Indices hit fresh intraday low; European markets open with losses
The benchmark indices extended losses and hit fresh intraday low in afternoon trade as a stronger-than-expected US jobs report heightened concerns over a potential Federal Reserve rate hike. Sentiment was further weighed down by elevated crude oil prices and escalating tensions in the Middle East. The Nifty traded tad above the 23,750 level.
At 12:29 IST, the barometer index, the S&P BSE Sensex declined 481.73 points or 0.63% to 76,033.70. The Nifty 50 index declined 140.55 points or 0.59% to 23,757.15.
In the broader market, the BSE 150 MidCap Index fell 0.69% and the BSE 250 SmallCap Index shed 0.13%.
The market breadth was negative. On the BSE, 1,923 shares rose and 2,425 shares fell. A total of 286 shares were unchanged.
Gainers & Losers:
Apollo Hospitals (up 1.26%), Eicher Motors (up 0.96%), Maruti Suzuki (up 0.84%), Coal India (up 0.77%) and Max Health (up 0.69%) were the top gainers.
Infosys (down 3.67%), Tech Mahindra (down 3.06%), SBI Life (down 2.46%), Trent (down 2.34%) and HCL Tech (down 2.23%) were the top losers.
Stocks in Spotlight:
VA TECH WABAG shed 0.49%. The company said that it has secured a 'medium? order from the Reliance Industries (RIL) for a an effluent treatment plant, at Dhirubhai Ambani Green Energy Giga Complex (DAGEGC), Jamnagar. As per the company's internal classification, the value of this contract lies between Rs 100 crore and Rs 250 crore.
Jindal Stainless slipped 1.19%. The company said that it has entered into a technical assistance agreement with JFE Steel Corporation, Japan, to strengthen its manufacturing capabilities for selected ferritic stainless steel grades.
Sudarshan Pharma Industries was locked in 5% upper circuit. The company said that its board has approved a proposal to acquire 24,23,675.64 equity shares of common stock, equivalent to 9.50% stake of MedTherapy Biotechnology Inc., a Boston-based global cancer cell & gene therapy company.
Global Markets:
European markets traded lower on Monday as an escalating military standoff in the Persian Gulf and a looming policy meeting by the European Central Bank kept investors from placing bold bets. MO< Meanwhile, most Asian stocks advanced on Monday after a stronger-than-expected US jobs report boosted optimism over global growth. However, the data also increased expectations of a Federal Reserve rate hike in September.
Wall Street ended lower on Friday after the stronger-than-expected jobs report revived concerns over the Fed's interest-rate outlook. The Dow Jones Industrial Average fell 0.51%, while the S&P 500 declined 0.38% and the Nasdaq Composite shed 0.29%.
The US Labor Department reported that nonfarm payrolls increased by 162,000 in August, well above economists' expectations for a 56,000 rise. The unemployment rate remained at 4.1%. The labour-force participation rate edged up to 61.6%. Payroll gains for June and July were also revised higher by a combined 55,000.
The strong employment data strengthened expectations of a Fed rate hike at its 15-16 September meeting.
Attention will now shift to US inflation data due later this week. The August consumer price index report, scheduled for Friday, could provide further clues on the Fed's policy path. A stronger inflation reading could reinforce expectations of a rate hike, while softer data could support the case for keeping rates unchanged.
Oil prices moved higher as tensions between the US and Iran escalated over the weekend. Brent crude rose to around $96.80 a barrel.
The latest escalation followed US strikes on three Iranian oil tankers. Iran's Islamic Revolutionary Guard Corps said it had targeted three tankers and several US-linked vessels in retaliation. Iran also indicated that it plans to establish a restricted zone outside the Strait of Hormuz. The claims regarding the Iranian attacks have not been independently verified.
The developments have raised concerns over possible disruptions to oil shipments through the Strait of Hormuz, a critical route for global energy supplies. The rise in crude prices is also adding to inflation concerns at a time when major central banks are reassessing their interest-rate paths.
Investors are also watching the European Central Bank, which is widely expected to raise its policy rate to 2.75% this week.
US cash equity markets will remain closed on Monday for the Labor Day holiday. Regular trading will resume on Tuesday.
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