A bout of volatility was witnessed as key benchmark indices trimmed losses after extending intraday slide in morning trade. The barometer index, the S&P BSE Sensex, regained the psychological 27,000 mark after falling below that level in intraday trade. The broad market depicted weakness. There were more than two losers against every gainer on BSE. The market sentiment was weak after a survey showed contraction in India's services sector in May 2015. The Sensex was currently off 183.35 points or 0.67% at 27,005.03. The BSE Small-Cap index was off 1.1%. The decline in this index was higher than the Sensex's decline in percentage terms.
The broad based losses for Indian stocks materialized today, 3 June 2015, after forecast of deficient rains this year from the India Meteorological Department. In overseas markets, Asian shares edged lower as a spike in US and German debt yields overnight reduced the appetite for riskier assets.
Pharmaceutical shares declined. Realty shares also edged lower.
Foreign portfolio investors sold shares worth a net Rs 594.14 crore yesterday, 2 June 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 271.64 crore yesterday, 2 June 2015, as per provisional data released by the stock exchanges.
Earlier, the Sensex and the 50-unit CNX Nifty, both, hit their lowest levels in almost three weeks in morning trade as these two key benchmark indices extended initial losses.
In overseas markets, Asian shares edged lower as a spike in US and German debt yields overnight reduced the appetite for riskier assets. US stocks ended slightly lower yesterday, 2 June 2015, on caution ahead of the important monthly jobs report later in the week and ahead of a looming deadline for Greece and its lenders to find a solution to the country's debt crisis.
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At 11:19 IST, the S&P BSE Sensex was down 183.35 points or 0.67% at 27,005.03. The index fell 212.59 points at the day's low of 26,975.79 in mid-morning trade, its lowest level since 14 May 2015. The index rose 87.84 points at the day's high of 27,276.22 in early trade.
The 50-unit CNX Nifty was down 58.05 points or 0.70% at 8,178.40. The index hit a low of 8,166 in intraday trade, its lowest level since 14 May 2015. The index hit a high of 8,236.70 in intraday trade.
The BSE Mid-Cap index was down 103.48 points or 0.99% at 10,371.03. The BSE Small-Cap index was down 121.45 points or 1.10% at 10,925.73. The fall in both these indices was higher than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was quite weak, with more than two losers against every gainer on BSE. 1,558 shares fell and 613 shares rose. A total of 76 shares were unchanged.
Pharmaceutical shares declined. Wockhardt (down 2.4%), Strides Arcolab (down 1.95%), GlaxoSmithKline Pharmaceuticals (down 1.71%), Sun Pharmaceutical Industries (down 1.7%), Divi's Laboratories (down 1.63%), IPCA Laboratories (down 1.08%), Lupin (down 1.03%), Dr. Reddy's Laboratories (down 0.96%), Glenmark Pharmaceuticals (down 0.43%), Piramal Enterprises (down 0.15%) and Cipla (down 0.02%), edged lower. Cadila Healthcare (up 0.10%) and Aurobindo Pharma (up 0.31%) edged higher.
Realty shares edged lower. Unitech (down 6.03%), Housing Development and Infrastructure (HDIL) (down 5.86%), Oberoi Realty (down 5.1%), Anant Raj (down 3.91%), D B Realty (down 3.2%), Sobha (down 3.13%), Indiabulls Real Estate (down 2.9%), Parsvnath Developers (down 2.85%), Sunteck Realty (down 1.81%) Prestige Estates Projects (down 1.34%), Peninsula Land (down 0.58%) and Godrej Properties (down 0.1%) edged lower. DLF was up 0.31%.
Bharti Airtel was down 0.53% to Rs 415.75. The company announced before trading hours today, 3 June 2015, that the company has approached investors for issuance of debt instruments in the form of US dollar denominated Senior Unsecured Notes. The notes have an expected tenor 10 years. The company will use the proceeds for capital expenditure in compliance with end-use guidelines set forth in the Master Circular by the Reserve Bank of India and all laws and regulations of India applicable to the company. The notes are expected to be listed on the Singapore Stock Exchange.
Meanwhile, the India Meteorological Department (IMD) said in its second stage Long Range Forecast (LRF) for Southwest Monsoon 2015 issued after trading hours yesterday, 2 June 2015, that the rainfall over the country as a whole for the 2015 southwest monsoon season is likely to be deficient. Quantitatively, the season rainfall for the country as a whole is likely to be 88% of the long period average (LPA) with a model error of plus/minus 4%. In April 2015, the IMD had forecast this year's monsoon rainfall to be 93% of the long period average with a model error of plus/minus 5%.
