Market closes at 3-mth low

Worry ahead of next week's US Fed meet, other global headwinds; banks, automobile stocks lead fall as Sensex briefly slips below 25k

The Indian markets closed on Friday at a new three-month low, amid weaker global cues on headwinds such as depreciation in China's yuan and next week's US Federal Reserve meeting, where it is widely expected to raise interest rates for the first time in a decade.

The benchmark indices ended about one per cent lower. The Nifty 50 lost 73 points to close at 7,610.45 and the BSE's 30-share Sensex fell 208 points to 25,044.43.

As the start of trade, the markets opened in the green but soon pared all gains and at one point of time were down nearly 1.4 per cent. The Sensex was barely 100 points away from its 52-week low as it briefly slipped below 25,000; the Nifty touched a low of 7,575.30, merely 35 points above its year's low. At the day's lowest point, the Sensex was down 386 points from its high and the Nifty was 128 points down.

However, in the last one hour's trade, some recovery set in which helped the Sensex close the trade above the psychological mark of 25,000 and the Nifty re-conquered the 7,600 level. Foreign institutional investors emerged net buyers on Friday for the first time in many weeks, of shares worth Rs 250 crore, by provisional data.

The market breadth remained weak. As many as 41 counters of the Nifty 50 closed in the red, while only 11 stocks in the Sensex could gain in a falling market. In an action-packed day, with the Reserve Bank of India upping the ante on the issue of bad assets earlier in the day, followed by an order from the National Green Tribunal for restriction on sale of diesel-based vehicles, the counters of banks and automobiles bore the brunt. The Nifty Bank and Nifty Auto were down 2.25 per cent and 1.75 per cent, respectively.

Vinod Nair, head, fundamental research, at Geojit BNP Paribas Financial Services, said: "The market tested the key support level of 7,600 as the pullback of global funds continued to create downside volatility in the bourses. Domestic investors were cautious ahead of Consumer Price Index and Index of Industrial Production data, which helps to gauge the economic stability. The confusion on the (goods and services) tax bill and the US Federal reserve meet forced retail participants to trim their exposure."

Banking and automobile stocks led the fall. In the Sensex, the shares of India's largest private lender, ICICI Bank, were the most hit as the counter lost 3.6 per cent to trade at the close on Rs 249.35. Other heavyweights Axis Bank, HDFC Bank and State Bank of India (SBI) were down 1.3-2.3 per cent. In the automobile category, Mahindra & Mahindra and Tata Motors lost 2.2-3 per cent.

Navneet Munot, chief investment officer at SBI Mutual Fund, said: "We feel the (US) Fed rate hike is almost (factored) in the price and the market volatility would subside once the event is behind us. Two other things to watch would be how China manages to adjust to lower growth rates, and the maturity of the key constituents in handling geopolitical tensions."

The Nifty Midcap indices were down 1.6 per cent. After a solid two-year run in the midcap and smallcap space, market participants are cautious.

Stocks which bucked the trend on Friday included companies from the metal, pharmaceutical and information technology spaces. Ahead of the government putting an anti-dumping duty of 5-57 per cent to safeguard the interest of domestic steel makers, Tata Steel was up 3.4 per cent and Hindalco gained 0.7 per cent. Cipla, Lupin and Sun Pharma ended in the green, with marginal gains.