Mumbai, October 10: Normalcy returns to the market, following a sharp rise in the previous session as once again the spate of bad news gripped the sentiment on Thursday. Ahead of its sharp rise the markets had witnessed six day losing streak since September 30. The market also turned cautious on Thursday ahead of the beginning of the eagerly awaited earnings reports for the September quarter (Q2FY20).
The Sensex ended 297 points lower at 37,880 while Nifty settled at 11,234, down 0.70 per cent. Moody's Investors Service also slashed its 2019-20 GDP growth forecast for India to 5.8 per cent from 6.2 per cent earlier, citing weaker growth outlook which will dampen the prospects for fiscal consolidation. US-China trade talks would start today amid a lot of pessimism. While a broad agreement seems unlikely, China indicated it is open to a limited deal, provided no more tariffs are imposed. Thus development over the US-China trade talks and results from TCS and Infosys would drive the market over the next few days, dealers said.
Shares in Indiabulls Housing Finance Ltd slumped 19.5 per cent after the central bank blocked its proposed merger with Lakshmi Vilas Bank (LVB) Ltd. It was the latest in a series of negative headlines surrounding the banking industry, which is saddled with a mountain of soured debt.
The stocks from the telecom sector gained following Reliance Jio said it would start charging customers for calls made through its network to other operators. This move, analysts felt, could signal a rise in industry stock prices and revenues if more operators follow Jio's lead Jio’s rivals Bharti Airtel Ltd and Vodafone Idea Ltd gained 4 per cent and 5 per cent respectively. Market heavyweight RIL rose 2.6 per cent.
All the sectors ended in red led by Nifty PSU Bank index, which was down nearly 3 per cent. Rising concerns over US-China trade talks and poor earnings season domestically dampened the sentiments.
Siddhartha Khemka, head of Retail Research at Motilal Oswal Financial Services said, “Technically, Nifty formed an Inside Bar on daily scale as it traded in the range of the previous session. It has recently taken support near to 11,100 zones but follow up buying is missing at higher levels. Now it needs to hold above 11,250 zones to witness a bounce towards 11,330 then 11,400 zones while on the downside major support is seen at 11,100 levels.”
Rohit Singre, senior technical analyst at LKP Securities said, "Strong fall of Indiabulls Housing Finance and some more names in NBFC sector taking the rounds can be one of the reasons for today’s fall. The index has also witnessed profit booking from strong resistance. So this can be a technical fall as well. Nifty Bank showed more correction after Indusind Bank results as stock fell below 6 per cent intraday".
Shrikant S. Chouhan, senior vice president, Equity Technical Research, Kotak Securities said, “Market took a breather today after Wednesday’s massive rally. Bank Nifty, the biggest gainer on Wednesday was today’s big loser. It has lost nearly 900 points out of the total gains of 1100 points on Wednesday. Broader market remained weak. Fundamentally, we are of the view that the market has taken a cautious bet ahead of US and China tariff talks, as well as the results of index giants like TCS and Infosys. Technically, the market has formed an “Inside body” formation that generally leads to a trending wave. On Friday, 11,330 and 11,090, would be major levels to watch out and we expect major activity beyond the same”.
Kicking off the earnings season, IndusInd Bank declared its Q2 results which saw rise in its gross NPAs, thus concerning the market. Overall, the Q2FY20 results season is expected to tepid, which is weighing on investor sentiment.