LTCG, US jobs batter bulls on Dalal Street

Mumbai: The domestic equity markets fell for the fifth consecutive day amidst a rout in global stocks after a better than expected wage growth data released in the US over the weekend stoked fears about sooner than expected rate hike by the US Federal Reserve. In the domestic market, both the Nifty and Sensex opened the day with deep cut, down 1.5 per cent tracking a major sell-off in US markets, which posted their biggest single day fall since the BREXIT vote.

The Nifty closed the day at 10,666.55 losing 94 points or 0.87 per cent while the Sensex closed the day at 34,757.16, down 309.59 or 0.88 per cent. The positive data signalling a growth in the India’s services sector also failed to cheer up the mood as investors continue to fret over the reintroduction of long-term capital gain (LTCG) tax on equity market investments.

“Investor sentiment showed no signs of improvement after the announcement of a 10 per cent tax on long-term capital gains accrued from equity investments.  Globally as well, the sentiment seemed subdued as signs of strength in the US economy triggered fears of a sooner-than-expected rate hike by the US Federal Reserve. Data released by the US Labour Department over the weekend indicated that US non-farm payrolls surged by 200,000 in January 2018 after rising by 160,000 in December 2017,” said Karthikraj Lakshmanan, senior fund manager, equities, BNP Paribas Mutual Fund.

On Monday, the provisional data released by the stock exchanges showed that foreign portfolio investors (FPI) offloaded shares worth Rs 1,263.57 crore.

India’s volatility index (VIX), soared 5 per cent on the National Stock Exchange (NSE) signalling the underlying nervousness in the market.  

“The recent rally in benchmark indices was mainly driven by heavyweights like, HDFC Bank, HDFC Ltd, L&T, ICICI Bank and Reliance Industries. All these counters have started correcting and the way their short term charts are shaped up, we do not expect any relief soon in the market. Hence, we continue to remain cautious and expect the Nifty to slide towards 10,597- 10,500 in days to come,” said Sameet Chavan, chief technical and derivative analyst at Angel Broking.