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The pangs of demonetisation resulting in a cash crunch, coupled with a truncated trading week, saw equity markets losing another 2 per cent on Tuesday. The Nifty lost 2.26 per cent to close at 8,108 (188 points) while the Sensex lost 1.92 per cent (514 points) to close at 26,305.
Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services, said, “As the demonetisation drive entered the second week, the ripple effect of cash squeeze continued across sectors such as realty, jewellery, etc. The pull-out by FIIs to the tune of over ₹7,000 crore in the last few days have exacerbated the volatility, and Indian markets are less likely to receive much respite, as Parliament session is likely to see a rocky start on Wednesday. Hope now rests on CPI figures which could influence the RBI rate decision, when it meets in early December.”
A report by Kotak Institutional equities observed: “According to official estimates, about ₹3 lakh crore has been deposited with banks, while ₹50,000 crore has been exchanged between November 10-13. Anecdotal evidence suggest that only about 40 per cent of the ₹3 lakh crore collected until last week (₹1.2 lakh crore) has so far been transferred to the currency chests owing to operational difficulties. With additional deposits in the coming days, we see further upside to the CRR balances, which would boost system liquidity even more.”
FPIs pulled out net equities worth ₹2,354 crore, while retail investors on the BSE nearly matched it with a net buy position of ₹2,140 crore. DIIs had a net buy position of only ₹105 crore on Tuesday.
It was a highly volatile trading session with the India VIX closing at 20.1450, up 16.01 per cent. All sectoral indices barring Nifty PSU Bank and Nifty IT closed in the red. Mid- and small-cap stocks were the worst affected. The S&P BSE Midcap index slumped 3.91 per cent while the small-cap index plunged 4.67 per cent.
Apollo Hospitals, Bata India, TCS, Tata Elxsi, Titan, Religare and PNB Housing were among the stocks that hit 52-week lows on Tuesday.
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