Global woes drag Sensex 242 pts; Nifty ends at 2-month low

Moneycontrol Bureau

The market closed at two-month low on Friday, tracking weakness in global peers on growth concerns and China volatility. Banks, realty, auto and infrastructure stocks dragged the market while FMCG and select healthcare stocks helped the market show some recovery in last hour of trade. Even the likely relief to FIIs on MAT levy aided the late recovery.

The 30-share BSE Sensex dropped 241.75 points or 0.88 percent to 27366.07, the lowest level since June 19, after hitting an intraday low of 27131.44. The 50-share NSE Nifty closed tad below the 8300 level. It touched day's low of 8225.05, before closing at 8299.95, down 72.80 points or 0.87 percent.

The broader markets also trimmed losses in late trade. The BSE Midcap and Smallcap indices were down 0.9 percent and 0.6 percent, respectively. The market breadth was negative as about 1001 shares advanced against 1806 shares declined on the Bombay Stock Exchange.

Experts feel the selling pressure (amid consolidation) may continue in near term due to global woes, though the likely recovery in earnings may support market in long term.

Ridham Desai, Morgan Stanley said at the end of this season, consensus estimates Sensex earnings growth at 10 percent Y-o-Y for FY2016 and 20 percent Y-o-Y for FY2017.

According to him, the earnings cycle is turning given India's macro is healing and earnings will likely improve through FY2016. As this quarter showed, the risk to India's earnings comes largely from global sources, he said.

Global markets were under pressure on poor manufacturing data in China and prospects of fresh elections in Greece. China's Shanghai cracked more than 4 percent after Caixin China manufacturing data fell to 47.1 in August against 47.8 in July. Hang Seng 348 points and Nikkei lost 3 percent. Major European markets were down more than 1 percent (at 16 hours IST).

Brent crude is set for the longest weekly losing streak since 1986, down 0.8 percent to USD 46.23 a barrel. Gold cooled off after hitting a one-month high on the global risk aversion, up 0.17 percent to USD 1155.20 an ounce.

Back home, the Sensex lost 2.5 percent and the Nifty dropped 2.6 percent but the loss in broader markets was less compared to benchmarks. CNX Midcap and BSE Smallcap indices declined 1.2 percent. BSE Realty index saw major selling pressure, down 9 percent.

The rupee tumbled to a fresh 2-year low on weakness in equity market and sustained capital outflows by foreign funds. Strong demand from importers and banks also weighed on the local currency. The currency depreciated by 29 paise to 65.83 a dollar, which was in line with most Asian and emerging markets currencies. Exporters sold dollars at higher levels, but the intraday pull back was short lived as the currency has again moved to intraday low at 65.91.

Meanwhile, the AP Shah panel has recommended giving relief to FIIs on MAT levy prior to April 1, 2015 and the government is favourably considering these recommendations. Sources told CNBC-TV18 that a decision is likely next week.

Larsen & Toubro, Tata Motors, Bajaj Auto, Bharti Airtel, Vedanta and GAIL were prominent losers, down 2.5-4 percent. Bank Nifty was down more than 1 percent as HDFC Bank, Axis Bank and State Bank of India slipped over a percent. ICICI Bank was down 0.7 percent and Housing finance company HDFC declined 1.6 percent.

However, Infosys bucked the trend, up 1 percent on weak rupee. Morgan Stanley said the launch of three new service offerings on Thursday will help the company transform into a next generation services company. It is a step forward towards Infosys achieving USD 20 billion revenue from new service offerings by 2020, he added.

HUL, ITC, Cipla, Sun Pharma and Hindalco were other gainers, up 0.3-1 percent.