Market has one worry too many
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Mumbai: The stock market resumed their decline on Wednesday amid continued concern over weak rupee and high fuel prices, with the Nifty ending below the 10,500-mark. A 200-point fall in Dow futures in the US on the back of geopolitical and trade war concerns precipitated the decline in the local benchmarks.
Indices have declined in six out of the last seven trading sessions.
The Sensex ended down 306.3 points at 34,344.9 and the Nifty ended down 106.35 points at 10,430.3. The BSE MidCap and SmallCap indices fared better compared to the main benchmarks but still ended down 0.2 per cent and 0.5 per cent, respectively.
In the US, stock futures declined amid comments from President Donald Trump that he was not pleased with the recent trade talks between the US and China. He also raised doubts about the upcoming North Korea summit.
Back home, oil marketing companies slumped 6-8 per cent on worries that the government may ask them to share the burden of higher oil prices. In the metal space, Vedanta declined 6 per cent amid protests at its copper plant in Tamil Nadu.
“Sentiments are negative because of macro headwinds such as rising crude oil prices, currency volatility and higher yields. There is also a question mark in terms of headline earnings given the drag from the banking sector,” said Harsha Upadhyaya, chief investment officer-equities at Kotak Mahindra Asset Management Company.
Sustained selling by foreign investors is adding to the market’s woes. Foreign portfolio investors on Wednesday sold shares worth Rs 311.11 crore while domestic institutional investors bought shares for Rs 789.78 crore, provisional data showed. FPIs have sold shares of nearly Rs 6,400 crore in May. If not for support from mutual funds, the fall in stock indices would have been deeper. Mutual funds have pumped in about Rs 31,700 crore in Indian equities till May 18.
“Domestic flows into equity have moderated from peak level of $3 billion a month but they are still at healthy level at around $2 billion a month. We don’t see that trend changing immediately,” said Upadhyaya.
With treasury yield in the US breaching 3 per cent mark recently, currency risk has emerged as one of the biggest risks for flows into emerging markets.
“Because of rising yields in the US, we are seeing flight of capital from emerging markets and risk assets in general. Provided that this kind of scenario persists, we will see continued outflows from emerging markets, including India, which has a 9 per cent weightage in the emerging markets basket,” said Vaibhav Sanghavi, cochief executive officer at Avendus Capital Alternate Strategies.
Indices have declined in six out of the last seven trading sessions.
The Sensex ended down 306.3 points at 34,344.9 and the Nifty ended down 106.35 points at 10,430.3. The BSE MidCap and SmallCap indices fared better compared to the main benchmarks but still ended down 0.2 per cent and 0.5 per cent, respectively.
In the US, stock futures declined amid comments from President Donald Trump that he was not pleased with the recent trade talks between the US and China. He also raised doubts about the upcoming North Korea summit.
Back home, oil marketing companies slumped 6-8 per cent on worries that the government may ask them to share the burden of higher oil prices. In the metal space, Vedanta declined 6 per cent amid protests at its copper plant in Tamil Nadu.
“Sentiments are negative because of macro headwinds such as rising crude oil prices, currency volatility and higher yields. There is also a question mark in terms of headline earnings given the drag from the banking sector,” said Harsha Upadhyaya, chief investment officer-equities at Kotak Mahindra Asset Management Company.
Sustained selling by foreign investors is adding to the market’s woes. Foreign portfolio investors on Wednesday sold shares worth Rs 311.11 crore while domestic institutional investors bought shares for Rs 789.78 crore, provisional data showed. FPIs have sold shares of nearly Rs 6,400 crore in May. If not for support from mutual funds, the fall in stock indices would have been deeper. Mutual funds have pumped in about Rs 31,700 crore in Indian equities till May 18.
“Domestic flows into equity have moderated from peak level of $3 billion a month but they are still at healthy level at around $2 billion a month. We don’t see that trend changing immediately,” said Upadhyaya.
With treasury yield in the US breaching 3 per cent mark recently, currency risk has emerged as one of the biggest risks for flows into emerging markets.
“Because of rising yields in the US, we are seeing flight of capital from emerging markets and risk assets in general. Provided that this kind of scenario persists, we will see continued outflows from emerging markets, including India, which has a 9 per cent weightage in the emerging markets basket,” said Vaibhav Sanghavi, cochief executive officer at Avendus Capital Alternate Strategies.