Extending its losses for the second day, benchmark Sensex tumbled 329 points to end at 26,231 yesterday as investors hit the exit button amid mounting global concerns. Participants are in a wait-and-watch mode ahead of US jobs report as well as Italy’s constitutional referendum on Sunday, which could determine whether or not the country will remain in the eurozone.
Caution also prevailed ahead of the Reserve Bank’s policy review next week, leading to fall in banking counters. The BSE Sensex resumed lower at 26,437.37 and hovered in a range of 26,463.06 and 26,182.93 before closing 329.26 points, or 1.24%, lower at 26,230.66, its lowest closing since November 28. The gauge has dropped by 422.15 points or 1.58% in two days. The NSE 50-share Nifty dropped by 106.10 points or 1.30% to close at 8,086.80 after moving in a range of 8,159.30 and 8,070.05.
“Since morning, the market was following the rising global anxiety over today’s US employment data and the forthcoming Italian constitutional referendum.
While RBI’s market stabilisation scheme (MSS) to suck the excess liquidity out of the system provided some short-lived relief to banks, the ongoing GST Council meet and issues related to dual control and implementation disrupted the investors’ mood,” said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
Sustained foreign capital outflows also affected the market sentiment. Foreign funds sold shares worth a net Rs402.62 crore on Thursday, as per provisional data released by the stock exchanges. For the week, the Sensex and Nifty both recorded losses by falling 85.68 points, or 0.32%, and 27.50 points, or 0.33%, respectively. All the sectoral indices, led by consumer durables, FMCG and auto, ended with losses up to 2.32% as selling pressure intensified.
Meanwhile the rupee strengthened for the fourth consecutive sessions against the dollar ahead of the US non-payroll data.
The rupee closed at 68.23 a dollar, up 0.18% from its previous close of 68.35.
The home currency opened at 68.29 against the US dollar. So far this year, it has fallen 3.04%.
On the domestic front, traders are cautious ahead of the Reserve Bank of India’s bi-monthly policy on December 7. Most of the brokerages expect the RBI to cut rates by 25 basis points. One basis point is one-hundredth of a percentage point.
Traders are also cautious ahead of the Italian referendum scheduled for Sunday and mid-December US Federal Reserve policy.
Bond yield gained after the government raised the limit on bonds it issued to the Reserve Bank of India to help it mop up excess liquidity in the financial system. The cap on the so-called Market Stabilisation Scheme was increased to Rs6tn from Rs300bn for the year ending March 2017, Bloomberg reported.
The benchmark 10-year government bond yield closed at 6.243%, compared to Thursday’s close of 6.215%. Bond yields and prices move in opposite directions.
So far this year, foreign institutional investors have bought $4.15bn in equities and sold $3.68bn in debt. Asian currencies were trading higher. Indonesian rupiah was up 0.392%, Singapore dollar 0.246%, Malaysian ringgit 0.231%, Philippines peso 0.192%, Japanese yen 0.158% and Thai Baht 0.149%. However, South Korean won was down 0.431% and China renminbi 0.038%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 100.98, down 0.06% from its previous close of 101.04.