Domestic equity indices cracked in morning trade on Friday as Asian shares remain cautious following mixed closing of Wall Street and surge in oil prices. India’s manufacturing growth falling in November also affected the sentiment.
BSE Sensex tumbled as much as 260 points during early trades dragged by telecom, banking, consumer durables, auto and realty sector indices while Nifty 50 breached its crucial 8,150 levels.
At 11:10 am, the S&P BSE Sensex was trading at 26,339, down 222 points, while Nifty50 was quoting 8,119, down 74 points. In broader markets, BSE Midcap was down 0.46% while BSE Small Cap was trading 0.32% lower.
“Now it has to cross and hold above 8,200-8,220 zones to continue the up move towards 8,300-8,335 zones while holding below 8,150 might attract profit booking decline towards 8,080 zones. Market has been finding pressure after the bounce back move so if follow up selling happens then it may start the next corrective leg on the downside. Now traders would focus on upcoming RBI policy which might start the next volatile move in the market,” said Anand Rathi Equity Advisory in a technical note.
Government also issued a clarification on gold saying there is no limit on any gold holding provided it is acquired from explained sources of income including inheritance.
On Wednesday, foreign institutional investors were net sellers with net equity sell value of Rs 402.62 crore, while domestic institutional investors bought equities worth Rs 237.81 crore, provisional data available with BSE suggested.
Sectors and Stocks
Telecom stocks fell 0.81% after Mukesh Ambani announces extension of Reliance Jio freebies till March 31, 2017. Ides was down 1.81% while Airtel and RCom fell 0.5% each.
HDFC was the top laggard at BSE Sensex, down 2.26% followed by Adani Ports (1.27%), Dr Reddy’s (1.25%), ITC (1.14%) and L&T (1.10%).
Realty and Consumer Durables were the biggest sectoral laggards, dowm nearly 1% each. Auto sector was marginally up despite poor auto sales numbers led by Tata Motors which was trading 1.17% up.
Coal India was the top gainer on Sensex, up 1,58% post reports that its coal production grew 5.3% to 50 million tonnes in November as compared to 47.47 mt (y-o-y).
Among other gainers, ONGC was up 0.70% and Sun Pharma gained 0.28%.
PMI falls in November
India's PMI fell to 52.3 in November following demonetisation move, lower than the 22-month high of 54.4 in October. According to the Nikkei Markit India Manufacturing Purchasing Managers' Index (PMI) - a composite indicator of manufacturing performance - the withdrawal of high-value banknotes has reportedly hampered manufacturing growth in November, with companies signalling softer increases in order books, buying levels and output.
Oil prices rally
Oil prices extended gains early on Friday as OPEC and Russia agreed to rein in a global oversupply in crude on Wednesday with analysts now focusing their attention on implementation of the deal.
US West Texas Intermediate (WTI) crude futures were at $51.10 per barrel by 0037 GMT, up 5 cents from their last settlement.
Brent futures jumped 4.1% or $2.10 a barrel to settle at $53.94 per barrel on Thursday. Earlier in the session, prices jumped as much as 5.2% to $54.53 a barrel, the highest level since July 27, 2015.
Asian shares were flat in early trade on Friday following mostly sluggish sessions on Wall Street and Europe, as 10-year U.S. Treasury yields surged to near 18-month highs and crude futures soared to 16-month highs.
MSCI's broadest index of Asia-Pacific shares outside Japan was little changed, but remained on track to end the week up 0.6%.
Japan's Nikkei, which jumped to an 11-month high on Thursday, slipped 0.6% early on Friday as the yen strengthened. It is set for a weekly gain of 0.1%.
Yields on 10-year US Treasuries touched 2.492% on Thursday, the highest since June 2015, after data showed factory activity accelerating in November and construction spending at a seven-month high in October.