Stock Market LIVE Updates: Sensex down 800 pts, Nifty sub-17,700; banks, IT hit

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Share market LIVE updates: Indian equities slumped on Thursday following a selloff in technology shares in Asia and overnight losses on Wall Street as concerns grew about aggressive monetary tightening by the US Fed 

Investors are focusing on tightening monetary policy as concerns persist about the omicron variant’s threat to global growth and company earnings. Fed officials said a strengthening economy and higher inflation could lead to earlier and faster rate increases than expected, with some also favoring moves to shrink the balance sheet soon after.

FMCG makers prepare for a new round of price hikes

Prices of fast-moving consumer goods (FMCG), such as biscuits, milk-based edibles and personal care items, could continue to rise this quarter as companies try to counter inflationary headwinds.

Biscuit maker Parle Products said it will effect another price hike in the quarter. “On some products, we have already taken it up in December. And the balance of them will happen in January—this will be about 5-7% increase. The price hike will continue till February,” said Mayank Shah, senior category head at the company. This year, the company would have hiked prices by 10-12% on its entire portfolio.

N.Korea launches second hypersonic missile

North Korea fired a “hypersonic missile” this week that successfully hit a target, state news agency KCNA reported on Thursday, its second such test as the country pursues new military capabilities amid stalled denuclearisation talks.

The launch on Wednesday was the first by North Korea since October and was detected by several militaries in the region, drawing criticism from governments in the United States, South Korea, and Japan.

North Korea first tested a hypersonic missile in September, joining a race headed by major military powers to deploy the advanced weapons system.

Derivatives View: ICICI Securities 

Nifty

The Nifty opened higher and closed near the day’s high on Wednesday, with a gain of more than 0.64%. Though the index witnessed a sharp up move, 18000 Call option did not witness any meaningful closure and continues to hold highest OI of more than 70 lakh shares. Hence, we expect the Nifty to face major resistance around 18000 levels.

Bank Nifty

On Wednesday, the Bank Nifty outperformed the Nifty as healthy buying in heavyweight like HDFC Bank, Kotak Bank among others helped it to sustain at higher levels. Looking at option chain, Bank Nifty 38000 Call strike witnessed sizeable OI addition that should act as immediate hurdle.

Office leasing: IT sector’s share continues to shrink

The information technology (IT) sector, which was once a key demand driver for office spaces, continues to see a decline in its share of leasing transactions. According to the latest data by property consultant Knight Frank India, in the second half of calendar year 2021, the share of IT sector in office leasing declined to 27% from 41% a year ago.

The increased adoption of work from home culture post the pandemic led IT companies to postpone decision on leasing office spaces, especially after a severe second-wave of Covid hit the country in March 2021.

Even though IT was the largest contributor to total office transactions for Grade A properties seen in H2 2021, the decline in its share in just one year is steep. This has clearly weighed on office rentals. On a year-on-year basis, rentals declined 7.6% in 2021, said the Knight Frank report.

Nifty view: Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments

There has been a reaction from the resistance zone of 17800-17950. This would not mean the end of the current trend. The trajectory will continue to be positive until 17200 is not broken on a closing basis. Bottom picking or accumulation is always a strategy that can be adopted. However, I am of the opinion that unless we do not close above 17950, the next leg of this rally will not commence.

IT companies likely to continue growth rally in Q3 on strong demand

Indian IT services companies are likely to continue their growth rally in October-December despite it being a seasonally weak quarter due to furloughs and lower working days in key markets of the US and Europe.

Analysts at brokerage firms believe IT companies will buck the trend of seasonally weak third-quarter earnings and report robust growth on the back of strong demand. “Attrition and supply-side pressure would start to ease off from this quarter and would continue to decline for the next two-three quarters,” Edelweiss Securities said in a pre-earnings note.

Most brokerages agree that the strong demand environment is expected to continue in Q3 FY22, with tier-2 players outgrowing tier-1 companies.

Nifty IT worst hit among sectoral indices

Indian IT stocks fell on Thursday tracking losses in global peers.

A rout in technology shares in Asia accelerated after the Federal Reserve signaled interest-rate hikes may be more aggressive than many had expected. Treasuries held losses.

