Nifty Settled below 8,100 for the first time in last five months on 17th November. Demonetization and US Fed rate hike expectations were the major reasons behind this continued fall. The Sensex ended 71 points lower at 26,228 and Nifty fell 32 points to settle at 8,080.
The BSE Midcap and Smallcap indices slipped 0.4% and 0.6%, respectively. The markets ended with bearish breadth as 1,664 stocks ended lower while 950 ended higher on the BSE. Bharti Airtel was the biggest loser among Sensex 30 stocks, down more than 4%. Coal India, HDFC Bank and Asian Paints also fell by 1-2%.
However, ITC, ICICI Bank, HUL, Axis Bank, GAIL, Cipla and NTPC gained 0.5-1.5%. Auto stocks were down due to likely slowdown in sales after demonetization. Bajaj Auto, Maruti Suzuki and Hero Motocorp fell 1-2.5%. Tata Motors bucked the trend and ended up over 3%.
Government announced on Thursday some new measures to ease the cash crunch caused by the move. It has also allowed farmers to draw money from banks against loans sanctioned to them.
Analysts expect “As we get more clarity on the impacts of demonetization on the individual sectors, the volatility may continue. While gains on the indexes right now will be short term, one can expect selling to resume soon.”
Investors have become very cautious about the current quarter’s earnings of Indian firms since the demonetization move. Many analysts are expecting more bleeding at the Dalal Street as earning may decline due the sudden Demonetization. Development Bank of Singapore (DBS) said that “India’s bank note reform has pushed up deposit growth and boosted liquidity. This may in turn depress the inflationary pressures.” With credit growth still weak, excess liquidity has pushed Indian ten-year bond yields sharply lower this week.