Caution over macro-data flares volatility, markets end flat

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SME Times News Bureau | 12 Feb, 2016
Caution over the upcoming macro-data, coupled with unwinding of long-positions and negative global cues flared extreme volatility in the Indian equity markets on Friday.

In the process, a barometer index of the Indian equities markets provisionally closed the day's trade flat -- up by only 34 points.

The choppy trade was marked by short-covering and value buying, a day after the barometer index corrected by 3.40 percent or 807.07 points due to less-than-expected earning results, bleeding international indices and a weak rupee.

However, caution over the upcoming macro-data points on monthly industrial production and trade data capped gains and dragged markets lower to their new 52-week lows in intra-day trade.

Both the bellwether indices of the Indian equity markets opened on a weak note, following a steep fall in Asian indices and Thursday's decline in the US markets.

Despite some recovery, indices remained below the psychologically important levels of 23,000 and 7,000-point marks, respectively.

According to a market analyst, volatility spiked as buyers retreated after Thursday's massive fall. Nevertheless, recovery in crude oil prices which stood at $27 a barrel (one barrel is equal to 159 litres) kept sentiments mildly positive.

But heavy selling by the foreign investors, absence of any fresh positive trigger and below expected third quarter (Q3) results halted markets upward movement.

In addition, a weak rupee unnerved investors. It opened lower at 68.38 to a US dollar from its previous close of 68.30 to a greenback.

During the intra-day trade, the Indian rupee touched its lowest level since September 2013 at 68.47 levels on spot.

The weakness in rupee indicated massive flight of foreign funds from the equity markets. The foreign institutional investors (FIIs) were net sellers on Thursday, they divested Rs.1,112.66 crore.

Investors' confidence was further eroded by doubts over the central government's ability to perk up investments.

Nonetheless, positive European markets lend some support to the recovery.

Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) provisionally closed flat.

It has lost over 1,665 points, or 6.76 percent in the last four sessions.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day's trade flat. It inched down by four points or 0.06 percent to 6,972.50 points.

The NSE Nifty touched a new 52-week low at 6,869 points. Nifty traded at its lowest levels since early May, 2014.

It has slide by 512.75 points, or 6.84 percent during the last four days trade.

The S&P BSE Sensex, which opened at 23,060.39 points, provisionally closed at 22,986.12 points (3.30 p.m.) -- up 34.29 points or 0.15 percent from the previous day's close at 22,951.83 points.

During the intra-day trade, the Sensex touched a high of 23,161.15 points and a low of 22,600.39 points -- its new low in 52 weeks.

The BSE market breadth favoured the bears -- with 1,692 declines and only 886 advances.

"Short-coverings on the last day of the trading week has led to some recovery. Higher crude oil prices also helped markets climb back up," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

"However, negative Asian markets, long liquidated positions and disappointing results and a weak rupee capped gains."

Vaibhav Agarwal, vice president and research head at Angel Broking, expected markets to react to global cues and upcoming macro data.

Nitasha Shankar, vice president for research with YES Securities, cited that Indian markets witnessed high volatility following Thursday's massive sell-off.