Sensex snaps 6 sessions of gains on global volatility

A private PMI survey showed that the service sector activity, fell to 50.3 in June, from 51 in May, the lowest for the index in seven months and the second-lowest in a year.

By: ENS Economic Bureau | Mumbai | Updated: July 6, 2016 5:45 pm
BSE, Sensex, Nifty, NSE, News, Markets, business news, india markets, asia markets, world markets, stocks, stock price The expansion of the Union Cabinet fails to move investors in a big way.

Snapping six sessions of gains, the Sensex retreated from a 10-month high on Tuesday as investors paused ahead of announcements by major central banks this week, including the minutes of the US Federal Reserve’s June meeting.

The 30-share barometer Sensex closed at 27,166.87, a loss of 111.89 points, or 0.41 per cent. The index had risen over 881 points in the past six sessions. The 50-share NSE Nifty too slipped from its 10-month high by settling lower by 34.75 points, or 0.42 per cent, at 8,335.95.

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Meanwhile, snapping its four-day winning spree against the American currency, the rupee also dropped by 18 paise to close at 67.45 on fresh dollar demand from banks and importers on the back of higher greenback overseas and fall in equities. The expansion of the much-publicised Union Cabinet failed to move investors in a big way.

Risk aversion swept through Asian markets as data showing China’s manufacturing growth stalled last month coupled with warnings from the Bank of England that the UK’s vote to leave the European Union was already having an economic impact. Global investors made a dive for bonds, sending 10-Treasury yields as low as 1.377 per cent and Swiss yields negative all the way out to 50 years on bets the world’s major central banks will wade in with yet more stimulus.

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dsdThe Nikkei Services Business Activity index, which maps the service sector activity, fell to 50.3 in June, from 51 in May. This marks the lowest level for the index in seven months and the second-lowest in a year. Services sector grew at its slowest pace in seven months in June, marking the third straight month of a declining growth rate, as new business orders turned sluggish, a monthly survey showed today, adding to the clamour for rate cuts by the RBI.

Jayant Manglik, president, Religare Securities, said, “Participants were in profit taking mood from the beginning, citing weak global cues and absence of any positive trigger. In line with Nifty, sectoral indices ended flat to marginally lower and the market breadth too was reflecting the same bias. The profit taking in Nifty was on the expected line and we feel it may extend for a session or two prior to further upmove.”

According to Shreyash Devalkar, fund manager, BNP Paribas Mutual Fund, data showing a slowdown in growth in India’s services sector in June 2016 coupled with weakness in global stocks weighed on the sentiment on the domestic bourses.

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