An MSCI Inc. index of the region’s equities retreated for the third day in four with a gauge of tech shares among the worst performing. U.S. futures fluctuated after the Nasdaq 100 tumbled the most since March as rising Treasury yields added to concerns over growth and profitability. The S&P 500 retreated as traders increased bets U.S. rates will increase at least three times this year.

Housing sales rise 51% in top eight cities

Housing sales across top eight cities rose 51% last year, even as the office market continued to slump due to the covid pandemic with gross leasing witnessing a 3 % fall, according to Knight Frank India.

Housing sales increased to 232,903 units during last year from 154,534 units in 2020, but demand was down 5% from the 2019 pre-pandemic levels and 37% lower than the 2011 peak numbers.

In the office segment, the gross leasing of office space fell to 38.1 million sq. ft in 2021, from 39.4 million sq. ft in the previous year, due to the adverse impact of the second wave of the covid pandemic.

Oil falls from one-month high on OPEC+ supply plans, U.S. fuel inventory surge

Oil prices lost ground on Thursday, easing from their highest levels in more than a month as OPEC+ producers stuck to a plan to boost production and U.S. fuel stockpiles surged amid declining demand.

The global benchmark Brent crude futures fell 87 cents, or 1.08%, to $79.93 a barrel. U.S. West Texas Intermediate (WTI) crude futures lost 62 cents, or 0.8%, to $77.23 a barrel.

Nifty view: Nagaraj Shetti, technical research analyst, HDFC Securities

Indian stock market continued with upside momentum on Wednesday, but the pace of the market seems to have reduced and the volatility has started to occur at the higher levels. There is a possibility of consolidation movement or minor weakness on NSE Nifty near 18,000 levels in the next 1-2 sessions, before showing further upside movement from dips. Immediate support for NSE Nifty is placed at 17,760 levels.

Cairn withdraws all tax cases

Capricorn Energy Plc., formerly Cairn Energy Plc., said on Wednesday it has entered the last leg of the settlement of a controversial tax dispute by withdrawing all lawsuits against the Indian government, which will pave the way for the authorities to refund ₹7,900 crore or approximately $1.06 billion to the British explorer.

Capricorn and Cairn UK Holdings Ltd said in a newspaper announcement that they have entered the final stage in the undertaking with the Indian government “by withdrawing Indian and global appellate and enforcement proceedings”. This action is the final necessary step by the firm under the rules of India’s Taxation (Amendment Act) 2021, the announcement said.

Asia stocks fall as tech rout deepens

Stocks in Asia dropped Thursday after a selloff in U.S. technology shares and Treasuries accelerated once Federal Reserve minutes signaled interest-rate hikes may be more aggressive than many had expected.

An MSCI Inc. index of the region’s equities retreated for the third day in four, though declines were more restrained than in the U.S. U.S. contracts fluctuated after the Nasdaq 100 tumbled the most since March as rising Treasury yields added to concerns over growth and profitability. The S&P 500 retreated as traders increased bets U.S. rates will increase at least three times this year.

The yield on the U.S. 10-year note pared some of its gains. It climbed to 1.71%, a level not seen since April. Overnight swaps markets moved to price in an 80% chance of a 25 basis-point hike at the Fed’s meeting in March. The dollar was little changed.

A selloff in Chinese tech companies eased in Hong Kong. Chinese companies listed in the U.S. extended their decline after Tencent Holdings Ltd. cut its stake in an online gaming company, triggering concerns of similar action at other firms amid Beijing’s regulatory crackdown on the sector.

S&P 500 futures rose 0.1%, while Nasdaq 100 futures rose 0.1%. 

Japan’s Topix index fell 1%, Australia’s S&P/ASX 200 Index fell 1.3%, South Korea’s Kospi index lost 0.6%, Hang Seng Index was little changed, and Shanghai Composite Index fell 0.4%.

Overnight, stocks closed lower on Wall Street after minutes from the Federal Reserve’s last meeting raised expectations that the central bank will move faster to raise interest rates to fight inflation.

The S&P 500, The Dow Jones Industrial Average and the Nasdaq fell. Drops in major technology stocks were the biggest weight on the market.

The S&P 500 fell 92.96 points, or 1.9%, to 4,700.58. The Dow Jones Industrial Average fell 392.54 points, or 1.1%, to 36,407.11. The Nasdaq fell 522.54 points, or 3.3%, to 15,100.17.

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