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Sensex opens on a volatile note on weak domestic, global cues; Yes Bank, ICICI Bank, Kotak Bank rally 4% in early trade

FP Staff

BSE Sensex opened on a highly volatile note on Monday as weak domestic and global cues weighed on investor sentiment amid sustained foreign fund outflow.

After opening in the positive terrain, the 30-share index swung over 300 points in early trade. The index was trading 72.68 points, or 0.19 percent, lower at 37,600.63 at 0930 hours.

Similarly, the broader NSE Nifty slipped 32.80 points, or 0.29 percent, to 11,141.95.

Top Sensex losers in the early session included IndusInd Bank, Sun Pharma, Hero MotoCorp, L&T, Bajaj Finance, TCS, M&M, Tata Motors and NTPC, shedding up to 2.15 percent. Zee Entertainment slumped over 13 percent after disclosing pledged shares with VTB Capital that was done in 2017. BPCL slid over 6 percent, Indian Oil, IndusInd Bank and Grasim dipped between 2 and 2.6 percent. On the other hand, top gainers were Yes Bank, HDFC twins, Vedanta, ICICI Bank and Kotak Bank, rising up to 4 percent.

In the previous session on Friday, the BSE barometer ended 433.56 points or 1.14 percent lower at 37,673.31, while the Nifty plunged 139.25 points or 1.23 percent to close at 11,174.75.

FIIs remain net sellers

Foreign institutional investors (FIIs) remained net sellers in the capital market, pulling out Rs 682.93 crore on Friday, while domestic institutional investors bought shares worth Rs 606.28 crore, data available with the stock exchange showed.

"Market has been witnessing profit-booking post the 8 percent rally on account of a corporate tax cut. The cut in repo rate by the Reserve Bank of India (RBI) did not inspire confidence to investors given sharp downgrade in GDP growth forecast," said Vinod Nair Head of Research at Geojit Financial Services.

FIIs continue to be on risk-off mode on account of global slowdown and trade issues, he said, adding that the equity market may trade with a negative bias in the short-term. The rupee, meanwhile, depreciated 19 paise against its previous close to trade at 71.07 in early session.

Elsewhere in Asia, bourses in Shanghai, Hong Kong and Tokyo were trading on a negative note, while those in Seoul were trading a tad higher.

Asian shares edge higher

Asian shares edged higher on Monday after data showed the US unemployment rate dropped to the lowest in almost 50 years, easing concerns of a slowdown in the world's largest economy. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.18 percent. Australian shares were up 0.5 percent. Japan's Nikkei stock index opened higher but reversed course and fell 0.3 percent.

US stock futures, ESc1 fell 0.44 percent in Asia on Monday after the S&P 500 surged 1.4 percent on Friday.

The offshore yuan fell 0.3 percent to 7.1352 to the dollar after Bloomberg reported that Chinese officials are signalling they are increasingly reluctant to agree to a broad trade deal pursued by US President Donald Trump.

There was no onshore yuan trading, as Monday is the last day of a long China holiday for its national day.

The media report also pushed up safe-haven assets such as gold and the yen.

Crude oil futures extended declines in a sign that investors remain cautious about a resolution to the trade dispute.

Sentiment toward the US economy deteriorated sharply much of last week after disappointing data on manufacturing and services suggested the trade war was taking a toll, and more rate cuts would be needed to avert a potential recession in the world's biggest economy, Reuters said.

But a modest September increase in US jobs, announced on Friday, eased some of these concerns and lifted USmarkets that day. The US unemployment rate fell to 3.5 percent in September to reach the lowest since December 1969. Non-farm payrolls also grew in September, but slightly less than expected.

"Moderate job growth and subdued inflation in the United States is a positive for stocks," said Shusuke Yamada, head of FX and Japan equity strategy at Merrill Lynch Japan Securities in Tokyo.

This week, the main focus will be the high-level US-China trade negotiations expected in Washington on 10-11 October to see if the two sides can end a bruising year-long trade war that has hurt global growth and raised the risk of recession.

"The dollar is a little soft heading into US-China trade talks," said Yamada. "I see some scope for yen gains, but it is not likely to be a big move higher."

The United States and China have slapped tariffs on each other's goods as part of a long-running dispute over Beijing's trading practices, which Washington says are unfair.

Central banks around the world have been easing policy to try to offset the impact of the trade war.

The Federal Reserve has lowered interest rates twice this year. Before the jobs report, traders saw an 85.2 percent chance the Fed will cut rates by 25 basis points to 1.75%-2.00% this month, but that chance has now fallen to 81.1 percent, according to CME Group's FedWatch tool.

The yield on benchmark 10-year Treasury notes rose to 1.5238 percent on Monday compared with its US close of 1.5140 percent on Friday.

Spot gold, an asset often bought during times of uncertainty, rose 0.15 percent to $1,506.93 per ounce.

The yen also considered a safe-haven asset, edged slightly higher to 106.83 versus the U.S. dollar and gained to 72.17 per Australian dollar.

US crude CLc1 dipped 0.21 percent to $52.7 a barrel. Brent crude LCOc1 fell 0.39 percent to $58.13 per barrel. In addition to worries about the global economy, signs of oversupply in the oil market are weighing on futures prices. Brent futures, the global oil benchmark, fell 0.43 percent to $58.12 per barrel.

--With inputs from agencies

Also See: Sensex tanks 362 points, Nifty sinks below 11,400-mark; Yes Bank, IndusInd, SBI, Bharti Airtel among top losers

Sensex jumps over 250 points ahead of RBI policy outcome on gains in banking, financial stocks; Nifty spurts 70 points

Rupee rises 12 paise to 70.75 against dollar in early trade; easing crude prices strengthen investor sentiments

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