BSE Sensex sinks below 26k-mark on profit-booking, down 119 points

sensex and nifty

Markets today failed to make good use of the early momentum in a fluctuating trade as the benchmark Sensex broke below the psychological 26,000-mark by falling over 119 points amid profit-booking and a mixed global trend.

The broader NSE Nifty too cracked below the 7,900-level.

Caution ahead of the expiry of December monthly derivatives contracts on Thursday weighed, traders said.

Sentiment took a hit after IMF chief Christine Lagarde wrote in a guest article in a German newspaper that global growth will be “disappointing and patchy” in 2016.

She pointed to the prospects of US Fed rate hike and slowdown in China as fuelling uncertainty and risk of global volatility.

The BSE index, earlier backed up by covering-up of short positions, succumbed to profit-booking and ended below the 26,000-level at 25,960.03, down 119.45 points, or 0.46 per cent. It had gained 240.77 points in the previous two sessions.

The NSE Nifty closed lower by 32.70 points, or 0.41 per cent, at 7,896.25. It touched the day’s high of 7,944.75 in early trade.

“Early gains were frittered away as traders indulged in year-end profit-booking in the stocks across the board,” said Manoj Choraria, a Delhi-based stock broker.

A mixed trend in Asia, and European shares slipping from their three-week highs in early trade only compounded the woes.

The bear grip was so tight that as many as 21 stocks out of the 30 in the Sensex pack lost while others advanced.

Infosys was the worst hit as it plunged 1.52 per cent, followed by TCS (1.38 per cent) and Wipro (1.04 per cent).

Maruti Suzuki, SBI, RIL, Hero MotoCorp, Adani Ports, ICICI Bank, Bajaj Auto, Axis Bank and L&T also ran up losses.

But Tata Steel, Tata Motors, NTPC, ITC, BHEL and Dr Reddy’s all ended higher.

Stocks of liquor companies United Spirits, United Breweries, Empee Distilleries and Tilaknagar Industries felt the heat for the second straight day as they fell up to 5.01 per cent after SC yesterday upheld the Kerala government’s policy restricting issuance of bar licences to five-star hotels only.

The BSE IT index fell the most by 1.21 per cent followed by technology (0.77 per cent), oil and gas (0.56 per cent), banking (0.43 per cent), PSU (0.30 per cent), auto (0.30 per cent) and realty (0.17 per cent).

Broader markets left the Sensex far behind, with the mid-cap index rising 0.21 per cent and small-cap 0.07 per cent.

Foreign portfolio investors (FPIs) net bought shares worth Rs 8.49 crore yesterday, according to provisional data.

FPIs’ net inflow drops to $7.4 bn in debt markets in 2015

The capital poured in by the FPIs is often been called ’hot money’ because of its unpredictability.

Overseas investors poured in just about $7.4 billion in the Indian debt markets in 2015, after having pumped in a staggering $26 billion in the preceding year.

Foreign funds also stayed away from Indian equities in 2015 and invested just Rs. 17,806 crore ($3.2 billion) in stock markets last year.

In comparison, FPIs had been investing around Rs. 1 lakh crore each into equities in the preceeding three years.

The decline in inflows has been attributed to a slew of domestic and international factors including concerns of a global slowdown, Chinese equity meltdown and an imminent interest rate hike by the U.S. Federal Reserve.

Besides, delay in implementation of major economic reforms in India also dampened investors’ sentiments.

As per the data available with depositories, Foreign Portfolio Investors (FPIs) infused a net amount of Rs. 45,856 crore ($7.4 billion) in the debt markets in 2015 as compared to a record investment of Rs. 1.6 lakh crore ($26 billion) in the previous year.

In 2013, FPIs had pulled out around Rs. 51,000 crore ($8 billion). Prior to that, overseas investors had invested about Rs. 35,000 crore, Rs. 42,000 crore and Rs. 46,408 crore in 2012, 2011 and 2010 respectively.

The capital poured in by the FPIs is often been called ’hot money’ because of its unpredictability, but these overseas entities have still been among the most important drivers of Indian stock markets.

