Mumbai: Equity benchmarks washed out some of previous day's gains on Wednesday, falling one percent each after the tension in Iraq escalated further but the Nifty managed to hold 7500 level. The BSE Sensex fell 274.94 points to close at 25246.25 and the NSE Nifty slipped 73.50 points to 7558.20 after hitting intraday lows of 25114.30 and 7515.50, respectively.
Experts see 8-10 percent correction in near term if the crisis in Iraq widened further as India is more vulnerable to hike in oil prices but they advise buying on every dip ahead of Union Budget (likely in first two weeks of July).
According to them, 7000 level on the Nifty should act as a strong support now. Vibhav Kapoor, Group CIO, IL&FS says the risk reward ratio right now is not favourable. Two key concerns are the possibility of deficient monsoons and high expectations from the Budget.
According to Deven Choksey, MD, KR Choksey Shares and Securities, the correction poses great opportunity to own stocks of those sectors where a positive policy announcement is expected. Media report suggested that militants from ISIS took control of most of Iraq's largest oil refinery, located in Baiji in northern Iraq. The official says the southern regions that produce some 90 percent of the country's oil are completely safe.
But interestingly, Brent crude was static today showing with no knee-jerk reaction to Iraq conflict, which was in the range of $113-113.5 a barrel. Globally investors will closely watch the outcome of two-day Federal Reserve meeting that will end tonight. Experts feel the Fed may cut monthly bond buying purchases by another $10 billion to $45 billion.
Back home, the rupee depreciated to 60.49 a dollar, down 45 paise compared to previous day's close. All sectoral indices except Healthcare closed in the red with the BSE Realty, Power, Oil & Gas, IT, Auto, Metal and Capital Goods falling 1-2 percent. Petrochemical major Reliance Industries was in focus today as its chairman Mukhesh Ambani in company's 40th annual general meeting said Reliance will invest Rs 1.8 lakh crore across businesses in the next three years and launch the much-awaited 4G broadband services in 2015.
The stock declined 2.12 percent due to weak market sentiment. Shares of ICICI Bank, TCS, HDFC Bank, ITC, Tata Motors, L&T, Sun Pharma, M&M, BHEL, NTPC, Tata Steel and Hero Motocorp were down 1-3 percent. However, drug maker Cipla and aluminium major Hindalco Industries bucked the trend, rising nearly 3 percent followed by GAIL, Maruti Suzuki, Axis Bank and Dr Reddy's Labs. Kotak Mahindra Bank was up 2.5 percent as the bank will seek shareholders' nod for raising FII investment limit in bank to 40 percent versus 37 percent.
In the broader space, Punj Lloyd shot up 16 percent after JP Chalasani, managing director & group CEO said the order book and revenue visibility look strong for the current financial year 2014-15. "We hope to book orders worth over $2 billion by August," he adds. Declining shares outnumbered advancing ones by a ratio of 1622 to 1406 on the BSE.
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