Sensex cracks over 100 points ahead of Fed meet; Nifty tests 8,200

Sensex fell as much as 130 points during early trade led by losses in Infosys, Axis Bank, Wipro and Asian Paints

Markets opened lower today as invested remain cautious amid mixed global cues after the announcement of first-ever pact between Opec and non-Opec members on crude output cut since 2001. IIP falling 1.9% in October also impacted the sentiment.

Sensex fell as much as 167 points during early trade led by losses in Infosys, Axis Bank, Wipro and Asian Paints.

Investors are expected to remain cautious ahead of key events scheduled this week. Domestic trade deficit data, November CPI inflation and WPI inflation will be announced in the coming week while globally Fed rate decision is awaited.

At 11:05 am, the S&P BSE Sensex was down 135 points at 26,612 and the Nifty50 fell 55 points at 8,207.  Among broader markets BSE Midcap fell 0.30% and Smallcap indices were down 0.09%.

“The 8,280 region gave away briefly last Friday, but failed to usher in enough short covering. Hence a pull back is in order, which if is restricted to 8,235 repeated upside attempts could be seen aiming 8,330 initially and 8,580 later. Inability to float above 8,235 will suggest emerging weakness, but look for slippage past 8,160 before committing more shorts; but major falls are less likely,” said Geojit BNP Paribas in a technical note.

On Friday, foreign institutional investors were net buyers with net equity buy value of Rs 200.52 crore, while domestic institutional investors also bought equities worth Rs 289.57 crore, provisional data available with BSE suggested.

Sectors and Stocks

IT sector index fell almost 1.50% today after US President-elect Donald Trump on Friday pledged to stop companies from abusing the visa process for foreign workers in a way that undermines the labour market for Americans. Infosys was the top loser on BSE Sensex, down over 2%. Wipro and TCS also fell more than 1% each.

ONGC was the top gainer on BSE Sensex, up 1.86% followed by SBI, RIL and Sun Pharma.

Auto sector fell 0.55% weighed down by losses in Tata Motors, Maruti Suziki, Hero Moro, and Bajaj Auto. Other losers included Axis Bank, HUL and ICICI Bank.

Shares of oil exploration & production (E&P) companies such as Oil Natural Gas Corporation (up 2.3% at Rs 314) and Oil India (2.5% at Rs 454) have hit their respective fresh 52-week highs on the BSE in early morning trade tracking surge in oil prices.

Aban Offshore, Hindustan Oil Exploration, Selan Exploration Technology, Deep Industries, Cairn India and Jindal Drilling & Industries are other from the E&P sector, trading higher between 2% to 4% on the BSE in an otherwise weak market. The S&P BSE Sensex was down 0.41% or 109 points at 26,638 at 09:28 am.

IIP Shrinks

Industrial production fell 1.9% in October against 0.7% last month despite it being a festival month and demonetisation was yet to be announced, indicating that months of November and December may see sharper fall due to cash crunch in the economy. Two of three broad segments-- manufacturing and mining-- declined by 2.4% and 1.1% respectively, while electricity generation rose just 1.1%.

Opec & non-opec members sign their first deal

Oil prices jumped more than 5% on Monday after OPEC and non-OPEC producers agreed to curb oil output and ease a global glut, while the US dollar extended gains ahead of an expected rate hike this week.

The Opec and the non-Opec producers on Saturday reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices that overstretched many budgets and spurred unrest in some countries. Non-Opec members have agreed to slash crude oil output by 5,58,000 bpd, with Russia reducing its output by 3,00,000 bpd gradually to 10.947 million bpd by March 2017.

With the deal finally signed after almost a year of arguing within the Opec and mistrust in the willingness of non-Opec Russia to play ball, the market’s focus will now switch to compliance with the agreement.

GST

The proposed Bills to enact a national goods and services tax (GST) are set to miss the entire winter session of Parliament, due to conclude on Friday. The Centre and states are yet to finalise the legislation, rendering the April 1, 2017, roll-out target seemingly impossible.

Fed rate meet to start tomorrow

The two-day rate-setting meeting of the Fed will kick off on December 13, which will be keenly tracked worldwide. Talk of a policy tightening has kept emerging markets, including India, on edge as this means a flight of capital to the US. The market has already factored in a 25 basis point rate hike. Nevertheless, since the US is the world's biggest economy and a major source of capital for emerging markets like India, something beyond that could bring selling pressure.

Global Markets

Though MSCI's broadest index of Asia-Pacific shares outside Japan was broadly flat after posting its biggest weekly rise in nearly three months last week, energy plays in Hong Kong and Shanghai such as CNOOC and PetroChina were among the top gainers.

Despite the bounce in some Asian stocks, broad investor sentiment remained cautious from a flows perspective with data showing a pick up in outflows from emerging markets and inflows toward U.S. markets, according to Jefferies analysts.

Japan’s equity benchmark Nikkei rose 1.21% to 19,224.89. Other Asian indices, including Hong Kong’s Hang Seng , South Korea’s Kospi and Taiwan’s TWSE were trading mixed.

Wall Street's major indexes hit record highs for the third day in a row on Friday as the post-election rally got a lift from healthcare and technology stocks. Dow Jones added 142.04 points, or 0.72%, to 19,756.85. The S&P500 index rose 13.34 points, or 0.59%, to 2,259.53. The Nasdaq Composite gained 27.14 points, or 0.50%, to 5,444.50.