Indian stocks fell, snapping a three-day gain, as a risk-off mood swept through global markets after Federal Reserve minutes fuelled concern over the pace of recovery for the world’s largest economy.
The benchmark S&P BSE Sensex Index declined 1% to end at 38,220.39 points yesterday, after closing at its highest since March 3 on Wednesday. The NSE Nifty 50 Index fell 0.8%. The MSCI Asia Pacific Index was down 1.5%, led by a slump in technology shares.
Fed officials noted that the coronavirus pandemic would weigh heavily on economic activity, according to minutes of the central bank’s July meeting. Separately, India’s interest rate-setting panel turned cautious about a recent surge in consumer inflation, according to minutes of the August 4-6 meeting published after close of trading yesterday.
Even so, the Sensex is up 1.6% so far this month, with foreign investors having bought a net $5.4bn of local stocks – set to be the biggest inflow in 17 months. While India’s economy faces its first annual contraction in four decades due to the coronavirus pandemic, as many as 29 of the 48 Nifty 50 members that have reported quarterly earnings this season have met or exceeded estimates, according to Bloomberg analysis.
“We are positively surprised by the extent of cost controls that companies were able to realize” in the June-ending quarter, Citigroup Inc analysts Surendra Goyal and Vijit Jain wrote in a note. They are overweight in the financials and telecom stocks and underweight consumer and metal companies.
The number of confirmed coronavirus cases in India stands at 2.77mn, with the number of deaths nearing 53,000. About 2.04mn people have recovered.
The yield on 10-year bonds fell two basis points to 5.95%, while the rupee weakened 0.3% to 75.02 per dollar.
Ten of the 19 sector sub-indexes compiled by BSE Ltd fell, led by a gauge of telecom shares
Reliance Industries Ltd contributed most to the Sensex’s slide, falling 1.7%, and Housing Development Finance Corp was the biggest decliner, decreasing 2.4%.
Meanwhile the rupee plunged 20 paise and settled below the 75 per US dollar mark yesterday as strengthening American currency and losses in domestic equities weighed on investor sentiment.
Forex traders said strong dollar, weak domestic equities and US Federal Reserve meeting minutes weighed on investor sentiment.
At the interbank forex market, the local unit settled for the day at 75.02 against the US dollar, down 20 paise over its previous close of 74.82.
During the session, the domestic unit witnessed an intra-day high of 74.93 and a low of 75.05 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.31% to 93.17.
“The US dollar has strengthened overnight after the release of US Federal Open Market Committee (FOMC) minutes that were less dovish than expected,” said Abhishek Goenka, Founder and CEO, IFA Global.
As per the FOMC minutes, the committee members have expressed concern over the continuing impact of Covid-19 on economic growth.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 459.01 crore on Wednesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.82% to $45 per barrel.
from Gulf Times https://ift.tt/2EmywTf
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