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Market opens in red: Sensex drops nearly 200 points, Nifty tests 12,300 in opening session; Wipro, Canara Bank, Tata Steel shed up to 3%

FP Staff

Sensex dropped nearly 200 points in the opening session on Wednesday as global investor sentiment dampened after the US said its initial trade deal with China does not include tariff rollback.

The NSE Nifty 50 index slipped 0.45 percent to 12,307.5 by 0414 GMT, while the benchmark S&P BSE Sensex fell 0.38 percent to 41,791.41.

The 30-share BSE index was trading 190.81 points or 0.45 percent lower at 41,761.82. Similarly, the broader NSE Nifty fell 53.15 points or 0.43 percent to 12,309.15.

Wipro Ltd fell 3.5 percent, its biggest intraday drop in nearly four months, after the software services exporter forecast March-quarter revenue growth below analysts' expectations and reported a dip in third-quarter profit. IndusInd Bank Ltd languished at the bottom of the Nifty, slipping 4.4 percent after the private sector lender reported a spike in bad loan additions in the third quarter.

Larger peer Yes Bank Ltd was down for a fourth straight day, falling as much as 4.5 percent. Canara Bank Ltd slipped 2.8 percent after the lender said it had called off a stake sale in its housing finance unit, Can Fin Homes Ltd, without giving a reason. IndusInd Bank, Tata Steel, UltraTech Cement, SBI, Infosys, Axis Bank and ICICI Bank were among the top losers in the Sensex pack, shedding up to 3 percent. On the other hand, Titan, Hero MotoCorp, Tech Mahindra, Nestle and Sun Pharma rose up to 1.30 percent.

In the previous session, Sensex settled 92.94 points or 0.22 percent higher at 41,952.63€"its all-time closing high. Likewise, Nifty ended 32.75 points, or 0.27 percent, higher at 12,362.30, which was a record closing level.

MindTree Ltd rose 3.9 percent to its highest since 3 July after the IT firm beat market expectations with a 3% rise in quarterly profit. Fairfax-backed CSB Bank Ltd climbed 4.7% after the Reserve Bank of India lifted restrictions on opening new branches.

Meanwhile, on a net basis, foreign institutional investors sold equities worth Rs 205.56 crore, and domestic institutional investors offloaded shares worth Rs 642.47 crore on Tuesday, data available with stock exchanges showed.

According to traders, indices retreated for record highs after US officials on Tuesday said the trade truce with China, set to be signed on Wednesday, does not include a deal to roll back tariffs imposed on most Chinese goods.

The joint statement from the Treasury and the US Trade Representative's office said "there is no agreement for future reduction in tariffs. Any rumours to the contrary are categorically false."

Rupee falls 14 paise, slips below 71 per US dollar in early trade

The rupee opened on a cautious note and fell 14 paise to 71.01 against the US dollar in early trade on Wednesday as concerns over the US-China trade deal weighed on investor sentiments.

Forex traders said, the rupee along with other Asian currencies weakened after reports surfaced that tariffs on billions of dollars in Chinese goods will stay in place until after the US presidential election in November, according to a PTI report.

At the interbank foreign exchange, the rupee opened weak at 71.01, showing a decline of 14 paise over its previous closing.

The Indian rupee on Tuesday had closed at 70.87 against the dollar.

Domestic bourses opened on a negative note on Wednesday with benchmark indices Sensex trading 185.29 points down at 41,767.34 and Nifty lower by 66.20 points at 12,296.10.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, as they sold shares worth Rs 205.56 crore on Tuesday, as per provisional data.

Stocks slip ahead of US-China trade deal signing

Stocks slipped in Asian trade on Wednesday as investors awaited the signing of an initial US-China trade deal, with sentiment somewhat dented by comments from the U.S. Treasury Secretary that tariffs would remain in place for now, according to a Reuters report.

MSCI's broadest index of Asia-Pacific shares outside Japan retreated 0.40%, Japan's benchmark Nikkei and South Korea's KOSPI shed 0.46% and 0.40%, respectively, while Australian stocks added 0.33 percent.

China's Shanghai Composite fell 0.59% and Hong Kong's Hang Seng dropped 0.72 percent.

Treasury Secretary Steven Mnuchin said late on Tuesday that the United States would keep in place tariffs on Chinese goods until the completion of a second phase of a U.S.-China trade agreement, triggering some profit-taking in risk assets.

The news came hours before the signing of a preliminary trade agreement to ease an 18-month-old trade war between the world's two largest economies.

Wall Street stocks dipped on Tuesday, reversing earlier intraday record highs, after media reported the United States would likely maintain tariffs on Chinese goods past November's presidential election.

"We should not expect further tariff relief until after the November presidential elections, suggesting today's agreement is probably as good as it gets for 2020," said Tapas Strickland, director of economics at National Australia Bank in Sydney.

He added that Mnuchin's comment didn't come as a total surprise to the market and the underlying sentiment should remain intact.

US Treasury yields ticked down as investors took stock of weaker-than-expected consumer prices and the expected signing of the interim trade deal, with the benchmark 10-year note yield falling to 1.807 percent.

Markets were also weighing the impact of the US government nearing publication of a rule that would vastly expand its powers to block shipments of foreign-made goods to China's Huawei, as it seeks to squeeze the blacklisted telecoms company, two sources said.

In the currency market, the Japanese yen, often perceived as a safe haven, reversed earlier losses against the dollar as news US tariffs would remain on Chinese goods through the US election hurt risk sentiment.

The yen was last changing hands at 109.90 yen to the dollar, a shade firmer on the day, after hitting its weakest level in nearly eight months of 110.22 yen the previous day.

The euro was last traded at $1.1129 and the dollar index against a basket of currencies stood at 97.368, both steady on the day.

The offshore yuan weakened to 6.905 per dollar after rising to 6.865, the strongest since July 11, on Tuesday.

China's central bank extended fresh short- and medium-term loans on Wednesday but kept the borrowing cost unchanged, as it seeks to maintain adequate liquidity in a slowing economy.

Oil prices slipped on Wednesday on worries that the pending Phase 1 trade deal between the world's two biggest crude users may not lead to more fuel demand as Washington intends to keep tariffs on Chinese goods in place.

Concerns about increasing supply also pressured prices after a government report on Tuesday said that output from the United States will increase in 2020 by more than previously forecast.

Brent crude dropped 0.19 percent to $64.37 per barrel and US West Texas Intermediate crude futures were down 0.21 percent at $58.11 a barrel.

--With inputs from agencies

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