Fry-day! RIL, bank stock drags Sensex, Nifty lower for 2nd consecutive session

Despite positive global market cues following the widely anticipated 25 basis point interest rate cut by the Federal Reserve, Indian benchmark equity indices Sensex and Nifty50 opened in the red for the second consecutive day on Friday. The decline was led by index heavyweight Reliance Industries and banking stocks.

The BSE Sensex was trading 210 points, or 0.26%, lower at 79,331. The Nifty50 was down 65 points, or 0.27%, trading at 24,134 around 9:28 am.

The Federal Reserve cut interest rates by a quarter of a percentage point on Thursday as policymakers took note of a job market that has "generally eased" while inflation continues to move towards the U.S. central bank's 2% target.


"Economic activity has continued to expand at a solid pace," the central bank's rate-setting Federal Open Market Committee said at the end of a two-day policy meeting in which officials lowered the benchmark overnight interest rate to the 4.50%-4.75% range, as widely expected. The decision was unanimous.

In the Sensex pack, Reliance Industries, ICICI Bank, Tata Motors, Maruti, and Asian Paints opened lower, while Infosys, Tech Mahindra, Titan, HCL Tech, and HDFC Bank saw gains.

The Nifty IT index rose 0.8% in early trade, driven by gains in Infosys, Wipro, and LTIMindtree, following the Federal Reserve's 25 basis point interest rate cut. As Indian IT companies earn a substantial portion of their revenue from the U.S., the rate cut is seen as favorable for the sector.

Among individual stocks, RVNL fell 7% in early trade after the company reported a significant decline in Q2 profit along with a modest decrease in revenue.

Cochin Shipyard shares also hit a 5% lower circuit at the open, following its Q2 results, which showed a 4% year-on-year increase in net profit to Rs 189 crore.

Sector-wise, Nifty Bank, Auto, PSU Bank, and Oil & Gas opened lower by as much as 1.15%, while Nifty IT, Consumer Durables, Healthcare, Pharma, and Metal sectors opened higher by up to 1%.

Experts View

"Two divergent trends are evident in the market now: one, strength in the global market led by the US and two, weakness in the Indian market. The record setting uptrend in the US market is being driven now by the ‘Trump trade’, expectations of implementation of the promised corporate tax cuts and its positive impact on US corporate earnings. The weakness in the Indian market can be attributed largely to the relentless selling by FIIs which continues this month, too," said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

"The rationale for the FII selling is, the elevated valuations in India which appear conspicuous in the context of the earnings deceleration evident in the Q2 numbers. If the Q3 numbers and leading indicators reflect recovery in earnings, the scenario can change with FIIs reducing selling and even turning buyers," Vijayakumar added.

Hardik Matalia, Derivative Analyst at Choice Broking, said, "Nifty can find support at 24,100 followed by 24,000 and 23,900. On the higher side, 24,300 can be an immediate resistance, followed by 24,400 and 24,500."

Global Markets

Asian stocks rose broadly on Friday, tracking Wall Street's overnight rise to record highs, as investors digested the Federal Reserve's message for careful interest rate cuts even with expectations for big fiscal spending under incoming President Donald Trump.

Mainland Chinese blue chips were up 0.5%, after a 3% surge on Thursday. Hong Kong's Hang Seng gained 1%. Japan's Nikkei added 0.25%, up 3.7% for the week.

Overnight, the Dow Jones Industrial Average closed flat, while the S&P 500 gained 0.74% and the Nasdaq Composite gained 1.51%.

US Treasury Yield

US Treasury yields pushed to new lows in Asian hours, keeping the dollar under pressure after its biggest decline versus major peers in more than six weeks on Thursday.

US two-year Treasury yields, which are highly sensitive to monetary policy expectations, edged down to 4.2119% on Friday, compared with a more than three-month high of 4.3120% on Wednesday.

FII/DII Tracker

The foreign institutional investors (FIIs) sold equities worth Rs 4,888 crore on November 7, while domestic institutional investors purchased equities worth Rs 1,786 crore on the same day.

Crude Oil

Oil prices fell slightly on Friday as the risk that a hurricane in the Gulf of Mexico will affect US oil and gas output declined while the market continues to weigh how President-elect Donald Trump's policies might affect supplies.

Brent crude oil futures fell 26 cents, or 0.3%, to $75.37 per barrel. US West Texas Intermediate (WTI) crude gained 35 cents or 0.5% to $72.01. The benchmarks fell after rising nearly 1% on Thursday. For the week, Brent is set to gain 3.1% while WTI is set to rise 4.1%

Rupee vs Dollar

The Indian rupee fell 5 paise to 84.37 against the US dollar in early trade. Meanwhile, the dollar index, which measures the currency against six major peers, ticked up slightly to 104.53, but that followed a 0.7% drop on Thursday, its biggest since August 23. On Wednesday, it soared 1.53%, the most in over two years.

(With inputs from agencies)