to maintain its burden in the equity market,” Vinod Nair, Head Of Research at Geojit Financial Services told Moneycontrol.
He said at the same time, it is possible that a good portion of the above mentioned risk factors have been digested by the market and the upcoming impacts will depend on developments like stability in global bond yield & trade war.
Hence, he advised it will be wise to start with a mix of high quality sectors and stock ideas available at cheaper valuation compared to the averages of last 3 years.
The India Volatility index moved near 20 levels again. Spurt in volatility after the dips of last few sessions suggests that upside could be restricted again in the market, experts said. India VIX jumped 10.05 percent to 19.78.
The market breadth was in favour of bears as about two shares declined for every share rising on the BSE.
All sectoral indices closed in the red barring FMCG that gained 0.8 percent.
Nifty IT index hit hard, falling more than 3 percent after the Trump administration on Wednesday said it is planning to “revise” the definition of employment and specialty occupations under the H-1B visas by January.
Analysts believe this move will have an adverse impact on Indian IT companies in the US and small and medium-sized contractual firms mostly owned by Indian-Americans. HCL Technologies, Tech Mahindra, Infosys lost 3-6 percent.
Mindtree was the biggest loser among technology stocks, down 16 percent as brokerage houses slashed target prices after weak September quarter earnings. Citi downgraded the stock to neutral from buy and cut target price to Rs 1,090 from Rs 1,240 earlier.
Reliance Industries was the leading contributor to Sensex’ losses, falling more than 4 percent after mixed July-September quarter earnings.
NBFCs including housing finance companies saw heavy selling pressure as Nifty Financial Service was down 1.3 percent. Indiabulls Housing Finance shares crashed 17 percent to hit fresh 21-month low despite management clarification on developer loan portfolio and RBI easing liquidity concerns.
Repco Home Finance, PNB Housing Finance, Gruh Finance, Dewan Housing etc were also down 7-18 percent. HDFC, the largest housing finance company, fell 4 percent.
Yes Bank shed 6 percent after the RBI turned down lender’s request to extend its chief executive Rana Kapoor’s term up to April 2019. The regulator has asked the bank to appoint a new CEO by February 1, 2019.
Among largecaps, ITC, HUL, Kotak Mahindra Bank, HPCL, Wipro and Sun Pharma were top gainers, rising 1-2 percent.
Cable television service operator Hathway Cable gained 3 percent but Den Networks lost nearly 6 percent after Reliance Industries announced to take controlling stake in both companies. Dish TV plunged 7 percent on competition fears.
Meanwhile, the rupee gained strength, rising 28 paise to close at 73.32 against the US dollar while Brent crude futures gained a percent to trade around $80 a barrel, at the time of writing this article.
On the global front, Asian markets ended mixed with Japan’s Nikkei losing 0.6 percent. China’s Shanghai Composite rebounded in afternoon to close 2.6 percent higher following a series of measures by China’s securities regulator to support the struggling stock market.
European markets traded lower at the time of writing this article. France’s CAC was down 0.9 percent and Germany’s DAX slipped 0.33 percent amid weak third-quarter corporate results.
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