Markets end negative, take a hint from Fed about the rate cut

For the second consecutive day, markets on Wednesday ended red after taking a hint of rate hikes in the upcoming year from the new Federal Reserve chair Jerome Powell.

“The US Fed Chair acknowledged the strength in the US economy in his testimony on the monetary policy and economy before the US House of Representatives' Financial Services Committee”, said Karthikraj Lakshmanan, Senior Fund Managar- Equities, BNP Paribas MF. His statements, according to Lakshmanan, sparked fresh concerns of faster rate hikes in 2018, reviving fears of capital outflows from emerging markets. “As rates in developed markets rise, they become more compelling investments when compared to emerging markets, on a risk adjusted basis”, he added.

At the end of the day, the 30-share BSE Sensex was down 162.35 points at 34,184.04 and the 50-share NSE Nifty declined 61.40 points to 10,492.90.

“Markets exhibited intraday volatility, with GDP data release expected post-closing, and monthly auto numbers scheduled from tomorrow onwards”, said Anshul Mishra Fund Manager- Equity, Union AMC. 

The trading session ended with Infosys, Asian Paints, SBI, HeroMotoCop, UPL and Eicher Moters being the top gainers while Hindustan Unilever, ICICI Bank, Axis Bank, Vedanata and India Bulls Housing Finance as top losers. Sectorally apart from Consumer durables, realty and technology, everything else ended on a negative note.

“The weak macroeconomic data from Asian countries including India further stoked the negative sentiment in the market. The Nikkei India Manufacturing PMI fell to 52.1 in February 2018 from 52.4 in January 2018. The sentiment was also cautious ahead of the release of data on India’s Gross Domestic Product for Oct-Dec 2017”, said Mr. Laxmanan.

India’s GDP grew to 6.3% in Jul-Sep 2017 from 5.7% in Apr-Jun 2017 and at the time of writing of this piece, the GDP data for the Q3 (October-December) was out and stood at 7.2%, thus replacing China as a fastest growing country in the World.  

In broader markets, BSE Midcap index closed 0.23 per cent down, however, the Smallcap index closed 0.21 per cent higher, outperforming benchmark Sensex.

The net value withdrawn by the foreign investors was Rs1750.52 cr while the net value invested by the domestic investors was Rs1596.89 cr.

All major markets across the World ended red after Jerome Powell, the New Chair of Federal Reserve hinted towards three interest rates hike in the current year. Nikkei and Hang Seng fell more than 1% while Shanghai Composite dropped by 0.99%. At the time of writing this piece, FTSE 100 was down by 0.29%, DAX was down by 0.32% and S&P 500 had closed 1.27% down on the previous day.

Meanwhile, among in the precious metal section, gold gained 0.25% by closing on Rs 30,371 while crude oil prices dipped 0.49% to end at Rs. 4,102.