NEW DELHI: A below-normal
forecast by private weather agency
proved to be a big dampener for stock benchmarks on Wednesday, which surrendered the day’s gains after scaling all-time highs.
According to Skymet, monsoon in 2019 is likely to be ‘below normal’ to the tune of 93 per cent of the long period average (LPA) of 887 mm for four months starting from June to September.
This sent the bulls hurtling downwards, wiping off the earlier gains, as the market ended in negative territory.
The Reserve Bank of India is all set to announce its policy review decision tomorrow.
Brent’s jump towards a nearly five-month high of $70 a barrel played spoilsport, too.
According to analysts, the market is entering a consolidation phase after the recent run-up.
“Tech parameters suggest the possibility of extended consolidation before the upmove resumes. We continue to believe the bias remains positive and suggest buying on dips. Meaningful support on the downside is seen at 11,200-11,300. Expect volatility to remain high in the near term,” said Sahaj Agrawal, Kotak Securities.
Index heavyweights RIL and bank stocks emerged as the top drag on Dalal Street.
BSE barometer Sensex slipped 180 points, or 0.46 per cent, to settle at 38,877, while the broader Nifty hit 11,644, down 69 points, or 0.59 per cent.
Let’s run through the market bulletin.
On the 30-issue BSE index, only 7 advanced while 23 declined. Maruti Suzuki took the centre-stage with a rise of 2.78 per cent and topped the leaderboard.
Things did not turn favourable for the biggest lender State Bank of India, which slipped 2.40 per cent, the worst hit. YES Bank, Bharti Airtel, L&T, Sun Pharma and M&M declined up to 2.30 per cent.
Broader markets missed the boat too as they saw heavy selling. The BSE Midcap index came down 0.77 per cent and BSE Smallcap 0.87 per cent.
Not a single sector on the BSE ended in the green, with oil & gas taking the maximum beating. Telecom, energy and capital goods were among other sectors that fell the most.
Of the Nifty stocks, 11 issues ended in the green and 39 in the red. Sectorally, even on the NSE, none flashed green.
India VIX, the gauge of fluctuations, spiked 3.58 per cent.
A quick look at factors
Skymet sees below-par monsoon due to climate change and carbon emissions. “Even the hint of El Nino should not be taken lightly. Severest droughts have taken place during moderate El Nino,” Skymet said.
This development did not sit well with market participants, pushing investors to the exit door.
Oil on the boil again?
Oil prices rose for the fourth day, nudging Brent towards a nearly five-month high of $70 a barrel. Support from OPEC-led supply cuts and US sanctions overshadowed a report showing an unexpected rise in US inventories, according to Reuters.
Brent futures gained 38 cents, or 0.55 per cent, to $69.75, which earlier reached $69.96 – the highest since November 12 when they last traded above $70.
Vinod Nair, Head of Research, Geojit Financial Services
“Market slid after touching a new high as initial forecast of below-normal monsoon by Skymet and rise in oil prices impacted sentiment. Investors are likely to be more vigilant, going forward, due to the upcoming general elections and have a bottom-up-approach considering the performance of fourth quarter results. Global market stayed positive due to signs of pick-up in Chinese economy and prospects of US-China trade deal.”