Domestic Stock Markets Fell in Line with Weakness in Broader Asia

While most sectoral indices on the NSE finished lower, the IT and pharma indices on the NSE - Nifty IT and Nifty Pharma - led those declines.

Domestic stock markets, fell today in line with weakness in broader Asia. BSE benchmark index Sensex ended 300 points lower at 35,474 while the Nifty settled at 10,656, 107 points or 1 per cent lower from its previous close breaking their three-day rising spree.

Losses in the equity markets came a day after the outcome of a key meeting of the Reserve Bank of India (RBI) board to boost lending failed to impress investors, amid expectations the implementation of the proposed measures will take time. A selloff across sectors led by IT and pharma stocks dragged the indices lower.

Things to know:

1) Top laggards on the 50-scrip Nifty were Yes Bank, Hindalco Industries, Indiabulls Housing Finance, Dr Reddy’s and Wipro, finishing between 3.3 per cent and 6 per cent lower.

2) Market breadth favoured the bears with an advance-decline ratio of 1:2. On the NSE, 1,265 stocks finished lower while 481 ended higher. 1,720 stocks declined while 867 rose on the BSE.

3) Monday’s meeting of the RBI board with the government marked the first since the extent of a deep rift between the central bank and the Centre became public. In a statement released after conclusion of the more than nine-hour-long meeting, the RBI its board would support small businesses and give banks more time to step up capital norms. It also decided to form an expert committee to look into whether its reserves are adequate.

4) However, the announcements made by the RBI after the meeting feel short of investors’ expectations, say analysts. “Market had built up that the meeting will go smoothly. But what has come out is something that will take time to materialise and market always wants immediate action,” cited AK Prabhakar, head of research at IDBI Capital, as saying.

5) “It is not an immediate solution that will help the market. It is a long-term process. It will happen but will happen at its own speed,” he said. “Now, there are fresh fears of a slowdown globally, due to impending Brexit, trade war. All these worries have come back.”

6) While most sectoral indices on the NSE finished lower, the IT and pharma indices on the NSE Nifty IT and Nifty Pharma were among the prominent laggards, falling 2.2 per cent and 1.9 per cent respectively.

7) The rupee rose as much as 31 paise against the dollar to touch 71.36 during the session. That marked the highest level for the rupee against the greenback since September. The outcome of the RBI meeting removed uncertainty over a growing rift over policy decisions between the government and the top bank, boosting the rupee. Strength in the rupee battered shares in IT and pharma companies, say analysts, as any gains in the rupee limit the profitability for exporters.

8) Yes Bank closed 6 per cent lower, a day after its non-executive and independent director Rentala Chandrashekhar resigned, in addition to a slew of resignations from its board in past few weeks.

9) Tuesday’s downside of about 1 per cent in the markets came despite a rise in fund inflows. Domestic institutional investors net sold shares worth Rs. 310.26 crore as against a net purchase of equities to the tune of Rs. 1,103.36 crore by foreign institutional investors (FIIs) on Monday, provisional data from the NSE showed.

10) Meanwhile, Asian stock markets slipped on Tuesday, extending sharp overnight losses on Wall Street as technology firms lost on worries about slackening demand. MSCI’s broadest index of Asia-Pacific shares outside Japan was largely flat.

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