The equity markets signed-off FY16 on a weak note with the benchmark Sensex and Nifty dropping nine per cent each as disappointing corporate earnings growth, delay in promised reforms and fear about g
The equity markets signed-off FY16 on a weak note with the benchmark Sensex and Nifty dropping nine per cent each as disappointing corporate earnings growth, delay in promised reforms and fear about global growth slowdown triggered an exodus of foreign portfolio money during the most part of the year.
On Thursday, the Sensex closed the volatile trading day at 25,341.86, gaining just 3.28 points or 0.01 per cent. The broader 50-share Nifty ended the day at 7,738.40, posting a marginal gain of 3.20 points or 0.04 per cent.
Investor wealth fell by nearly Rs 7 lakh crore during the 2015-16 fiscal, or over Rs 2,700 crore per trading session, as economic headwinds played spoilsport globally with equities.
The decline in investor wealth came in contrast with addition of over Rs 27 lakh crore during 2014-15 fiscal.
During the fiscal 2015-16, the BSE benchmark Sensex tumbled 2,615.63 points or 9.35 per cent to 25,341.86 from 27,957.49 on March 31, 2015. The gauge touched its 52-week low of 22,494.61 on February 29, 2016.
Led by the weak trend in the stock market, investor wealth declined by Rs 6.73 lakh crore to Rs 94.75 lakh crore in 247 trading days.
While emerging market (EM) equities including India rallied higher over the past one month on the back of a recovery in commodity prices, analysts at Morgan Stanley believe that the structural growth challenges facing the emerging markets are not over yet. According to Morgan Stanley, commodity prices are likely to see further downside with iron ore expected to hit $40 per tonne by Q4 this year and oil to climb down to $29 per barrel.
“We think the earnings recession has further to run. For sure, EMs has now been in an earnings recession for over four years, and all earnings recessions end sometime. Our base case earnings forecast is for earnings to fall another 7 per cent in 2016 before we tentatively highlight potential recovery in 2017,” Morgan Stanley said and added that the recent modest improvement in inflows to EM equity products is likely to fade in the next few weeks.
On Thursday, the provisional figures released by the stock exchanges showed that foreign portfolio investors (FPI) had bought shares worth Rs 4,056.62 crore.
The National Stock Exchange witnessed a record turnover in its derivative segment amidst the expiry of March derivative series with the Nifty index options clocking a turnover of Rs 5.23 lakh crore. This suggests that traders have aggressively bought index options contracts as a hedge against any unexpected corrections in the market.
