With massive profit-booking by investors, downward trend of earnings growth of leading corporate giants and aggressive selling by foreign funds on tax, the benchmark BSE Sensex plunged by more than 555 points to over three-week low of 27,886.21.
The downward trend on the growth of heavyweights like RIl and Infosys and weak global cues also added to the sharp fall. According to data available with BSE and NSE, investors’ profit-booking forced Nifty to lose nearly 2 per cent, and simultaneously all mid-cap and small-cap indices too lost between around 2-2.5 per cent.
“For large institutional investors, this is a good opportunity to kind of accumulate the stocks, the ones you wanted which you thought were at prices which were elevated,” says Prasun Gajri, CIO, HDFC life Insurance. “With over 550 points fall, the Sensex has lost over 1,200-points in the last 4 trading sessions primarily on account of nervousness surrounding the March quarter earnings, which has witnessed a shaky start.
“While expectations from results are already low, concerns with respect to delayed recovery in corporate earnings in the backdrop of a slower-than-expected economic recovery has overtaken sentiments in the short-term,” said Hitesh Agrawal, Head of Research at Reliance Securities.
The development on taxation front pertaining to global investors is also acting as a short-term headwind for the market, he said. Among the 30-Sensex stocks, 28 ended with losses led by RIl which plunged 4.46 per cent. Only Sun pharma and ICICI Bank managed to end with gains.
Sector-wise, the BSE realty index suffered the most by losing 2.78 per cent, followed by FMCG, capital goods, IT, power 2.04 and oil and gas. The BSE smallcap index fell 2.17 per cent while the midcap index ended 2.02 per cent lower. At the BSE, 1,964 stocks declined and 871 advanced while 99 remained unchanged.
Meanwhile, rupee also saw the biggest fall of the year, plunging by 55 paise to close at over one-month low of 62.91 on sustained demand for dollars from importers. Dollar shortcoverings by exporters on the back of firm American unit overseas amid heavy capital outflows also kept the rupee under pressure, according to forex dealers.
This was the fourth consecutive session of downtrend in the 30-share index, which has now lost around 1,160 points since crossing 29,000-levels last Monday. The Government’s focus, however, would be on pushing through the bills on land acquisition and goods and services tax.
Traders, however, said that concerns by foreign investors over retrospective taxation weighed on trading sentiments. The 50-share Nifty was down 157.90 points to close below 8,500-mark.
The index had closed at 8,341.40 on March 27. However, traders said that lower closing in other Asian markets combined with India’s exports falling 21 per cent in March to a six-year low also weighed on markets. In a report, global brokerage firm UBS cut its Nifty target for December this year to 9,200 from 9,600 amid slower-than-expected recovery in growth.
The bullish trend in Indian markets over the last one year was mainly driven by ‘positive surprise on rate cycle, lower oil prices and reforms news-flow’ but hereon, actual earnings and macro data points would matter increasingly, UBS said. “The revised target also reflects our view of the growth recovery being slower-than-expected, as is playing out in quarterly corporate results,” it added.
The 30-share Sensex opened up more than than 95 points, but on emergence of profit-booking in realty, FMCG and IT it dipped to the session’s low of 27,802.37. The 50-share NSE Nifty plunged by 157.90 points or 1.83 per cent to close at 8,448.10, while moving between 8,619.95 to 8,422.75 intraday.
Market diver RIl was the worst performer on Sensex with over 4.40 per cent plunge. It had posted 8.5 per cent fourth quarter profit growth after market hours last Friday. Out of 30 Sensex stocks, 28 ended in negative zone, while only Sun Pharma and ICICI Bank managed to rise.