Markets fall for a sixth session, oil & GST weigh

Sensex, Nifty drop 4.3% in six sessions ahead of US Fed meet

Indian markets on Wednesday fell for a sixth session, as foreign investors continued to pull money out ahead of next week’s US Federal Reserve meeting, where the central bank is expected to end a seven-year near-zero interest rate regime. A slump in commodity prices, including oil, further weakened sentiment towards emerging markets. On the domestic front, concerns over the passage of the Goods and Services Tax (GST) Bill, a key tax reform, in the winter session of Parliament, too, weighed on stock prices.

On Wednesday, the benchmark BSE Sensex fell 274.28 points, or 1.08 per cent, to close at 25,036, the lowest closing figure since September 7. The broad-based Nifty ended down 89.2 points, or 1.16 per cent, at 7,612.5.

Foreign institutional investors (FIIs) sold shares worth Rs 500 crore on Wednesday, provisional data showed. FIIs have pulled out nearly Rs 11,000 crore in the past month.

“The chaos in the market is increasing, in the run-up to the Fed meet next week. The turmoil is led by FIIs, who are continuously reducing their exposure in emerging markets due to the reversal in the US quantitative easing,” said Vinod Nair, head (fundamental research) at Geojit BNP Paribas Financial Services.

The MSCI Emerging Markets Index, too, was down for the sixth session on Wednesday, led by declines in markets such as Vietnam, Taiwan and Hong Kong, as weak economic data from China hit prices of industrial commodities.

“Investors remain cautious as concerns over China, an impending increase in US interest rates and falling oil prices continue to resonate across markets,” Jonathan Ravelas, chief market strategist at BDO Unibank, was quoted as saying by Bloomberg.

Back home, disruption in Parliament for a second day by the opposition Congress party over the National Herald case raised concerns whether the GST Bill would be passed in the ongoing the session of Parliament. The GST delay saw shares of logistics companies including Gati, Gateway Distriparks, Transport Corp of India Ltd and Snowman Logistics post a sharp slump.

The Sensex has dropped 1,133 points, or 4.33 per cent, and the Nifty 342 points, or 4.3 per cent, after six days of declines.

The sell-off has been broad-based with all BSE sectoral indices posting losses. The metal and energy indices have fallen eight per cent and six per cent, respectively in the past six sessions. Meanwhile, healthcare and technology indices have outperformed the Sensex, declining 2.3 per cent and 3.2 per cent, respectively.

Among the bluechip companies, Vendata declined 13 per cent in the past six sessions, followed by Coal India and Bank of Baroda, which fell around 10 per cent each.

“We expect markets to sell off emerging markets (EMs) around the first Fed hike,” said Saumil Shah, managing director and head of equity sales trading at Bank of America Merrill Lynch. “As the dust settles, India should attract investor interest.”

The Sensex is down nine per cent in 2015. After the recent correction, the index now trades at less than 15 times its 12-month forward projected earnings.