Global cues depress Indian equity markets

Investors` anxiety over the upcoming US presidential election, along with a massive foreign fund outflow, plunged the Indian equity markets during the just-concluded trade week.

The negative global sentiments dragged the key domestic indices lower -- by more than 2% each -- even as positive domestic cues such as the Goods and Services Tax (GST) Council`s consensus on the rate slabs and healthy macro-data failed to uplift investors` sentiments.

The 30-scrip sensitive index (Sensex) of the BSE closed the week`s trade with a loss of 667.36 points or 2.39% to 27,274.15 points.

Similarly, the 51-scrip Nifty of the National Stock Exchange (NSE) receded by 204.25 points or 2.36% to 8,433.75 points.

The US presidential election, which is scheduled to be held on November 8, subdued investors` sentiment across global markets.

The confidence of domestic investors was eroded during the truncated trading week after the US Fed`s Federal Open Market Committee (FOMC) indicated a possible rate-hike in December on the back of economic recovery. The Indian equity markets were closed on Monday on account of Diwali Balipratipada. 

A hike in US interest rates can potentially lead foreign portfolio investors (FPI) and funds away from emerging markets such as India. It is also expected to dent the business margins of corporates as access to capital from the US will become more expensive.

"Consecutive days of decline in the US markets added to global markets` uneasiness surrounding the US presidential election. In addition, a UK court`s ruling made the Brexit more complicated," Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services, told IANS.

"Indian stocks, which were jittery all through last week, hastened their fall on Friday, hit by the double whammy of a penalty on Reliance as well as the US anti-trust probe on pharma stocks."

The uncertain global cues also triggered a selling frenzy by foreign investors.

As per Dhruv Desai, Director and Chief Operating Officer of Tradebulls: "FIIs (foreign institutional investors) fund outflow was seen throughout the week which pressurised the Indian equity markets."

Provisional figures from the stock exchanges showed that the week witnessed an outflow of Rs 1,841.40 crore in foreign funds.

Figures from the National Securities Depository (NSDL) disclosed that foreign portfolio investors (FPIs) were net sellers of equities worth Rs 1,504.42 crore, or $225.07 million from November 1-4.

However, positive macro-data on the growth in India`s manufacturing and services sector during October could not support the upward movement of the key indices.

In addition, consensus on GST slab rates, too, could not cheer the equity markets.

"Investors got some comfort with the report indicating India`s services sector activity gathered pace in October, driven by sharper increase in new business orders amid strong demand and improved market conditions," Desai said.

"Some support came with the report that core sector output rose to a three-month high by 5% in September, compared to growth of 2.4% in the year-ago period, on the back of a sustained growth in the steel sector and a rise in refinery products."

On the positive side, the Indian rupee appreciated by nine paise to 66.70 against a US dollar from last week`s close of 66.79.

According to Hiren Sharma, Senior Vice President and Head-Forex Advisory at Anand Rathi Financial Services, the rupee wasn`t totally in sync with either Nifty fall or dollar fall.

"It hasn`t been too positive with the dollar decline perhaps being managed and also due to the fact that majority of FCNR (Foreign Currency Non-Repatriable) redemptions (US$ 18 bn) are scheduled in November. USD/INR has been in a tight range between 66.66 to 66.92 for 12 weeks now," Sharma added.

Among the top weekly gainers in Sensex was led by Mahindra and Mahindra (M&M) up 4.71 % at Rs 1372.45, followed by ITC (up 2.70 % at Rs 249.10), Hindustan Unilever (up 1.10 % at Rs 847.40) and NTPC (up 0.76 % at Rs 153.40).

The losers -- Sun Pharmaceuticals (down 12.24 % at Rs 652.75), Dr. Reddy`s Lab (down 8.42 % at Rs 3,077.20), ONGC (down 6.34 % at Rs 269.65), Adani Ports (down 6.03 % at Rs 288.55) and State Bank of India (SBI) (down 5.82 % at Rs 242.85).