Sensex ends 45 points down on rupee strength, rising European bond yields

Our Bureau |Agencies | | Updated on: Dec 06, 2021

Indian shares edged lower on Thursday, dragged down by losses in blue chips on rising bond yields in Europe, while export-oriented stocks dropped as the rupee rose above the key 64 level on inflows ahead of disinvestments in key companies.

German and US bond yields surged to their highest in more than five months, making equities look more expensive in comparison to debt and keeping the Asian stock markets subdued.

The rupee rose to as high as 63.81 per dollar versus its Wednesday's closing level of 64.00/01 ahead of inflows related to stake sales in power producer NTPC and oil refiner Indian Oil Corp.

The BSE index closed down by 45.04 points or 0.17 per cent at 27,206.06 after earlier falling as much as 1.1 per cent, while the broader NSE index fell 11.25 points or 0.14 per cent at 8,224.20 after earlier losing up to 1.2 per cent.

Among BSE sectoral indices, IT index fell the most by 0.71 per cent, followed by consumer durables 0.41 per cent, TECk 0.34 per cent and capital goods 0.17 per cent. On the other hand, PSU index gained the most by 1.9 per cent, followed by realty 1.07 per cent, oil & gas 1.02 per cent and auto 0.85 per cent.

Top five Sensex gainers were Hindalco 2.92%, SBIN 2.37%, Bajaj Auto 1.87%, M&M 1.71% and Tata Steel 1.7%, while the major losers were VEDL 1.65%, Sun Pharma 1.12%, Infosys 1.09%, Wipro 1.04% and HDFC 0.92%.

The Union Cabinet had on Wednesday approved the sale of shares in the two state-run companies as part of its plan to raise $11 billion from asset sales this financial year.

"The negative triggers have shifted from local to global factors but I think a firm bottom is in place," said G. Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.

Tax collections and capex mood indicate better days ahead, he added.

A report by SMC Investments and Advisors said: "Asian stocks remain mixed as weak data from US and China deter investor confidence. US markets closed lower as earnings of major companies showing weakness with slowing economic data in the backdrop. While the Commerce Department released a report showing another modest increase in US business inventories in the month of March, the uptick in inventories missed economist estimates. The report said business inventories inched up by 0.1 per cent in March after edging up by a downwardly revised 0.2 per cent in February. Economists had expected inventories to rise by 0.2 per cent compared to the 0.3 per cent increase originally reported for the previous month. The uptick in inventories was partly due to an increase in retail inventories, which rose by 0.3 per cent in March after climbing by 0.5 per cent in February."

Concerns about delay in key land acquisition reforms and over retrospective taxes on foreign investors have already led to a more than 10 per cent fall in Indian stocks since the record highs hit in March.

Also, HSBC had on Wednesday cut Indian shares to "underweight" from "overweight", the first major downgrade by a foreign bank since local shares began a rally last year, saying markets were overbought at a time when earnings were expected to slow and the scope of interest rate cuts were diminishing.

Global markets

European shares extended a losing streak on Thursday as bond market jitters and a rebound in the euro currency, whose weakness has benefited many European exporters, weighed on stocks.

Record low interest rates and government bond purchases by the European Central Bank (ECB) have kept a lid on the euro and buoyed European stocks, but signs of a rebound in the currency and on bond yields have caused volatile market movements.

The pan-European FTSEurofirst 300 index was down by 0.4 per cent at 1,563.16 points in early session trading. The FTSEurofirst lost ground in the previous two sessions, although it remains up by around 14 percent since the start of 2015.

Asian stocks ex-Japan were broadly flat while Japan's Nikkei 225 index fell 1 per cent, weighed down by the yen’s strength against the sagging dollar.

Published on May 14, 2015
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