Nifty at 1-month low, inflation data eyed

Shares fell for the fifth day in a row on Monday after better-than-expected US jobs data revived worries about an early withdrawal of the Fed’s monetary stimulus. The benchmark Nifty declined to a one-month low, while the rupee also weakened against the dollar on concerns that the rollback of the bond-buying programme, known as third quantitative easing (QE3) - might begin as early as December.

Till recently, investors were expecting the Fed to start QE3 tapering by March. However, such concerns did not stop foreign institutional investors (FIIs) from extending their purchases of stocks. These investors net bought shares worth Rs 333.50 crore, while their domestic counterparts sold share to the tune of Rs 782.53 crore, according to provisional data. FIIs have remained net buyers in the last 25 trading days.

The BSE Sensex on Monday fell 175.19 points or 0.85 per cent to close at 20,490.96. The National Stock Exchange’s (NSE) Nifty dropped 61.95 points or 1.01 per cent to close at 6,078.80.

“After a sharp rally, the market is tiring and needs to consolidate. Election polls are showing mixed trends making investors jittery. Some worries have emerged again about Fed tapering,” said Rakesh Arora, managing director and head of research, Macquarie Capital Securities, in a client note.

After an early decline, indices recovered mid-day through the session on Monday, thanks to the better-than-expected export data but the rebound fizzled just before the close. “Excessive volatility is hurting the participants and we don’t expect any relief from that front due to macroeconomic data lined up this week,” said Jayant Manglik, president (retail distribution) at Religare Securities.

The government will announce consumer price inflation and industrial output data on Tuesday and wholesale price inflation on Friday. “One should keep extra caution, irrespective to the direction of the trade and cut the losses short,” said Manglik.

Shares of real estate and capital goods companies led losses on Monday. Larsen & Toubro fell 3.1 per cent.