From April 2015 weak El Nino conditions are established over equatorial Pacific Ocean. Atmospheric conditions like weakened trade winds, negative Southern Oscillation Index (SOI) values etc. generally associated with El Nino conditions are also observed, the IMD said. The latest forecast from IMD-IITM coupled model indicates El Nino conditions are likely to strengthen further and reach to moderate strength during the monsoon season. There is about 90% probability of El Nino conditions to continue during the southwest monsoon season, the IMD said.
The IMD said that there is 66% probability of deficient rains, 27% probability of below normal rains and 7% probability of normal rains this year.
The season rainfall is likely to be 85% of LPA over North-West India, 90% of LPA over Central India, 92% of LPA over South Peninsula, and 90% of LPA over North-East India, all with a model error of plus/minus 8%, the IMD said. The monthly rainfall over the country as whole is likely to be 92% of its LPA during July and 90% of LPA during August both with a model error of plus/minus 9%.
The annual monsoon is critical for the country's agriculture. Scarce seasonal rains can adversely affect agriculture production and push prices up in India, because a considerable part of the country's farmland is dependent on the rains for irrigation.
The onset of monsoon in Kerala has been delayed. The IMD in its daily monsoon report yesterday, 2 June 2015, said that conditions are becoming favourable for the onset of southwest monsoon over Kerala around 5 June, four days after the scheduled onset date of 1 June.
The IMD's downgrade of the monsoon forecast came on a day when Reserve Bank of India (RBI) Governor Dr. Raghuram Rajan said that the central bank will wait for more certainty on the monsoon outturn after cutting the benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review yesterday, 2 June 2015.
Meanwhile, India's services sector fell back into contraction in May 2015 after experiencing growth for six successive months, the outcome of a survey from Markit Economics today, 3 June 2015, showed. The seasonally adjusted HSBC India Services Business Activity Index declined to 49.6 in May 2015, from 52.4 in April 2015. Although indicative of falling output, the latest reading pointed to a marginal rate of contraction. Leading services activity to decline was a reduction in incoming new work, the first since April 2014. Competitive pressures and natural disasters were blamed for the decrease in new business inflows. Service providers' optimism was maintained during May, as improved marketing strategies and better economic conditions are expected to lead to business activity growth over the course of the next year.
Pollyanna De Lima, Economist at Markit said in a statement that India's services sector is expected to see a rebound in coming months. An upturn in employment combined with improved business confidence further add to the evidence that prospects may brighten, he said.
In global commodity markets, Brent crude oil futures edged lower today, 3 June 2015. Brent for July settlement was off 41 cents at $65.08 a barrel. The contract had risen 61 cents or 0.94% to settle at $65.49 a barrel during the previous trading session.
Oil cartel OPEC is expected to keep its production target of 30 million barrels of oil per day unchanged at a meeting scheduled in Vienna on Friday, 5 June 2015. The OPEC meeting is being closely watched for clues about the organization's next moves.
In overseas markets, Asian shares edged lower today, 3 June 2015, as a spike in US and German debt yields overnight reduced the appetite for riskier assets. Key benchmark indices in China, South Korea, Taiwan, Japan and Indonesia were down by 0.48% to 1.35%. Key benchmark indices in Hong Kong and Singapore and were up by 0.27% to 0.75%.
The HSBC China Services Purchasing Managers' Index rose to an eight-month high of 53.5 in May, HSBC Holdings PLC said today, with both new orders and employment in the sector rising to multi-year highs. Activity outside the nation's factories during the month also came in above April's 52.9 reading. A reading above 50 indicates month-over-month expansion.
US stocks ended slightly lower yesterday, 2 June 2015, on caution ahead of the important monthly jobs report later in the week and ahead of a looming deadline for Greece and its lenders to find a solution to the country's debt crisis.
In Europe, Greece's creditors reportedly reached a consensus on the terms of a proposed deal to put to the Greek government. However, Athens has yet to agree on the terms. The country has to repay 300 million euros ($329 million) to the International Monetary Fund (IMF) by Friday, 5 June 2015. Greece is scheduled to repay a total of euro 1.6 billion ($1.76 billion) to the International Monetary Fund (IMF) over the period between June 5-19.
Meanwhile, the European Central Bank (ECB) is widely expected to reaffirm its commitment to its quantitative easing scheme after a monetary policy meeting today, 3 June 2015.
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