Vote impasse in Italy, rail budget spook D-Street

Tags: News

Sensex joins global rout, sheds 316 points to hit 3-month low

Global sell-off due to inconclusive election results in Italy and a lackluster rail budget sank Indian stocks to their lowest close in three months on Tuesday.

With only one day to go for Thursday’s Union budget, the benchmark S&P BSE Sensex slipped below the 19,000 mark in intra-day trade, before closing at 19,015, down 316.55 points or 1.64 per cent. This was the lowest close for the benchmark since November 27.

NSE’s Nifty closed below the crucial 5,800 mark at 5,761.35, down 93.40 points or 1.60 per cent. This was the biggest single-day fall for the equity benchmarks in 2013.

Leading European equity indices fell between 1 per cent and 2.5 per cent after Italy’s general election threw up a hung parliament.

Analysts said the rail budget also disappointed companies and investors with freight charges going up by 5 per cent on account of higher fuel charges, which impacted bulk transport items such as iron ore and steel.

Tuesday’s fall followed the collapse of several mid-cap stocks on Monday. The selloff in mid-cap and small-cap stocks too continued for another day with the S&P BSE mid-cap index shedding 1.76 per cent and S&P BSE small-cap index falling 2.43 per cent.

Dipen Shah, head of private client group at Kotak Securities, said: “Weak opening of European markets added to the selling pressure. European shares opened sharply lower, with Italian stocks as worst performers, as the political deadlock gripped the euro zone’s third-largest economy after an inconclusive election outcome.”

Foreign institutional investors (FIIs) remained on the sidelines after they bought stocks net of just Rs 74.68 crore while domestic institutions were net sellers of equities worth Rs 160.61 crore, the exchange data showed.

Rajesh Jain, EVP & head of retail research at Religare Securities, said: “The impact of the rail budget on the market was neutral. Of course, Thursday’s Union budget would be the next trigger for the market.”

Among the sectoral indices, the worst hit were S&P BSE oil & gas index, which was down 3.07 per cent, followed by auto index (2.76 per cent), capital goods index (2.44 per cent) and metal index (2.30 per cent), while S&P BSE IT index bucked the trend with a gain of over 0.89 per cent.

Rikesh Parikh, vice-president for equities at Motilal Oswal Securities, said he expected the volatility in the market to persist with events such as the Union budget and the expiry of futures and options (F&O) contracts coinciding on Thursday.

Frontline stocks that fell sharply were Hindalco (4.49 per cent), Bajaj Auto (4.20 per cent), HDFC (3.74 per cent), ONGC (3.74 per cent) and Reliance Industries (3.51 per cent).

Alex Mathews, head of research at Geojit BNP Paribas Financial Services, said: “IT stocks were trading higher due to a week rupee. Infosys, TCS and MindTree breached their 52-week highs.”

raviranjan@mydigitalfc.com

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