Key indices posted modest losses tracking weakness in global stocks and after the Federal Reserve hiked the fed-funds rate by a quarter-point to between 1 per cent and 1.25 per cent. The S&P BSE Sensex shed 205.66 points or 0.66 pct to settle at 31,056.40.
The sensex has dropped by 216.89 or 0.69 per cent in two weeks.
The Nifty 50 index dropped 80.20 points or 0.83 pct to settle at 9,588.05.
There had been concerns that higher interest rates in the United States will boost returns on US debt and bank deposits, drawing money back from riskier markets.
Trading for the week began on a dull note as the key benchmark indices registered modest losses Monday.
Key benchmark indices garnered modest gains after gyrating in a small range during the day Wednesday as firmness in most global stocks and data showing wholesale price inflation easing in May, supported gains on the bourses.
Key benchmark indices registered modest losses Thursday weighed by weakness in global stocks as investors stepped back from risky assets following the Federal Reserve’s policy decision.
From the 30-share Sensex pack, 22 stocks rose and eight fell.
Reliance Industries (RIL) jumped 3.92 pct. The stock was the biggest gainer from the Sensex pack. RIL and BP Thursday announced that they are moving forward to develop already-discovered deepwater gas fields, bringing new gas production for India.
The two companies have agreed to deepen and expand their partnership to work jointly across a wide range of areas throughout India’s energy sector.
IT stocks dropped on recent slide in tech stocks in the US and after anemic economic data in the US, the biggest IT outsourcing market for Indian IT companies.
The annual rate of inflation, based on monthly wholesale price index (WPI) stood at 2.17 pct (provisional) for the month of May 2017 over May 2016 as compared to 3.85 pct (provisional) for the previous month.
The retail price inflation, as measured by the consumer price index (CPI), slowed to 2.18 pct in May from 2.99 pct in April 2017 as food prices started falling from their year-ago level.
The index of industrial production (IIP) rose by 3.1 pct in April led by robust growth in electricity generation.
Major losers from the sensex pack were TCS 4.49 pct, followed by Larsen 2.81 pct, M&M 2.66 pct, Lupin 2.55 pct, Tata Motors 2.50 pct, Maruti 2.48 pct, Coal India 2.39 pct, Cipla 2.35 pct, Bharti Airtel 2.04 pct, Icici Bank 1.88 pct and ONGC 1.36 pct.
The total turnover during the week on BSE dropped to Rs 18,341.14 cr from the last weekend’s level of 20,950.40 cr while NSE rose to Rs 1,16,212.33 cr from Rs 1,10,995.07 cr last week.
Gold, silver extend losses
Gold extended losses for the second week at bullion market owing to slackened demand from local jewelers and retailers amid a weak global trend.
Silver also slumped below the Rs 39,000-mark by plunging Rs 1,100 to Rs 38,800 per kg on reduced offtake by industrial units and coin makers.
Marketmen said fall in demand from local jewellers and retailers at domestic spot market and a weak global cues after upbeat US data strengthened the dollar and eroded demand for the precious metals, mainly kept pressure on gold prices.
Globally, gold settled the week lower at USD 1,253.40 an ounce and silver at USD 16.69 an ounce in New York.
On the domestic front, standard gold (99.5 purity) resumed lower at Rs 28,840 per 10 grams from last Friday’s closing level of Rs 28,945 and dipped further to Rs 28,720 before ending at Rs 28,670, revealing a loss of Rs 275, or 0.95 per cent.
Pure gold (99.9 purity) also commenced negative at Rs 28,990 per 10 grams compared to preceding weekend level of Rs 29,095 and dropped further to Rs 28,870 before finishing at Rs 28,820, showing a loss of Rs 275, or 0.95 per cent.
Silver ready (.999 fineness) opened lower at Rs 39,700 per kilogram from last weekend’s level of Rs 40,085 and fell further to Rs 39,000 before closing at Rs 38,960, revealing a sharp loss of Rs 1,125, or 2.81 pct. Sovereign, however, moved in a narrow range in limited deal and settled at previous level of Rs 24,400 per piece of eight gram.
Rupee suffers due to Fed move
The rupee wavered once again and lost some steam after a brief recovery against the beleagured US dollar as the US Federal Reserve delivered its widely expected rate hike and maintained a hawkish tone going forward.
After tumbling to a three-week low during the mid-week crash, the home currency finally ended with a loss of 19 paise at 64.43 against the greenback.
The most powerful central bank in the world – the US Federal Reserve announced a quarter-point increase in the target range for the federal funds target range of 1.00 to 1.25 per cent.
Forex market sentiment turned shaky as currency traders remained cautious, largely impacted by the interest rate hike by the US Fed and its hawkish view to trim balance sheet with one more rate hike during the year.
World financials and currency markets too reacted vehemently to the landmark outcome, ending months of lingering confusion and uncertainty.
However, robust stockpile of forex reserves and improving macroeconomic environment alongside policy reforms by the Narendra Modi government largely helped the Indian currency to withstand the volatility and pressure, a forex dealer said.
Giving a boost to forex trade, the official data showed country’s exports rising by 8.32 per cent to USD 24 billion in May, though the trade deficit too widened to touch nearly 30-month high of USD 13.84 billion, mainly due to increase in gold imports.
India’s imports too increased by 33 per cent to USD 37.85 billion in May in 2017.
In the meantime, after touching a life-time high, the country’s forex reserves marginally declined by USD 11.5 million to USD 381.156 billion in the week to June 9 due to fall in foreign currency assets, the Reserve Bank said.
Foreign funds were net buyers in equities after recent spell of selling and bought USD 679.53 mln as per provisional data from stock exchanges.
The rupee resumed lower at 64.30 from last Friday’s closing value of 64.24 at the Interbank Foreign Exchange (forex) market due to bouts of dollar demand amid volatile currency market undertone.
It remained under immense selling pressure most part of the trading sessions in the face of heavy dollar buying from banks and importers.
The local unit tumbled to hit a three-week low of 64.74 on Friday before staging a dramatic and substantial reversal to end at 64.43, showing a steep fall of 19 paise, or 0.30 per cent.
The RBI, meanwhile fixed the reference rate for the USD at Rs 64.5883 and Euro at Rs 72.0482, respectively.
In worldwide trade, the greenback took a breather from US Fed-inspired rally as investors turned skeptical following disappointing U.S. macro data including Friday’s consumer confidence and housing-market reports.
