Only a decisive close above 7,880 will signal that the market has come out of its recent trading range
We had mentioned in Monday’s closing report that Nifty, Sensex are in an uptrend and that Nifty has to stay above 7,800 for the uptrend to continue. However, in Tuesday’s trading, Nifty fell below the 7,800-level briefly and closed at 7,829. The major indices were weak throughout and closed with marginal losses.
Market analysts felt that despite strong macro-economic data, investors remained cautious ahead of the upcoming decision on the US rate hike. Even the better-than-expected inflation and modest factory output data, which had cheered investors with hopes of a rate cut by the Reserve Bank of India, did not support buying in the markets.
India's annual inflation rate based on wholesale prices continued in the negative territory in August, falling to (-)4.95% from (-)4.05% in July. Another key macro indicator showed that India's factory output had grown by 4.2% in July against a marginal rise of 0.9% in the like month of last year.
India's consumer price inflation for August eased slightly to 3.66% from 3.69% in July and a staggering 7.03% during the like month of last year. India Inc. expects that a better-than-expected WPI (wholesale price index) and CPI (consumer price index) will drastically improve chances of a rate cut during Reserve Bank of India's monetary policy review slated for September 29.
Higher interest rates in the US are expected to lead away the foreign portfolio investors (FPIs) from emerging markets like India. It is also expected to dent business margins as access to capital from the US will become expensive. It is estimated that the foreign funds and investors have sold around $3 billion since August 2015.
Sector-wise, only fast moving consumer goods (FMCG) and information technology (IT) index out of the 12 indices managed to stay afloat during the day's trade.
The S&P BSE capital goods index plunged by 337.65 points, automobile index plummeted by 294.32 points, bank index receded by 188.28 points, metal index fell by 173.21 points and consumer durables index was lower by 162.90 points.
However, the S&P BSE FMCG index was higher by 60.44 points and IT index inched-up by 3.40 points.
Major Sensex gainers during Tuesday's trade were: Hindustan Unilever, up 1.15% at Rs.804.75; Sun Pharma, up 1.11% at Rs.866.70; ITC, up 1.09% at Rs.316.75; NTPC, up 0.68% at Rs.126.40; and Reliance Industries, up 0.52% at Rs.867.55.
Major Sensex losers were: Tata Steel, down 5.08% at Rs.229.05; Vedanta, down 4.06% at Rs.96.90; Tata Motors, down 3.69% at Rs.333.95; Hindalco Industries, down 3.05% at Rs.76.30; and Larsen and Toubro (L&T), down 2.92% at Rs.1,556.95.
Among the Asian markets, Hong Kong's Hang Seng inched down by 0.49%, and China's Shanghai Composite Index lost 3.55%. However, Japan's Nikkei inched-up by 0.34%.
The top gainers and top losers in the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: