US election jitters, Fed rate hike fears rattle markets

Index heavyweights were among the top losers with RIL leading the decline

Benchmark share indices ended over 1% lower on Wednesday, tracking a sell-off in global markets, amid growing uncertainty over the US elections and the Fed's stance on interest rates at its two-day meet which concludes later today.

Meanwhile, the Federal Open Market Committee (FOMC)'s two-day meet on monetary policy concludes today. The US Federal Reserve is widely expected to maintain status quo on interest rates but could signal a hike in December after recent data indicated that the economy is picking up pace.

The S&P BSE Sensex ended down 349 points at 27,527 and the Nifty50 closed 112 points lower at 8,514 . In the broader markets, BSE Midcap and Smallcap indices settled 1.8% lower. Market breadth ended weak with 1958 losers and 977 gainers on the BSE.

"Market witnessed intense selling on US election jitters and the FED policy today. The opinion poll suggests a neck to neck competition. Investors believe that the volatility will rise until the expectation on US election result is really factored in. The FED is likely to maintain the key rates but market is focusing on any signs of rate hike trajectory." said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.

Foreign portfolio investors were net sellers in equities worth Rs 124 crore on Tuesday, as per provisional stock exchange data.

GLOBAL MARKETS

The CBOE (US) volatility index edged higher and was up 8.8% at 18.56. Volatility Index is a measure, of the amount by which an underlying Index is expected to fluctuate, in the near term.

Asian stocks ended lower after reports suggested that Republican Presidential candidate Donald Trump is seen closing the gap with his Democratic rival Hillary Clinton ahead of the elections early next week. Japan's Nikkei emerged as the top loser down 1.8% followed by Hang Seng which eased 1.5% while China's Shanghai Composite slipped 0.6%. Singapore's Straits Times ended down 0.2%.

European shares were trading lower after recent polls suggest that Republican candidate Donald Trump is ahead of his rival Democratic candidate Hillary Clinton in the race to the White House. The CAC-40, DAX and FTSE-100 were down 0.4%-0.8%.   

INDEX MOVERS


Index heavyweights were among the top losers with RIL and ITC closing 1%-2% lower followed by Tata Motors, TCS and ONGC.

SBI ended down 2.6%. The five associate banks of State Bank of India (SBI) have booked heavy combined loss of Rs 3,096 crore in the financial year’s second quarter ended September, on a sharp rise in provisions for stressed loans. The highest loss this time was reported by State Bank of Patiala (SBP) at Rs 1,340 crore, followed by State Bank of Hyderabad (SBH) at Rs 776 crore.

Lupin settled 1.3% lower. The pharma major announced that it has received final approval for Norgestimate and Ethinyl Estradiol Tablets USP, 0.25 mg/0.035 mg from the United States Food and Drug Administration (USFDA) to market a generic version of Janssen Pharmaceuticals, Inc.'s Ortho-Cyclen 28 Tablets (Norgestimate/Ethinyl Estradiol).

NTPC ended up 0.7%. The PSU power major announced that in continuation with company's earlier disclosures in respect of Hindustan Urvarak & Rasayn (HURL), a joint venture company formed between NTPC and Coal India (CIL), a supplemental joint venture agreement has been signed on 31 October 2016 amongst NTPC, CIL, Indian Oil Corporation (IOC), Fertilizer Corporation of India (FCIL) and Hindustan Fertilizer Corporation (HFCL) in order to induct IOC, FCIL and HFCL, as joint venture partners and shareholders in HURL.

Mahindra & Mahindra gained nearly 3% after reporting a strong 61% year on year (YoY) growth in total tractor sales at 45,177 units in October 2016.

Bajaj Auto ended flat. Export of motorcycles in October 2016 declined 11% to 94,895 units compared with 106,691 units in October 2015.

Bharti Infratel extended gains to end 2.7% higher amid a media report which suggested that the private equity heavyweight KKR and pension giant Canada Pension Plan Investment Board (CPPIB) are eyeing stake in the company.

BROADER MARKETS

Among others, shares of public sector undertaking (PSU) banks were under pressure with the Nifty PSU Bank index dropping over 3% on the National Stock Exchange (NSE). Canara Bank, Oriental Bank of Commerce and Punjab National Bank (PNB) were down more than 5% each, while Bank of India, Syndicate Bank, Union Bank of India, IDBI Bank, Bank of Baroda and State Bank of India were down in the range of 3%-4% on NSE.

MOIL gained nearly 5% to hit a 5-year high after the company hiked prices of various grades of manganese ore with effect from November 1, 2016.

Ujaas Energy surged over 9% on the back of heavy volumes after the company said that it has bagged order from Airport Authority of India (AAI).

Sundram Fasteners gained over 4% after the company posted a strong 82% year on year (YoY) growth in standalone net profit at Rs 77 crore for the quarter ended September 30, 2016 (Q2FY17). The auto parts & equipment firm had a profit of Rs 42 crore in the same quarter year ago.