Indian shares declined in afternoon trades Friday as investors feared a probable rate hike in September after strong United States jobless claims amid weak earnings from Bharat Heavy Electricals.
Global risk appetite dropped as investors awaited non farm payrolls data for the month July, which might indicate a probable rate hike in September.
Thursday, jobless claims declined more than expected, sparking fears of a September rate hike.
Jobless claims came at 270,000 for the week ended Jul 31 lower than analysts' estimate of 273,000 and 267,000 a week ago, a government data showed.
On Tuesday, Dennis Lockhart, Federal Reserve President of Atlanta expressed his support for an interest rate hike in September.
Lockhart, a voting member of Federal Open Market Committee this year, said to Wall Street Journal that it would take 'significant deterioration' in the United States economy for him not to refrain from supporting a September rate hike.
In its latest policy review last month, the central bank reiterated its resolve to hike rates later this year as the economy was poised for expansion and labour market was expected to improve further. A pick-up in US economy, the world's biggest, augurs well for emerging market especially for exporting companies.
The central bank said it was seeing 'solid' job gains and maintained its view that economic activity was expanding 'moderately', with the risks to the outlook 'nearly balanced'.
Meanwhile, shares also fell after heavyweight index component Bharat Heavy Electricals posted weak first quarter earnings.
BHEL posted first quarter profit of Rs 338.9 million compared to Rs 1.93 billion in the same period a year ago.
Meanwhile, sales slumped to Rs 42.08 billion from Rs 50.67 billion in the same period a year ago.
Meanwhile, locally investors also focused on corpus funds coming in from the state run retirement fund after it said that it would invest nearly Rs 50 billion in the equity markets this fiscal.
The Employees' Provident Fund Organisation (EPFO) will allocate Rs 50 billion in the present fiscal for exchange traded funds that track the country's two main share indexes, but could increase that to as much as Rs 70 billion to Rs 80 billion, fund commissioner K.K.Jalan.
Yesterday, Central Provident fund Commissioner, K.K. Jalan said that to begin with, EPFO will invest in two exchange traded funds, one built around the Nifty index of the National Stock Exchange and another around BSE's Sensex. Going forward, it may diversify its basket of ETFs.
According to a decision by the central board of EPFO, the retirement fund manager will invest up to 5% of its incremental corpus in ETFs in the current financial year. In other words, between 6 August and 31 March 2016, EPFO will pump in between Rs 50 billion and Rs 60 billion in the stock market.
At 1:50PM, India's benchmark index, the S&P BSE Sensex declined 0.30% to 28,215.80 on the Mumbai stock exchange. The measure opened at 28,327.11 compared to previous close of 28,298.13.
The 50-share Nifty slipped 0.33% to 8,560.80 on the National Stock exchange. The measure opened at 8,580.80 compared to previous close of 8,588.65.
Overseas investors net bought Rs 4.48 billion worth local shares Thursday, provisional data from the stock exchanges showed.
The following stocks/sectors recorded significant movement on the stock exchanges today:
Bombay Dyeing & Manufacturing Company Ltd: The flagship company of Wadia Group, slipped 6.1% to Rs 81.65 after reporting net loss in the fiscal first quarter on higher finance costs and weak sales.
IVRCL Ltd: A Hyderabad based company, spurted 1.8% to Rs 12.03 Friday after the company announced that it has allotted shares to lenders in accordance to the restructuring agreement.
Jaypee Infratech Ltd: A local infrastructure development and real estate company, slumped 6.6% to Rs 14.75 after fiscal first quarter net profit dropped 43.2% on weak sales and higher finance costs.
Mangalore Chemicals & Fertilizers Ltd: A Bangalore-based fertilizer company, fell 2.55% to Rs 59.15 Friday after fiscal first quarter net loss widened on one-time cost.
Sun Pharmaceuticals Ltd: India's biggest drugmaker, gained 0.65% to Rs 852after its Israel unit Taro posted strong earnings for the first quarter.
Uflex Ltd: A local packaging company, jumped 3.7% to Rs 181.60 after the company said that fiscal first quarter group profit climbed 22% on strong sales.
Vedanta Ltd: The flagship company of Anil Agarwal led Vedanta Resources Plc, climbed 1.7% to Rs 129 on talk to restart iron ore mining operations at the Codli mines in Goa next week.
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