Bears grip equities, as capital outflows spook investors

Mumbai: Indian equity markets came under the bear’s grip during the just-concluded trade week as investors remained jittery over huge volumes of foreign funds’ outflows, coupled with a weak rupee and broadly negative global cues.

The key domestic indices closed the week under review with losses of more than 1.5 per cent each, with the wider 51-scrip Nifty of the National Stock Exchange (NSE) slipping below its psychologically important mark of 8,000 points.

The barometer 30-scrip Sensitive Index (Sensex) of the BSE plunged by 448.86 points or 1.69 per cent to close the week’s trade to 26,040.70 points.

Similarly, the Nifty NSE slipped by 153.70 points or 1.89 per cent and closed to 7,985.75 points.

“The domestic market continued its southward journey on huge outflow of foreign funds, coupled with negative global indices and profit booking, pulling the Indian equity markets lower,” D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, told IANS.

“The Nifty slipped below the psychological 8,000 mark for the first time since November 25.”

The week opened on a negative note as outflow of foreign funds and a weak rupee dented investors’ risk-taking appetite.

Besides, broadly negative global indices on the back of Bank of Japan’s (BoJ) decision to maintain status quo in its monetary policy review further subdued investors’ sentiments.

In addition, the disappointment over the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meet’s minutes and lack of movement on building a political consensus over the contours of the pan-India indirect tax regime — Goods and Services Tax (GST) — weighed heavy on investors’ sentiments.

“The thin volumes ahead of the upcoming holidays and concern about the after-effect of the demonetisation continued to spook the confidence of the market participants,” Aggarwal explained.

“Also, the weakening rupee as against the dollar kept market participants away from the market.”

The rupee weakened by five paise to 67.82 against a US dollar from last week’s close of 67.77 to a greenback.

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the foreign institutional investors (FIIs) remained net sellers of the Indian equities during the week under review.

In terms of investments, provisional figures from the stock exchanges showed the week witnessed a massive outflow of foreign funds worth Rs 4,476.83 crore. The domestic investors purchased scrip worth Rs 3,967.98 crore during the week.

“Most IT sector stocks witnessed resistance at higher levels before end of the week due to profit booking,” Desai elaborated.

“Aviation stocks came under pressure after the report that India’s Airlines industry may have to bear an additional tax burden of up to Rs 15,000 crore annually once the GST is implemented.”

Desai pointed out that investors’ confidence was eroded after industry body Assocham gave a bleak outlook for an interest rate cut due to factors like continuous pressure on rupee, firming-up of US interest rates and hardening of global crude oil prices.

“Sentiments took a hit after global financial services major Nomura revised upwards India’s current account deficit (CAD) forecast to 1.4 per cent of the GDP for the current fiscal from 0.4 per cent earlier,” Desai added.

The top Sensex gainers were: Gail, up 3.97 per cent at Rs 431.60, Cipla (up 2.96 per cent at Rs 582.75), NTPC (up 0.75 per cent at Rs 161.15), HDFC Bank (up 0.46 per cent at Rs 1,186.45), and Tata Consultancy Services (TCS) (up 0.37 per cent at Rs 2,290.20).

The losers were: Axis Bank (down 7.26 per cent at Rs 438.45), Adani Ports (down 6.12 per cent at Rs 262.95), State Bank of India (SBI) (down 5.85 per cent at Rs 249.25), Tata Steel (down 5.64 per cent at Rs 390.75), and Bharti Airtel (down 4.66 per cent at Rs 295.50).