Markets ends four-day losing streak

Rebound in global stocks, currencies, reports of MAT relief buoy sentiment

The markets on Thursday ended their four-day losing streak following a rebound in global stocks and currencies after China’s central bank eased concern about a disorderly devaluation of the yuan. Reports of government-appointed committee questioning the legal basis for imposing the controversial Minimum Alternate Tax (MAT) on foreign investors also buoyed sentiment.

The benchmark BSE Sensex closed up 37 points, or 0.14 per cent, at 27,549, while the National Stock Exchange’s Nifty ended at 8,355, up marginally by six points from its previous close.

“Equity markets finally witnessed a pause on Thursday after four successive days of fall. However, lack of sustainability in index at higher level and excessive volatility on stock-specific front capped the upside move,” said Jayant Manglik, president (retail distribution), Religare Securities.

Gains were capped, as investors were disappointed with the monsoon session of the Parliament ending without the Goods and Services Taxes (GST) Bill being passed.

“If the Bill does not get passed, then the markets will be circumspect. There will be a feeling of complete let-down in the markets,” said Deven Choksey, managing director, K R Choksey Securities.

There was little respite for metal companies, as their stocks continued to tank. The BSE Metal index lost another 2.7 per cent, with Jindal Steel fell over 11 per cent followed by National Aluminium Company and Vedanta, both down over nine per cent.

Metal stocks have been under pressure for some time now: first because of the fall in commodity prices and recently due to the currency devaluation in China. A weakened Chinese currency would put pressure on companies exporting to that country, which accounts for more than 40 per cent of the global demand for commodities.

“Imports would tend to become cheaper from China, which can affect domestic production of companies in areas like metals, electronics, automobile parts, textiles etc,” noted a report by CARE Ratings on the impact of the Chinese devaluation of the renminbi titled “The Two-day fallout”.

Health care, automobile and banking sectors were the outperformers of the day, rising about one per cent each on Thursday. Gains in the Sensex were led by stocks like Mahindra & Mahindra, which rose 3.2 per cent and was the best performing stock in the Sensex. Health care majors Cipla and Lupin were up 2.6 and 2.2 per cent, respectively. Axis Bank was up 1.5 per cent followed by Coal India (up 1.5 per cent), on the back of its offer for sale divestment announcement on Wednesday.

On Thursday, foreign institutional investors (FIIs) were net sellers at Rs 625 crore, while domestic institutions were net buyers of equities at 545 crore, according to the provisional data provided by the exchanges. This week, FIIs have been sellers on all occasions.

On the BSE, two stocks declined for every one stock that gained on Thursday.