Key benchmark indices extended losses in mid-afternoon trade as European stocks dropped and trading in US stock index futures pointed to lower opening of US stocks at the opening bell. At 12:17 IST, the barometer index, the S&P BSE Sensex, was down 111.92 points or 0.45% at 24,712.91. The losses for the 50-unit Nifty 50 index were higher in percentage terms than those for the Sensex. The Nifty was currently down 46.30 points or 0.61% at 7,509.65. Meanwhile, the Reserve Bank of India kept its benchmark interest rate viz. the repo rate unchanged at 6.75% after a monetary policy review.
The Sensex lost 163.74 points or 0.65% at the day's low of 24,661.09 in mid-afternoon trade, its lowest level since 29 January 2016. The index rose 103.92 points or 0.41% at the day's high of 24,928.75 in early afternoon trade. The Nifty lost 59.75 points or 0.79% at the day's low of 7,496.20 in mid-afternoon trade, its lowest level since 29 January 2016. The index rose 20.35 points or 0.26% at the day's high of 7,576.30 in early afternoon trade.
In overseas stock markets, European stocks edged lower as oil prices resumed their downward trend and as concerns over global economic growth persisted. Trading in US stock index futures pointed to losses for US stocks at the opening bell. Trading in US index futures indicated that the Dow Jones Industrial Average could slide 109.50 points at the opening bell today, 2 February 2016.
Asian equities edged lower on fresh weakness in oil prices. But Chinese stocks edged higher after the country's central bank injected more liquidity into the financial system, in a move to stave off potential liquidity squeezes ahead of the weeklong Lunar New Year holiday that starts on 7 February 2016. The Shanghai Composite index settled 2.26% higher.
Closer home, the market breadth indicating the overall health of the market was weak. On BSE, 1,574 shares fell and 931 shares rose. A total of 120 shares were unchanged. The BSE Mid-Cap index was currently down 0.96%. The BSE Small-Cap index was currently down 0.56%. The losses for both these indices were higher in percentage terms than those for the Sensex.
Steel stocks led decline in metal and mining stocks. Tata Steel (down 5.17%), Jindal Steel & Power (down 4.78%), Steel Authority of India (down 4.92%) and JSW Steel (down 3.95%) edged lower. Among other metal stocks, Hindalco Industries (down 1.97%), Hindustan Zinc (down 1.03%) and National Aluminium Company (down 0.93%) declined.
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Stocks of iron ore makers edged lower. Vedanta (down 5.4%) and NMDC (down 0.93%) declined. According to reports, the mines ministry has written to the finance ministry to withdraw 10% export duty on low-quality iron ore from Goa to help boost sales amid a sharp fall in prices. Goa is known for low-grade ore used mainly by Chinese steel mills.
Pharma stocks declined. Aurobindo Pharma (down 4.4%), Cipla (down 5.2%), Glenmark Pharmaceuticals (down 3.07%), Wockhardt (down 2.69%), Ipca Laboratories (down 0.97%), GlaxoSmithkline Pharmaceuticals (down 1.02%), Divi's Laboratories (down 0.54%) and Cadila Healthcare (down 0.25%) edged lower. Alkem Laboratories (up 0.95%), Dr Reddy's Laboratories (up 0.24%) and Lupin (up 0.45%) edged higher.
Sun Pharmaceutical Industries (Sun Pharma) was down 2.81%. Strides Shasun was off 3.54% at Rs 1,111.75. Sun Pharma announced after market hours yesterday, 1 February 2016, that Strides Shasun has completed the acquisition of CNS divisions of erstwhile Ranbaxy Laboratories. It may be recalled that Sun Pharma had acquired Ranbaxy Laboratories.
Separately, Sun Pharma announced after market hours yesterday, 1 February 2016, the launch of Imatinib Mesylate Tablets (therapeutic equivalent to Gleevec for indications approved by the FDA) in US market. Sun Pharma's subsidiary received final approval for Imatinib Mesylate from United States Food & Drug Administration (USFDA) in December 2015. Being a First-to-File product, it was granted 180 days of marketing exclusivity by FDA from the time of its launch.
Brigade Enterprises slumped 6.87% at Rs 145.10 after consolidated net profit declined 16.35% to Rs 31.25 crore on 43.75% rise in net sales to Rs 494.17 crore in Q3 December 2015 over Q3 December 2014. The result was announced after trading hours yesterday, 1 February 2016.
Aban Offshore fell 5.65% at Rs 179.40 after the company reported consolidated net loss of Rs 88.73 crore in Q3 December 2015 as against net profit of Rs 129.99 crore in Q3 December 2014. Net sales declined 26.87% to Rs 733.60 crore in Q3 December 2015 over Q3 December 2014. The result was announced after trading hours yesterday, 1 February 2016.
While retaining accommodative stance of the monetary policy, RBI Governor Raghuram Rajan said in a statement that structural reforms in the Union Budget 2016-17 that boost growth while controlling spending will create more space for monetary policy to support growth. With unfavourable base effects on the ebb and benign prices of fruits and vegetables and crude oil, the January 2016 consumer price inflation target of 6% should be met, the RBI said. Consumer price inflation stood at 5.61% in December 2015.
Going forward, under the assumption of a normal monsoon and the current level of international crude oil prices and exchange rates, inflation is expected to be inertial and be around 5% by the end of fiscal 2016-17, RBI said. However, the implementation of the VII Central Pay Commission award, which has not been factored into these projections, will impart upward momentum to this trajectory for a period of one to two years, the RBI said. The RBI kept the cash reserve ratio (CRR) unchanged at 4% of net demand and time liability (NDTL).
According to Rajan, the current momentum of economic growth in India is reasonable but it is below what should be expected over the medium term. The RBI has retained the projected growth in GVA (Gross Value Added) unchanged at 7.4% for 2015-16 with a downside bias. The central bank expects acceleration in GVA growth to 7.6% in 2016-17. Expectations of a normal monsoon after two consecutive years of rainfall deficiency, the large positive terms of trade gain, improving real incomes of households and lower input costs of firms should contribute to strengthening the growth momentum.
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