Markets close flat as session washed out, rupee swamped

The Indian equity markets closed flat on Thursday, as the initial gains made on the back of positive macro-economic data diminished on account of the government's inability to pass key economic legislations on the last day of the monsoon session on Thursday.

Nevertheless, after three days of continued losses this week, the barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) closed 37 points up.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) also gained marginally -- by 6.40 points or 0.08 percent at 8,355.85 points.

The S&P BSE Sensex, which opened at 27,635.25 points, closed at 27,549.53 points -- up 37.27 points or 0.14 percent from the previous day's close at 27,512.26 points.

The Sensex touched a high of 27,791.10 points and a low of 27,496.29 points in the intra-day trade.

Investor were seen hopeful of a rate-cut based on healthy macro-economic data points which were released late on Wednesday.

The macro-economic data points showed a fall in India's annual retail inflation rate to 3.78 percent in July and a rise in the factory output to 3.8 percent in June.

"Both the Consumer Price Inflation (CPI) index and Index of Industrial Production (IIP) increased the hopes of a rate cut," Anand James, co-head, technical research desk, Geojit BNP Paribas told IANS.

Thursday's intra-day rally of 279 points eased the bearish outlook of the markets. The markets lost a total of 724 points during the first three trading days of the week.

The initial gains receded as negative cues such as the impasse over GST (goods and services tax) bill, and devaluation of the Chinese yuan coupled with a depreciating rupee impacted investor sentiments.

Notwithstanding the positive triggers brought in by the CPI and IIP data points, the negative sparks flared volatility.

On the global front, the devaluation of the yuan just before the US Fed's monetary policy decision impacted the Indian rupee which fell to a 24-month-low at Rs.65.23 to a dollar.

On the bright side of the volatile day's trade, the possibility that the government might extend the "Monsoon Session" or call for a "Special Session" of parliament to pass the GST bill kept investors optimistic about the future of the key economic legislation.

"The signals that are coming -- like an extension of the monsoon session or a proposed special session to get the GST bill passed -- are very encouraging," Devendra Nevgi, chief executive of ZyFin Advisors told IANS.

"The India growth story is based on the ability of the government to bring in reforms for the central bank to cut rates and usher in the demand by propping-up the consumer sentiment. The lack of reforms will send in a dampening signal to the rest of the world," Nevgi elaborated.

Lately, investors have been reluctant to chase higher prices given the possibility that the reform process might be stalled due to the government's inability to conduct business in parliament.

Sector-wise, healthy buying was observed in banks, healthcare and automobile stocks, while metal, consumer durables and technology, entertainment and media (TECK) scrip came under selling pressure.

The S&P BSE bank index increased by 140.54 points, followed by healthcare index which gained by 139.27 points and automobile index which rose 81.02 points

However, the S&P BSE metal index tanked by 217.98 points, consumer durables index declined by 109.75 points and the TECK index tripped by 35.66 points.

Major Sensex gainers during Thursday's trade were Mahindra and Mahindra, up 3.27 percent at Rs.1,340.30; Cipla, up 2.63 percent at Rs.725.55; Lupin, up 2.23 percent at Rs.1,757; Axis Bank, up 1.54 percent at Rs.566.60; and Coal India, up 1.52 percent at Rs.377.10.

The major Sensex losers were: Vedanta, down 9.26 percent at Rs.103.35; Tata Steel, down 6.22 percent at Rs.233.60; Hindalco Inds, down 5.21 percent at Rs.90.90; Bharti Airtel, down 3.36 percent at Rs.384.35; and Gail, down 1.70 percent at Rs.332.55.

Among the Asian markets, Japan's Nikkei was up 0.99 percent, Hong Kong's Hang Seng gained by 0.43 percent, and China's Shanghai Composite Index rose by 1.76 percent.

In Europe, the London FTSE 100 index was up 0.65 percent, Germany's DAX Index was higher by 1.66 percent, and French CAC 40 augmented by 1.81 percent at the closing bell here.