Sensex, Nifty join global rout amid West Asia crisis

Mumbai ,March 27(dna) – A global markets sell-off triggered a major correction in domestic equities, as investors rushed to prune their holdings unnerved by crisis in West Asia after Saudi Arabia launched air strikes in Yemen, sparking rally in Brent futures that soared nearly 6% to reach $59.71 a barrel.

The low prices of crude oil, enjoyed for months last year, proved to be lucrative for emerging markets like India, which now appears to be fading away following the outbreak of the crisis. Also, March series F&O expiry and concerns over expectations of lacklustre fourth quarter corporate earnings further rattled the markets, pushing both the key benchmark indices for the seventh straight session loss.
On Thursday, benchmark 30-share Sensex fell as much as 654.25 points 2.3% to end below 28,000-mark at 27,457.58. The Sensex has now lost 1,280 points in seven days. Similarly, the broader 50-share S&P CNX Nifty also ended 188.65 points lower or 2.2% at 8,342.15. Indian benchmark Sensex was the biggest loser among Asia Pacific region.

On the last day of the current month’s expiry, investors didn’t resort to rollovers, contrary to the expectations, due to the financial year-end approaching mid next week. From a high of 9119. 20 on March 4, when the Reserve Bank of India cut repo rate by 25 basis points to 7.5%, Nifty has lost 8.52% till date. April series Nifty premiums were trading 1.5% higher compared to the cash market.

This was probably one of the reasons for heavy selling seen in the last half hour on Thursday, said a dealer at a brokerage firm. The long weekend ahead owing to two festive holidays on Thursday and Friday coupled with a bank holiday on April 1, was also seen as a major reason for the heavy sell-offs, he said.

Foreign investors were seen exiting the Indian market, selling Rs 521.23 crore in equities where as domestic institutions net purchased stocks worth Rs 687 crore, the provisional data released by the exchange said. A report by CLSA had already stated FIIs nearing a short-term peak earlier this week.

“The investors wanted to cut down the losses on their investments which they could suffer anticipating another round of correction in the upcoming months.” said Ambareesh Baliga, an independent analyst.
“The corporate results of the last quarter of FY15 which is to be out from the next month will also be seen as a negative trigger, continuing the downward slope of the markets,” he added.

Taking note of the India Inc’s performance and the humongous debt that they carry, AK Prabhakar, another independent analyst, said, “Corporate earnings in the last quarter of FY15 will disappoint.” Analysts believe that the stock market which was seen rallying since the Modi government took charge has experienced its first big correction and is expected to see another soon.

“The Indian market is again expected to correct itself to reach 8000 points in the coming weeks but only after a pullback rally where we will see markets soar for 3-4 odd days,”added Prabhakar. While heavy selling was witnessed in frontline stocks, investors also dumped banking, IT, metal and pharma shares.

Posted by on March 27, 2015. Filed under Economy. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.