Sensex, Nifty Struggle As Global Rally Cools Off

 Sharemasterindia.com: After a two-day monstrous rally, BSE Sensex and Nifty traded lower on Thursday, tracking weak Asian markets. The Sensex fell as much as 432 points in early trade while Nifty slumped below 7,700 levels. The rupee also fell today, hurting the sentiment in domestic stock markets. However, in early noon trade, Sensex pulled itself off lows and was down nearly 250 points while Nifty hovered near 7,750 levels.


Here are top 10 developments:

1) Analysts say that in the short term Indian markets are likely to take cues from its global peers. The two-day rally in global markets cooled off today amid on fresh concerns about global growth, particularly China's economy.

2) Indian markets are likely to remain volatile till the crucial US Fed meet, which is scheduled for September 16-17, say analysts. An interest rate hike in the US could accelerate the selling from foreign investors who would like to park their money in US bonds. Besides, a rate hike in the US would strengthen the dollar, putting further pressure on rupee.

3) Analysts also remain worried about the relentless selling from foreign investors in Indian stock markets. Foreign investors sold a record Rs 16,877 crore worth of domestic stocks in August. On top of that, they sold Indian stocks worth nearly Rs 6,000 crore in the past seven sessions.

4) Domestic institutional investors have been buyers of stocks despite the selloff from foreign investors, providing some support to Indian markets. On Wednesday, they bought shares worth nearly Rs 1,200 crore.

5) Traders are also watching the value of the rupee which affects the dollar returns of foreign investors. The rupee fell to 66.76/dollar at its day's low against Wednesday's close at 66.41.

6) Indian stock markets witnessed broad-based selling pressure with all the BSE sectoral indices trading in the red. Banking, metal, realty and capital goods stocks that had outperformed in the previous two sessions, witnessed strong selling pressure.7) Asian stocks fell today after US stocks retreated overnight and Japan machinery orders unexpectedly shrank, deflating investors' appetite for riskier assets. Japan's key gauge of capital spending unexpectedly fell for a second straight month in July, signalling that the economy is struggling to get back on track after contracting in the second quarter.

8) Also weighing on Asian markets, China's producer prices fell for the 42nd straight month in the latest sign that deflation remains a significant risk for the world's second-largest economy.

9) Japan's Nikkei fell nearly 2.5 per cent while China stocks slipped 1.5 per cent. Overnight, in the US, S&P 500 ended down 1.5 per cent on Wednesday. On Wednesday, Standard & Poor's downgraded Brazil to a junk-grade credit rating, just seven years after it first won an investment-grade rating, further hurting the sentiment in global markets.

10) The downgrade of Brazil hurt the shares of select domestic pharma and power sector companies that had exposure to the Latin American nation.