Sensex falls 383 points, Nifty ends below 10,950; bank, financials top drags

Dragged by losses in shares of bank and finance majors, market benchmarks Sensex and Nifty closed in the negative territory for the second consecutive session on August 29.

The market remained in the red throughout the session, enduring bouts of volatility on the last day of August series of futures and options contracts as the optimism over the policy measures announced by the government fizzled out.

On August 23, the government had announced a string of measures to boost the economy and check the outflow of foreign funds. Additionally, the Union Cabinet on August 28 relaxed rules for foreign direct investment (FDI) in digital media, coal mining and retail.

However, it appears these macroeconomic policy moves failed to boost investor sentiment, as data show that selling by foreign portfolio investors (FPIs) in the Indian market remained unabated.

Investors took money off the table as worries over the deteriorating health of the domestic economy continued weighing on their risk appetite. Weak global sentiment due to looming worries of recession in the US and prolonged Sino-US trade war have made sentiment worse.

BSE Sensex closed 383 points, or 1.02 percent, lower at 37,068.93, with 21 stocks in the red, while the Nifty50 closed with a loss of 98 points, or 0.89 percent, at 10,948.30 with 21 stocks up and 29 down.

BSE Midcap and Smallcap indices outperformed benchmark Sensex, closing with losses of 0.17 percent and 0.62 percent, respectively.

Yes Bank, State Bank of India, HDFC, Axis Bank, Kotak Mahindra Bank and Mahindra & Mahindra finished as the top losers in the Sensex index.

However, Sun Pharma, Vedanta, NTPC, ONGC and Asian Paints were among the stocks that bucked the trend to end the day as top gainers in the Sensex kitty.

With a loss of 1.92 percent, BSE Bankex closed as the top loser among the sectoral indices, followed by BSE Finance (down 1.69 percent). BSE Healthcare, on the other hand, climbed 1.50 percent, backed by gains in shares of index majors Sun Pharma, Piramal Enterprises and Divi’s Laboratories. BSE Metal also logged a gain of 1.27 percent, with support coming from Vedanta, JSW Steel and Coal India.

In the last two sessions of losses, the cumulative market capitalisation of BSE listed firms dropped to Rs 1,39,83,324.95 crore from Rs 1,41,46,021.22 crore on August 27, making investors poorer by Rs 1.63 lakh crore.

Both Sensex and Nifty ended in the red for the third consecutive series. In the August series, Nifty came off by 2.7 percent and Sensex retreated 2 percent.

Top news of the day

The Supreme Court has extended ex-FM Chidambaram’s interim relief till September 5.

Gold prices breached the record Rs 40,000 per 10 gram level for the first time at the bullion market on strong demand from investors amid growing fears of a global economic slowdown.

India’s two main ports- Mundra Port and Kandla Port – said they had been warned by the coastguard and intelligence officials that Pakistan-trained commandos have entered Indian waters to carry out underwater attacks on port facilities, Reuters reported.

Stocks in news

Shares of Yes Bank continued their downward march for the second straight session after the stock declined 3.61 percent to close at 57.35 on the BSE. The stock, which has been on a bumpy track of late, came under fresh pressure on August 28 after rating agency Moody’s downgraded its credit rating with a negative outlook, citing lower-than-expected capital raising.

Sun Pharma shares jumped 5.31 percent to Rs 434.65, a day after reports of the Securities and Exchange Board of India (SEBI) clearing the company of charges of irregularities emerged. A preliminary probe by the market regulator found no merit in allegations of violation of securities laws, leveled by a whistle blower, against the pharmaceutical major, Business Standard quoted two persons as saying.

Shares of Coal India settled 2.05 percent higher at Rs 189 after the Union Cabinet approved 100 percent foreign direct investment (FDI) under the automatic route in coal mining and also in the creation of associated infrastructure.

Rebounding from day’s low at Rs 1,836, shares of Piramal Enterprises closed 4.57 percent up at Rs 1,981.95 even as the company deferred the issue of non-convertible debentures (NCDs).

JMC Projects shares declined 2.14 percent to Rs 116.45 after its parent company received a notice from the World Bank.

The company’s holding company Kalpataru Power Transmission (KPTL) has received a notice from the World Bank alleging process violations in bids submitted by its transmission business on two projects in Africa more than 7 years ago, as per a company release.

Global Updates

Signs that Italy’s latest political drama was over and hopeful noises from Beijing in the trade war pushed Europe’s share markets higher and paused the relentless steamrollering of global bond yields, reported Reuters.

Asian markets ended mixed on August 29 with Shanghai Composite and Nikkei ended marginally lower by 0.1 percent each, while Kospi was down 0.40 percent at 1,933.41.

Technical view

The Nifty traded with bearish bias throughout the session. On the way down, the index broke lower end of a rising channel on the hourly chart along with the key hourly and the daily moving averages. Also, the index breached the key psychological mark of 11,000 on the downside.

“All these bearish developments suggest that the short term pullback, which the Nifty witnessed in the last few sessions, is over at the swing high of 11,049 is unlikely to develop further. The selling pressure is likely to intensify going ahead and the Nifty can come down to test the recent low of 10,637 with a potential to head lower. The bearish stance holds true as long as the index trades below 11,181-11,200,” said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan by BNP Paribas.Subscribe to Pro and gain access to curated market data, trading recommendations, stock analysis, investment ideas and insights from market gurus. Now, get PRO for 1 year at Rs 289. Use code FREEDOM.