Equity indices slipped into the red on Thursday as the government’s latest reforms push failed to stem profit-booking amid the protracted US-China tensions.
After a choppy session, the 30-share BSE Sensex ended 76.47 points, or 0.19 per cent, lower at 40,575.17. Similarly, the broader NSE Nifty closed 30.70 points, or 0.26 per cent, down at 11,968.40.
Kicking off the country’s biggest privatisation drive, the Union Cabinet on Wednesday approved sale of the government’s stake in five PSUs. The Centre also doled out a Rs 42,000 crore relief to debt-laden telecom companies after it agreed not to take any payments for spectrum they use for the next two years.
However, trading sentiment remained risk-averse after the US-China trade negotiations were further complicated by a US legislation supporting Hong Kong protestors.
Majority of the sectoral indices also succumbed to profit booking amid elevated valuations, traders said.
Tata Steel was the top loser in the Sensex pack, dropping 3.35 per cent, followed by Bharti Airtel down 2.52 per cent, Yes Bank 2.43 per cent, ONGC 1.98 per cent and ITC 1.96 per cent.
Shares of Bharat Petroleum Corp Ltd (BPCL) and Shipping Corp of India (SCI) tumbled on Thursday after the Cabinet approved sale of government’s stake in these companies.
Shipping Corp stock dropped 6.29 per cent to close at Rs 64.05 on the BSE. During the trade, it declined 7 per cent to Rs 63.50. The scrip of BPCL plunged 5.66 per cent to close at Rs 513.80. During the day, it tanked 6.15 per cent to Rs 511.10. Both BPCL and Shipping Corp had hit their respective 52-week highs in early trade. Container Corp stock fell 0.49 per cent to Rs 575.15. In intra-day, it dipped 0.78 per cent to Rs 573.45.
During the early trade these scrips had shown mixed trend.
In the biggest privatisation drive ever, the Union Cabinet on Wednesday approved sale of government’s stake in blue-chip oil firm BPCL, shipping firm SCI and cargo mover Concor as well as decided to cut shareholding in select public sector firms below 51 per cent to boost revenue collections that have been hit by slowing economy.
The Cabinet Committee on Economic Affairs (CCEA) approved sale of government’s entire 53.29 per cent stake along with transfer of management control in the country’s second-biggest state-owned refiner Bharat Petroleum Corp Ltd after taking out Numaligarh refinery from its fold.
It also approved the sale of an entire 63.75 per cent government holding in Shipping Corp of India (SCI) and a 30.8 per cent stake in Container Corp of India (Concor).
The government currently holds 54.80 per cent in Concor and will retain 24 per cent stake post sell-off but without any veto powers or management say, Disinvestment Secretary Tuhin Kanta Pandey said.
On the other hand, HUL gained 1.15 per cent, L&T 0.89 per cent, Bajaj Auto 0.82 per cent and SBI 0.81 per cent.
“Concerns over delay in US-China trade deal and Fed minutes fuelled negativity in markets across the globe. While domestic blue chips are finding it difficult to maintain positivity due to excessive valuation.
“Focus will be on next week’s Q2 GDP data which is expected to be below the 5 per cent reported in Q1. At the same time, Nifty50 is trading at one year forward P/E of 19x and 26x on 12 month trailing basis which does not provide much leeway to perform in the short-term,” said Vinod Nair, head of research at Geojit Financial Services.
Sectorally, BSE metal, oil and gas, telecom, energy, basic materials, consumer durables and auto indices tumbled up to 2.23 per cent.
Realty, capital goods, finance, IT and teck notched up gains of up to 0.45 per cent. Broader BSE midcap and smallcap indices slipped up to 0.73 per cent.
Elsewhere in Asia, bourses in Shanghai, Hong Kong, Tokyo and Seoul settled in the red amid reports that the US-China trade deal was unlikely to be signed this year.
European equities were also trading on a negative note in their respective early deals.
Meanwhile, the Indian rupee pared initial losses and settled 5 paise up at 71.76 against the US currency on Thursday amid softening crude oil prices and weakening of the greenback vis-a-vis other currencies overseas.
Forex traders said the rupee rebounded after China said it will strive to reach ‘phase one’ trade deal with the US.
At the interbank foreign exchange market, the rupee opened at 71.83 against the US dollar. During the day, the domestic unit fluctuated between a high of 71.72 and a low of 71.89 and finally ended the day at 71.76 against the US dollar. On Wednesday, the domestic unit had settled at 71.81.
Brent crude futures, the global oil benchmark, slipped 0.51 per cent to USD 62.08 per barrel.