Sensex holds 26k-mark, but ends 144 points lower; losses mounts to over 1,300 pts in last 10 out of 11 sessions

Even as the country is gearing up for the festive of lights celebration (Diwali) starting Tuesday, bears continued to run riot on the equity bourses with the BJP-led NDA’s defeat in the Bihar elections and worries about the US Fed’s likely rate hike next month taking toll on the markets. The rupee and 10-year benchmark bond also fell to their lowest levels since 16 September, but intervention by the RBI capped the weakness. Although, undertone of the market remained bearish as seen over the past two weeks, benchmark Sensex managed to pare losses to a major extent after being down over 600 points in early trades and ended above the psychological 26,000-mark. [caption id=“attachment_2391550” align=“alignleft” width=“300”]  Reuters[/caption] On the other hand, positive leads from other Asian counterparts was once again ignored by the local traders. While Japan’s Nikkei rose nearly 2 percent, China’s Shanghai Composite gained 1.6 percent at close even as Hang Seng eased 0.6 percent. Back to the domestic market, a late bout of short covering in FMCG, automobile and consumer durable scrips helped the index curtail losses with the 30-share BSE S&P Sensex ending the session at 26,121.40, down 143.84 points, or 0.6 percent from previous close. However, frenzied selling had engulfed the markets in early trade with Sensex opening 456 points lower and tanking to the day’s low of 25,656.90, down 608 points. Sharp fall in early trade was on expected lines as analysts feared the poll debacle may rejuvenate the opposition parties to block key legislative reforms, leading to further delay in the passage of key bills and hurt the overall growth prospects. However, as the trading progressed, markets consolidated some of the early losses as the poll debacle was more or less discounted by the traders over the past few weeks and hence some amount of short covering came to the fore in late trades. But taking into consideration today’s losses, the benchmark index has ended lower in ten out of last eleven sessions, tumbling over 1,300 points in as many sessions. The broader 50-stock CNX Nifty today ended lower at 7,915.20, down 39.10 points, or 0.5 percent. Moreover, strong US October employment numbers announced last Friday further strengthened the case for a rate hike by the Fed, which analysts fear could drive equity outflows from the emerging markets, including India, leading to a prolonged bearish sentiment. However, despite the persisting weakness, market breadth witnessed a turnaround as 1,484 stocks advanced against 1,132 declines on BSE. The recovery was mainly on account of a revival in investor sentiment towards the second-rung stocks with BSE Mid-cap index ending 0.4 percent higher and BSE Small-cap index closing 0.8 percent higher, thus outperforming the key benchmark indices. Global rating agency Fitch said, “The BJP’s defeat in the Bihar state assembly election does not change our view on the medium-term economic outlook for India. The loss may complicate politics for the central government, but we don’t expect major implications on the economic front.” A chief economist at CARE Ratings also said the economic situation will not deteriorate on account of the Bihar elections result. This is because for two reasons. First the economy is largely driven by private sector involvement which carries on independently of the government in power. Second, the government at the centre has done everything possible on the administrative side as well as through policies which can still largely go ahead irrespective of this outcome. Easing doing business or doing something on power, coal, telecom, steel etc. would carry on in the normal course and these are issues that matter. Among the major laggards in the Sensex pack, shares of Sun pharma tumbled nearly 6 percent to Rs 756.90 after reporting disappointing second quarter numbers. Similarly, BHEl dropped nearly 4 percent to Rs 184.40 and Dr Reddy’s declined 3.4 percent to Rs 3,504.60 after the company’s facilities were issued warning letters by the US drug regulator. However, select frontline stocks bucked the trend to end with steady to firm gains. Shares of Tata Motors rose 3.9 percent to Rs 411.65, Maruti jumped 2.5 percent to Rs 4,637.60, ITC moved up 1.6 percent to Rs 342.25 and Vedanta was up 1.5 percent at Rs 93.65.