Markets slump as high interest rates may prevail

Markets snapped a four-day winning streak on Friday with rate sensitive leading the decline after comments from Reserve Bank of India Governor Raghuram Rajan late Thursday commented that inflation is a destructive disease which is forcing the central bank to keep interest rates high.

Further, a Reuters poll on Friday which indicated that emerging economies would contribute less to global growth in 2014 than earlier expected also weighed on market sentiment.

India is expected to grow at a lacklustre pace of 5.4% in fiscal 2015, as a result of the weak investment cycle gripping the country, which goes to elections this year, the report said.

SENSEX & NIFTY

The 30-share Sensex ended down 240 points at 21,134 mark and the 50-share Nifty ended down 79 points at 6,267 levels.

The Sensex and the Nifty touched an intra-day low of 21,130 mark and the Nifty 6,264 levels, respectively.

The broader markets underperformed the benchmark indices- BSE Midcap and Smallcap indices plunged by nearly 2% each.

The market breadth in BSE ended dismal with 1,758 shares declining and 890 shares advancing.

MARKET EXPERT’S VIEW

F&O: Adds Parag Doctor, Head-Trading Strategies, LKP Securities, “We expect Nifty to remain range bound between 6,250 and 6,350 ahead of expiry.

Traders can go for short strangle Sell 6,200 Put at Rs 16 and 6,400 Call at Rs 9.75, combined stop loss at Rs 36, target 0.”

Tech View: Mudit Goyal, technical analyst, SMC Global says, ‘Technically, Nifty had witnessed a decent upside move from 5970 levels and had registered a fresh all time high of 6415 on 09th December, 2013.

Afterwards, the index witnessed a healthy correction and found support around 6130 twice in past few sessions.

Today, Nifty has entered in its earlier support zone of 6110-6130 levels and consolidating in that range.

S0, some bounce back is expected from current levels upto 6420 in coming days. Trader should close their long position, if Nifty trade below 6220 levels.”

FIIs

Foreign institutional investors (FIIs) bought shares worth a net Rs 433.60 crore on Thursday, 23 January 2014, as per provisional data from the stock exchanges.

RUPEE

The rupee is trading lower with local stocks extending losses. The pair is at 62.20/21 after hitting 62.27 intraday. It had closed at 61.9275/9375 on Thursday.

GLOBAL MARKETS

Asian shares lurched to a 4-1/2 month low on Friday, extending the previous day's weakness as disappointing Chinese manufacturing data raised concerns over the economy, and emerging and commodity currencies took a beating.

Investors sought safety in gold, the yen and highly-rated government bonds, sending the 10-year U.S. Treasury yield to a seven-week low.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.8%, adding to the previous session's 1.3% decline following the Chinese factory activity report.

As the yen strengthened against the dollar, Japan's Nikkei stumbled 1.9% to a one-month closing low in relatively active, extending Thursday's 0.8% drop.

SECTORAL INDICES

BSE Realty, Capital Goods and Consumer Durables indices were down by 3% each followed by counters like Banks, Metal, Healthcare, Auto, Power and FMCG, all declining between 1-2%.

In fact, all the major BSE sectoral indices ended in red zone.

Rate sensitive sectors were reeling under selling pressure after Raghuram Rajan was quoted as saying that inflation was a "destructive disease" that was forcing the bank to keep interest rates high.

TOP LOSERS

The main losers on the Sensex were BHEL, Tata Steel, Sterlite, Tata Motors, L&T, ICICI Bnak, SBI and Tata Power, all slumping between 2-3%.

SMART MOVERS

Shares of Ranbaxy slumped 19.33% to Rs 337 after the USFDA banned more products of the company into the United States.

L&T Finance Holdings slipped over 4% after the company’s net profit for the third quarter ended December 2013 fell by 62.8 per cent to Rs 109.69 crore.

Mastek has slumped over 4% on profit booking at higher levels after the company announced good Q3 numbers.

Triveni Turbine fell by over 4% on BSE after the company's net profit fell 31.80% to Rs 20.80 crore on 19.53% decline in net sales to Rs 140.90 crore in Q3 December 2013 over Q3 December 2012.

Canara bank slipped nearly 7% to Rs 248 as the bank stock turned ex-dividend today, for the interim dividend of Rs 6.50 per share for the year ending 31 March 2014.

Shares of mid-cap and small-cap companies were under pressure in trade today, falling by as much as 10% on the Bombay Stock Exchange (BSE) on profit booking.

Financial Technologies, Aban Offshore, Info Edge India, Just Dial, Oriental Bank of Commerce, Biocon, KPIT Technologies, SKS Microfinance, TBZ, Kolte Patil Developers, Sasken Communication Technologies, National Fertilisers and JK Tyre were some of the stocks that tanked over 5% each.

Jewellers’ stocks rose sharply in an otherwise dull market amid expectations of a relaxation of the gold import norms, including the 80:20 rule, following a report that United Progressive Alliance (UPA) Chairperson Sonia Gandhi had written a letter to the government seeking such a move.