Interestingly, most of the inflows witnessed in 2015 into Indian debt market have gone into government securities.

Despite weaker inflows this year, FPIs’ cumulative net investments into the debt markets, since being allowed over two decades ago in November 1992, has now reached about Rs. 3 lakh crore.

MF Investment in Equities Hits Rs 70,000 Crore in 2015

MF Investment in Equities Hits Rs 70,000 Crore in 2015New Delhi: Mutual fund houses continued to be bullish on the equity markets in 2015 and purchased shares worth a staggering more than Rs 70,000 crore, primarily on account of strong participation from retail investors.

This is on top of Rs 23,843 crore already being infused in the entire 2014.

In comparison, foreign portfolio investors (FPIs) made a net investment of just Rs 16,674 crore during the period.

However, in the last three years, foreign funds have made an average investment of $20 billion (around Rs 1 lakh crore) each in the Indian stock markets.

Domestic mutual fund (MF) managers have invested a net Rs 70,173 crore in the equity markets in 2015.

The inflows could be much higher for this year as four trading sessions are still left.

“As domestic investors continued to invest in equities through MFs, 2015 turned out to be a stellar year for the industry with impressive inflow in the segment,” UTI Mutual Fund EVP and fund manager V Srivatsa said.

Equity MFs, including equity-linked saving schemes, have seen a net inflow of nearly Rs 87,000 crore till November this year.

The surge in inflows into equity schemes has prompted fund houses to pump money in the share markets.

In addition, robust inflows from retail investors in the equity segment have also helped.

According to industry body AMFI, 4-7 lakh retail folios are being added to the industry every month.

“Despite equities market not doing well throughout 2015, we have seen the inflows happening in the equity segment and through the retail segment”, Quantum AMC managing director and chief information officer I V Subramaniam said.

“Domestic mutual funds have been bullish on the stock market ever since the Narendra Modi-led BJP government came to power at the Centre,’ he added.

Till April last year, holdings were facing liquidation due to redemption from investors and the money started pouring in from May 2014 and the momentum continued till this month.

They have made intensive buying especially in August and September 2015, when the domestic market crashed due to rout in Chinese equities. During that time, overseas investors pulled out from the Indian stock markets.

The sell-off by overseas investors in the Indian equity markets has given an opportunity to mutual fund managers.

Mutual funds are investment vehicles that pool funds collected from investors to invest in securities such as stocks, bonds and money market instruments.

Stock Markets May Stay in Choppy Waters: Experts

Stock Markets May Stay in Choppy Waters: ExpertsNew Delhi: Indian stocks may see volatile trading during the week from December 28 to January 1 amid derivatives expiry and are likely to remain sideways as investors may stay light as the year comes to an end, say experts.

“Markets are expected to remain volatile as traders roll over derivative positions on Thursday. Activities usually dry up across global markets around the New Year, but due to derivatives expiry, traders will continue to see significant move on the local front,” said Vijay Singhania, founder-director, Trade Smart Online.

“Volumes will get pretty light at this time of year as most institutional investors are off on an annual vacation. Rupee-dollar movement and international crude oil price will dictate trend on the bourses in the week ahead,” Mr Singhania added.

The F&O expiry of the December series, scheduled for December 31, is expected to push up volatility on the domestic front.

“Macroeconomic data, trend in global markets, movement of the rupee against the dollar and crude oil price will dictate trend of the market in the near term on the back of reduced risks over global liquidity and correction in commodity prices to decade lows,” said Vivek Gupta, CMT-director research, CapitalVia Global Research.

“Market is now looking forward to cues to move ahead. However, as the year is heading towards December 31, people are in no mood to commit. Markets are thus expected to be range-bound for the last week of the calendar year,” SAMCO Securities CEO Jimeet Modi.

In the holiday-shortened previous week, the Sensex rose 319.49 points to settle at 25,838.71.

“The Indian market is expecting a better year ahead with a revival in FII sentiment… on expectations over government reforms,” said Vinod Nair, head-fundamental research at Geojit BNP Paribas Financial Services.