India’s equity benchmarks fell on Monday amid worries over a pick-up in inflation and slowdown in industrial production. The BSE Sensex cracked below 33,000, but finally ended at a three-week low of 33,033.56, down 281 points, or 0.84 per cent.
The NSE Nifty settled the day lower 96.80 points, or 0.94 per cent, at 10,224.95 after shuttling between 10,334.15 and 10,216.25 during the day.
The rupee also extended its fall for the second straight session and saw a 26 paise plunge in value to an over one-month low of 65.42 a dollar amid sustained demand for the US currency. Worries over a Fed rate hike alongside aggressive hedging strategy adopted by importers in the wake of implied currency volatility and ahead of CPI and WPI inflation data release predominantly kept forex market undertone shaky. Investors also kept an eye on Brent crude prices and the fast-developing West Asian crisis.
Dealers said slower growth in industrial output brought the fear element back for investors as both stock benchmarks lost nerve and ended with sizeable losses. Costlier food items, particularly vegetables, pushed up retail inflation in October to 7-month high of 3.58 per cent, the government said after the market closed for trading. “Domestic investors turned cautious giving more weight to slowdown in IIP to 3.8 per cent, geopolitical tensions in the Middle East and
continued advancement in crude prices. Despite significant tax relief at the recent GST council meet, expectation of rise in CPI and WPI inflation added to the cautiousness,” said Vinod Nair, head of research, Geojit Financial Services.
Industrial production (IIP) grew at a slower pace of 3.8 per cent in September 2017 compared to 5 per cent in September 2016 and 4.5 per cent in August this year, data released by the Central Statistics Office (CSO) showed on Friday.
Adani Ports sank the most, down 4.11 per cent, after its logistics arm reported a dip in quarterly earnings. ONGC, Coal India, HDFC and L&T also ended on the losers’ side. Idea Cellular was also down 3.61 per cent after the telecom operator logged a consolidated net loss for the September quarter. Shares of Reliance Communications plummeted 13.5 per cent to Rs 12.15 on the BSE after the company posted a consolidated loss of Rs 2,709 crore in the second quarter ended September. Broader markets lay low too as small-cap and mid-cap indices fell by up to 0.41 per cent.
“Tepid IIP numbers revived concerns of GST impact on growth, and markets chose to be cautious ahead of inflation data release Meanwhile, rupee’s steep fall, and oil’s rise may also chip away any positivity that have risen from GST rate cuts which held markets together, ” said a dealer.
Sameet Chavan, chief analyst, Angel Broking, said, “trading for the week kick started on a muted note, taking cues from the quiet global bourses. However, index remained under pressure right from the word go and eventually closed well below the 10,300 mark.”