If Nifty is unable to head above 8,550, it may head lower
We had mentioned in Monday’s closing report that Nifty, Sensex may dip a little and that as long as Nifty remains above 8,425, bulls have hopes of more gains. The major indices in the Indian stock market dipped a little and made marginal losses.
The S&P BSE Sensex, which opened at 27,949.13 points, closed at 28,831.54 points -- down 46.73 points or 0.17% from the previous day's close at 27,878.27 points. The Sensex touched a high of 28,040.73 points and a low of 27,747.40 points in the intra-day trade.
A lowered growth forecast, the widening monsoon deficit and diminishing hopes of a rate cut, coupled with a massive slide in the Chinese stock markets and its effect on the yuan as major concerns for investors.
The yuan devaluation will impact the Indian rupee which crashed to its new two-year low on Monday. The slide in rupee value negates the advantage of lower commodity prices -- like that of crude oil. On Tuesday, the rupee hit a new 33-month low of Rs.65.47 in the intra-day trading in the off-shore markets. The Indian currency there closed at Rs.65.32 to a US dollar.
However, the impact of the rupee's decline was contained as the domestic interbank foreign exchange markets were closed on account of the Parsi New Year.
Other worries for investors stem from the fact that the Reserve Bank of India (RBI) has shown its reluctance to cut interest rates even after current data showed inflation being under control.
Another dampener in the day's trade was global credit ratings agency Moody's decision to lower India's growth forecast for this year by 50 basis points to 7%.
"We have revised our GDP growth (for India) forecast down to around 7% in light of a drier than average monsoon although rainfall was not as low as feared at the start of the season," it said in its latest "Global Macro Outlook 2015-16" released on Tuesday.
The ratings agency's latest assessment comes against the backdrop of official statements by the Indian government that the monsoon rains were now predicted at 10% below normal even as the country's grain output fell 4.7% in the 2014-15 (July to June) season.
Sector-wise, healthy buying was observed in information technology (IT), capital goods, consumer durables, automobile and technology, entertainment and media (TECK) stocks.
However, metals, healthcare and banks sectors came under intense selling pressure.
The S&P BSE IT index was up by 186.89 points, capital goods index gained by 157.05 points, consumer durables index rose by 131.25 points, automobile index edged higher by 116.58 points and TECK index was up by 60.92 points.
On the other hand, the S&P BSE metal index plunged by 151.90 points, healthcare index fell by 102.37 points and banks index lost 42.14 points.
Major Sensex gainers during Tuesday's trade were: Tata Steel, up 2.07% at Rs.251.65; Maruti Suzuki, up 2.03% at Rs.4,634.55; Infosys, up 1.92% at Rs.1,163.80; Tata Consultancy Services (TCS), up 1.86% at Rs.2,734.60; and State Bank of India (SBI), up 1.76% at Rs.283.95.
The major Sensex losers were: Gail, down 4.43% at Rs.330.20; Coal India, down 4.20% at Rs.364.05; Cipla, down 2.87% at Rs.683.65; Vedanta, down 2.28% at Rs.102.85; and Lupin, down 2.13% at Rs.1,755.25.
Among the Asian markets, Japan's Nikkei fell by 0.32%, China's Shanghai Composite Index declined by 6.12% and Hong Kong's Hang Seng dropped by 1.43%.
The top gainers and losers in the major indices in the stock market are given in the table below:
The closing values of major Asian indices in the stock markets abroad are given below: