Published on October 14, 2016
1. Sensex Falls 439 Points, Nifty Dips 135 Points: 5 Factors The S&P BSE Sensex slumped over 439 points on Thursday’s trade and dipped below its crucial support level of ‘28,000’. It closed at a three-month low of ‘27,643.11’ led by losses in HDFC, HDFC Bank, ICICI Bank, Tata Motors and RIL. The Sensex opened lower and remained in the negative zone to hit a low of ‘27,563.84’ points before settling 439.23 points, or 1.56% down at ‘27,643.11’. Similarly, the NSE Index Nifty broke below the ‘8,600-mark’ to touch the session's low of ‘8,541.35’ and finally settled 135.45 points, or 1.56%, down at ‘8,573.35’. The Nifty50 dipped which below 8,600, was weighed down by losses in realty, metals, banks, power, auto stocks. The selling was broad-based since both S&P BSE Small-cap and Midcap indices slipped over 1% each. The five (5) factors held responsible are as follows: Rate hike hints from the US Fed: The minutes of the ‘September 20-21 meeting’, at which the US Fed held rates steady, showed a larger probability of a rate hike in the month of December. Most market analysts and experts around the world weren’t expecting a rate action in 2016. Numerous voting Federal Reserve policymakers judged that a rate hike would be warranted relatively soon if the United States economy continued to strengthen, but inflation dubiousness stayed, as per the minutes of the Fed's meeting released on Wednesday. An analyst said that a rate hike in December was possible. He added that Fed had been talking like this for quite some time and the news had been pretty good. He knew it would be a close call, he added. He concluded that the market was getting used to the idea of a possible next move in coming December and it was just not the end of it.
2. IT stocks had switched to caution mode ahead of Q2 results: Most IT stocks were trading with a negative bias before results of pacesetter TCS - Tata Consultancy Services and Infosys.TCS which was expected to report 0.2% (QoQ) drop in September quarter (Q2) net profit on Thursday at Rs.6,302.20 cr, however it reported a 4.3% growth in profit. On the other hand, revenue was likely to deliver 1.47% (QoQ) growth in the September quarter however it was seen flat 0.1% (QoQ). Infosys was expected to report 2.8% (QoQ) growth in the net profit for the quarter ended September 30 while in actuality it reported a growth of 4.95 % (QoQ) in net profit today. China September data haunts: Asian stocks plunged to three-week lows after China's September trade data displayed a steep decline in exports, raising new concerns about the health of its economy. China's September exports dipped 10% from a year earlier, far worse than anticipated, on the other hand its imports unexpectedly shrank 1.9% after picking up in the month of August, suggesting signs of stability in China may be short-lived. That left world’s second-biggest economy with a trade surplus of 41.99 billion dollars for the month, the General Administration of Customs stated on Thursday. Technical blues: The Nifty50 edged below its crucial support level of ‘8,650’ and a closed below ‘8600’ or even ‘8,650’ could attract further profit taking which could take the index towards ‘8,550’ levels, as per experts. The bulls shall be able to regain some authority over the Dalal Street if Nifty50 is able to surpass 8,750-mark on closing basis in this week. An analyst said that the Nifty50 has to cross and hold above ‘8,750’ zone to see a bounce back move towards ‘8,800-8,820’ zone while holding below ‘8,680’ might attract the profit booking decline towards ‘8,600’ then ‘8,558’ levels.
3. Metal scrips were under pressure: Metal stocks had come under pressure reflecting weakness in the global metal prices after exports at China (world's biggest metals consumer) fell more than expected in September. Mining stocks like Hindalco Industries and Vedanta Limited also slumped over 1.5% each. Disclaimer The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the research team. Users are advised to use the data for the purpose of information and rely on their own judgment while making investment decision. Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022 Disclosure Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also engaged in Investment Advisory Services and Portfolio Management Services. Dynamic Commodities Pvt. Ltd., associate company, is a member of MCX & NCDEX. We declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered. SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor penalty on for certain operational deviations. Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/ Research Analyst/ his Relative: Do not have any financial interest / any actual/beneficial ownership in the subject company. Do not have any other material conflict of interest at the time of publication of the research report Have not received any compensation from the subject company in the past twelve months Have not managed or co-managed public offering of securities for the subject company. Have not received any compensation for brokerage services or any products / services or any compensation or other benefits from the subject company, nor engaged in market making activity for the subject company Have not served as an officer, director or employee of the subject company Article Written by Salman Hashmi