Sensex plummet 327 points as investors turn careful of FOMC outcome, F&O expiry

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The Sensex and the Nifty plunged nearly 1.2 per cent as investors remained alert ahead of the conclusion of the US Federal Reserve’s meeting later in the day and the expiry of monthly derivatives contracts back home this week.

Although the US Fed is likely to keep interest rates stable this week, investors are looking forward for clues as to the timing of a widely expected rate hike.

Domestic shares will react to the news on Thursday, the same day when monthly derivatives contracts expire.

“Getting some clarity from the Fed on rates could give the markets some bounce,” G Chokkalingam, founder of Equinomics, a Mumbai-based research and fund Consultant firm said.

At 2.50 p.m., the 30-share BSE index Sensex was down 326.67 points or 1.2 per cent at 26,926.77 and the 50-share NSE index Nifty was down 94.55 points or 1.15 per cent at 8,138.85.

Among BSE sectoral indices, banking index fell the most by 2.94 per cent, followed by power 1.59 per cent, realty 1.46 per cent and healthcare 1.09 per cent. On the other hand, consumer durables index was the star-performer and was up 1.13 per cent, followed by TECk 0.02 per cent.

Top five Sensex gainers were Bharti Airtel (+1.65%), Tata Motors (+1.08%), ONGC (+0.93%), Cipla (+0.49%) and HUL (+0.18%), while the major losers were Axis Bank (-8.21%), ICICI Bank (-4.85%), SBIN (-2.73%), Lupin (-2.64%) and M&M (-2.29%).

Axis Bank fell despite posting July-September profit in line with expectations on Tuesday, as investors reacted to a sale of loans to asset reorganization companies at steep discounts.

Lupin’s disappointing quarterly results on Tuesday continued to weigh on pharmaceutical stocks. Lupin and Dr Reddy’s Laboratories fell more than 2 per cent each.

Beaten down telecommunications stocks recovered on Wednesday, with Bharti Airtel gaining 1.65 per cent while Idea rose 0.46 per cent.

Investors are also keeping an eye on InterGlobe Aviation Ltd’s $465 million initial public offering that was fully subscribed 1 p.m. (0730 GMT) on the second day of its bookbuilding issue.

India’s biggest listing in nearly three years is being closely watched by domestic and foreign investors as an indicator of demand for domestic equities.

Brokers

A report by Sageraj Bariya of East India Securities said “Equity investors remained cautious ahead of the FOMC meet outcome due later today. Markets would be jittery if there are strong indications of a December hike as the whole EM rally was triggered on hopes that the rate hike is not likely to happen this year. Even the US$ strengthened sending mixed signals to the markets. Asian markets following weak global cues except Japan which is trading up on yen weakness.”

Brokers said continued selling by investors, taking cues from weak Asian markets following overnight losses in the US markets ahead of a policy statement from the Federal Reserve dampened the sentiment here.

Investors are awaiting the US Federal Reserve’s policy statement which could provide clues about the timing of an interest rate hike.

Global markets

European shares are seen edging higher on Wednesday as investors digest a flurry of earnings reports ahead of a Federal Reserve policy decision later in the day.

Financial spreadbetters expected Britain’s FTSE 100 to open 1 to 4 points higher, or up as much as 0.1 per cent, Germany’s DAX to open up 30 to 32 points or as much as 0.3 per cent higher, and France’s CAC 40 to open 17 to 18 points higher, or up 0.4 per cent.

Asian stocks slipped on Wednesday, taking cues from an overnight decline on Wall Street and capped by caution ahead of a policy statement from the US Federal Reserve due later in the day.

MSCI’s broadest index of Asia-Pacific shares outside Japan declined by 0.6 per cent. Shanghai stocks dipped 0.1 per cent, Hong Kong’s Hang Seng fell 0.3 per cent and South Korea’s Kospi dropped 0.3 per cent.

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