Sensex slips 437 pts from day's high to end flat amid uncertainty over Karnataka govt formation

The market fell sharply from its day's high to end below the flatline amid uncertainty over formation of the government in Karnataka after election results.

The 30-share BSE Sensex slipped 437 points from day's high to end down 12.77 points at 35,543.94 while the 50-share NSE Nifty managed to hold the 10,800-mark, down 4.70 points at 10,801.90.

BJP was likely to be largest party in Karnataka Assembly with lead in 104 constituencies but was away from the half-way mark while Congress was leading in 78 seats and JDS in 38 seats at the time of writing this article.

In a surprise turn of events, the Congress said it would extend support to the Janta Dal (Secular) in forming the next government in Karnataka. JD(S) Tanveer Ahmed said HD Kumaraswamy has been offered the Chief Minister position by the Congress while the BJP has also reached out to the JD(S) for a post poll alliance.

"Going by last few weeks’ trends, markets were factoring in a decisive win for BJP. While they may be short of the majority, BJP has emerged as the single largest party and that trend is something that could help them in the upcoming General Elections," Siddharth Khemka, Head of Retail Research, Motilal Oswal Securities said.

VK Sharma, Head Private Client Group & Capital Market Strategy at HDFC Securities said Karnataka election is an event that is now out of the way," .

He feels the markets will now be more reactive to the international cues, which are a matter of concern specially the rising crude and dollar.

Meanwhile, the rupee extended losses in second half of session and hit more than 16-month low as the dollar strengthened against major global currencies on hopes for easing global trade tensions that pushed US bond yields higher. It was down 59 paise to close at 68.11 a dollar.

"Political uncertainty after the Karnataka elections also did not help. RBI's recent minutes had also revealed a hawkish bias, and the firm inflation now agrees with the same. To this end, oil’s trajectory for the rest of the month and trade balance figures for April would be crucial as market weighs RBI’s take on the rates," Anand James, Chief Market Strategist at Geojit Financial Services said.

CPI inflation rose to 4.6 percent while core inflation increased sharply to 5.9 percent, the 3-1/2-year high due to rise in rental inflation and services inflation.

On the global front, crude oil prices hit new 3-1/2-year high, backed by tight supply and planned US sanctions against Iran. Brent crude oil futures, the international benchmark for oil prices, jumped 1.16 percent to USD 79.14 a barrel, the highest level since November 2014.

European markets were mixed, as investors monitored key political and economic risks while most Asian stocks ended lower, with Hang Seng index falling over a percent.

Back home, the Nifty Midcap index corrected sharply for the second consecutive session, falling a percent partly due to PSU banks. About three shares declined for every two shares rising on the BSE.

On the stock front, Tata Motors was the biggest loser among Nifty50 stocks, slipping 4.2 percent. Reliance Industries, ITC, SBI, ICICI Bank, IOC, L&T, Coal India and Indiabulls Housing Finance declined up to 2 percent.

Tata Steel gained 2.6 percent ahead of its March quarter earnings due tomorrow and after its resolution plan for debt-laden Bhushan Steel approved by the National Company Law Tribunal. Bhushan Steel was locked at 5 percent upper circuit.

HDFC Bank, TCS, Bajaj Finance, Kotak Mahindra Bank, Power Grid and Titan Company among other largecaps rose up to 2 percent. HUL gained 0.8 percent after reporting better-than-expected earnings for the March quarter.

Avenue Supermarts gained four percent as the stock will be added to the MSCI India Index with effect from June 1.

Shares of Punjab National Bank ended around 4 percent lower after it posted highest-ever quarterly loss of Rs 13,471 crore for Q4FY18 while Karnataka Bank fell 2 percent after profit for the March quarter dropped sharply to Rs 11 crore compared to Rs 138.4 crore in corresponding period last fiscal.

Dena Bank and Allahabad Bank fell 6-9 percent after the Reserve Bank of India barred these lenders from giving fresh loans.

Pharma major Lupin was down half a percent after reporting a loss of Rs 783.5 crore in Q4 due to one-time loss of Rs 1,464.3 crore on Gavis Group acquisition.

Auto component maker JBM Auto has reported a massive 61.1 percent growth year-on-year in profit at Rs 23.6 crore for the quarter ended March 2018, backed by revenue as well as operational performance. The stock has ended over 1 percent higher.

Shares of Indian Hume Pipe closed 4 percent lower as Madhya Pradesh government cancelled an order worth Rs 578.5 crore due to discrepancies.

Fortis Healthcare was up 3 percent after Manipal-TPG revised its bid to buyout the company to Rs 180/share from Rs 160/share.