Sensex falls 439 Pts, Nifty dips 135 Pts: 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 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.

• 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 and Infosys. TCSwhich 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.

IAn 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.

• 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 and Vedanta also slumped over 1.5% each.

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