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Sensex, Nifty slip into negative zone in opening session on dismal macro data; rupee slips

FP Staff

Equity benchmarks Sensex and Nifty slipped into the negative zone in opening deals on Thursday, weighed down by disappointing macroeconomic data.

The BSE gauge Sensex was trading lower by 51.28 points or 0.12 percent at 41,514.62 in early trade; while the NSE barometer Nifty was down 16.55 points or 0.14 percent at 12,184.65, PTI said.

Both key indices were in the red primarily due to the emergence of selling in financial and auto stocks.

Hurting market sentiment, government data on Wednesday showed that industrial output contracted by 0.3 percent in December while retail inflation jumped to a 68-month high of 7.59 percent in January on high food prices.

Ahead of the release of IIP and inflation data, the Sensex had settled 349.76 points or 0.85 percent, higher at 41,565.90; and the Nifty had clocked 93.30 points, or 0.77 percent, gains to settle at 12,201.20 on Wednesday.

Provisional data showed that foreign institutional investors bought equities worth Rs 48.81 crore on a net basis on Wednesday.

Rupee slips 9 paise 

The rupee slipped 9 paise to 71.42 against US dollar in early trade.

The rupee opened on a weak note and declined by 9 paise to 71.42 against the US dollar in opening trade on Thursday, after weak macro-economic data disappointed market participants.

Forex traders said disappointing macroeconomic numbers weighed on the local unit.

The government data on Wednesday showed that industrial output contracted by 0.3 percent in December, while retail inflation jumped to a 68-month high of 7.59 percent in January on high food prices.

The rupee opened weak at 71.35 at the interbank forex market and then fell further to 71.42, down 9 paise over its last close.

The rupee had settled at 71.33 against the US dollar on Wednesday.

Market participants further said that factors like weak opening in domestic equities and rising crude oil prices weighed on the local unit, while weakening of the American currency supported the local unit to some extent.

Brent crude futures, the global oil benchmark, rose 0.14 per cent to USD 55.87 per barrel.

Foreign institutional investors (FIIs) remained net buyers in the capital markets, as they purchased shares worth Rs 48.81 crore on Wednesday as per provisional data.

Domestic bourses opened on a cautious note Thursday with benchmark indices Sensex trading 144.79 points down at 41,421.19 and Nifty down 32.40 points at 12,168.80.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.04 percent to 99.01.

The 10-year government bond yield was at 6.46 percent in morning trade.

Jump in new coronavirus cases stymies Asian stock rally

Asian stock markets wobbled on Thursday while safe-havens such as the yen, gold and bonds rose as the number of new coronavirus cases and deaths in the outbreak's epicentre jumped.

China's Hubei province, where the virus is believed to have originated, reported 242 new deaths, double the previous day's toll, and confirmed 14,840 new cases on 12 February.

The rise in the number of cases, which came as officials adopted a new methodology for counting infections, is a sevenfold increase from a day earlier.

It was not immediately clear how the new methods affected the results, nor why the death toll rose so sharply, but it seemed to dash hopes that the virus' spread might be slowing.

E-mini S&P 500 futures turned from positive to fall 0.3 percent. Dow Jones futures fell by the same margin, suggesting a pause in Wall Street's strong rally.

Ten-year US Treasuries fell about 3 basis points to 1.607 percent, the yen strengthened past 110 per dollar and a rally in Asian currencies against the dollar halted.

MSCI's broadest index of Asia-Pacific shares outside Japan was steady in morning trade but the news knocked the week's momentum from stock markets.

"The slowdown (in cases) was the key driver of the rally in growth-exposed assets," said Michael McCarthy, chief strategist at CMC Markets in Sydney.

"A lot of people leapt to the conclusion that we might have seen a peak...the reversal of what appeared to be good news is enough to have people scrambling for the exits."

Japan's Nikkei was flat while Australia's ASX/S&P 200 index retreated from a record high. The Shanghai Composite and Hong Kong's Hang Seng wavered either side of unchanged.

Gold rose 0.3 percent to $1570.12 per ounce.

More forecasts cut

Overnight, markets had taken comfort from the World Health Organisation's (WHO) emergency programme head describing the apparent slowdown in the epidemic's spread as "very reassuring."

Yet WHO chief Tedros Adhanom Ghebreyesus had also warned that it should be viewed with extreme caution. "This outbreak could still go in any direction," he said.

More than 1,300 people have died from the epidemic in China and the total number of cases in Hubei province now stands at 48,206.

Even before the rise in cases, economists were turning more bearish on the likely hit to China's growth as factories idle and supply chains are upended.

Citi on Wednesday again downgraded its 2020 GDP forecast for China to 5.3 percent. The bank had forecast it to be 5.8 percent in its January outlook, before cutting it to 5.5 percent two weeks ago.

Morgan Stanley believes a gradual, rather than sharp recovery is the most likely scenario. That all bodes ill for regional economies and has weighed on Asian currencies and commodities.

The Australian dollar AUD=D3, a liquid proxy for China's economic health because of Australia's export exposure, retraced its recent rally and traded 0.2 percent softer at $0.6725.

China's yuan was 0.1 percent weaker.

Rallying oil prices paused, with Brent crude up 15 cents to $55.94 per barrel, 15 percent below where it was before the coronavirus outbreak.

With inputs from agencies

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