After paring losses, key benchmark indices hovered near the flat line in afternoon trade. At 13:15 IST, the barometer index, the S&P BSE Sensex was down 5.74 points or 0.02% at 25,223.96. The Nifty 50 was currently down 5.55 points or 0.07% at 7,741.45. Meanwhile, the outcome of a monthly survey showed that growth in India's services sector eased last month due to a slower expansion in new business inflows.
The Sensex rose 11.54 points or 0.04% at the day's high of 25,241.24 in early afternoon trade. The barometer index hit its lowest level in more than three weeks when it lost 133.51 points or 0.52% at the day's low of 25,096.19 in mid-morning trade. The Nifty rose 1.95 points or 0.02% at the day's high of 7,748.95 in early afternoon trade. The Nifty, too, hit its lowest level in more than three weeks when it lost 43.15 points or 0.55% at the day's low of 7,703.85 in mid-morning trade.
In overseas stock markets, main European stocks edged higher as investors digested a raft of major earnings. Most Asian stocks edged lower amid renewed global growth concerns in the wake of weaker-than-expected Chinese manufacturing data. The Caixin China general manufacturing purchasing managers' index fell to 49.4 in April 2016 from 49.7 in March 2016. A reading below 50 indicates economic contraction. The data was released during trading hours in Asia yesterday, 3 May 2016. China's official manufacturing PMI, a competing gauge, came in at 50.1 in April 2016 compared with 50.2 in March 2016, according to data released by the National Bureau of Statistics on 1 May 2016. The Chinese economy is the world's second biggest economy after the United States.
A surprise interest-rate cut by Australia's central bank has added to global economic jitters. The Reserve Bank of Australia yesterday, 3 May 2016, cut its benchmark interest rate by 25 basis points to record low of 1.75% in a bid to combat record-low inflation and a strong local currency. The decision was announced during trading hours in Asia. US stocks closed lower yesterday, 3 May 2016, led by declines in energy and materials stocks amid renewed global growth worries. Meanwhile, Cleveland Fed President Loretta Mester yesterday, 3 May 2016, said in a speech that waiting for global financial markets to calm down before raising interest rates may backfire and just lead to more volatility. Mester said she would like to see gradual interest-rate hikes this year. Mester is a voting member of the policy-setting Federal Open Market Committee (FOMC) this year. The FOMC next undertakes monetary policy review at a two-day meeting on 14-15 June 2016.
Closer home, the market breadth indicating the overall health of the market was weak. On BSE, 1,425 shares declined and 893 shares rose. A total of 116 shares were unchanged. The BSE Mid-Cap index was currently down 0.34%. The BSE Small-Cap index was currently down 0.21%. The losses for both these indices were higher than the Sensex's decline in percentage terms.
Index heavyweight and cigarette major ITC was down 0.98% to Rs 313.80 on reports that the Supreme Court today, 4 May 2016, told the tobacco industry to adhere to rules requiring stringent health warnings on cigarette packs. The stock hit a high of Rs 319.35 and a low of Rs 313.40 so far during the day. The tobacco industry should not violate any rule prevailing as of today, the two-judge bench reportedly said, and added that the Karnataka high court should hear all pleas challenging the new rules. Last month, Indian tobacco companies shut down production in protest against requirements that 85% of a cigarette pack's surface be covered in health warnings, up from 20%. The tobacco industry has taken the government to court, saying the rules are impractical and will boost smuggling of imported cigarettes. The government backs the stringent rules to cut tobacco consumption.
Tata Steel extended initial losses. The stock was currently down 4.35% at Rs 333.30. Global metals group Liberty House Group yesterday, 3 May 2016, formally submitted a letter of intent to Tata Steel Europe containing its indicative bid for the entire issued share capital of Tata Steel UK. Liberty has put in the bid for all of Tata Steel's UK assets, excluding its Long Products division, which is in the process of being sold separately, and the Scottish Plate Assets that Liberty already acquired from Tata Steel. Tata Steel has put Tata Steel, UK on the block due to the deteriorating financial performance of the UK subsidiary.
The bid is based on Liberty's GREENSTEEL business model and would involve a transition from steelmaking in blast furnaces to recycling steel in electric arc furnaces over time while ensuring the company continues to meet key customers' quality requirements. Steelmaking would be ultimately powered by renewable energy sources. Liberty said in a statement that it believes that the UK steel industry can achieve long-term viability if based on an agile, sustainable, non-cyclical model which integrates liquid steel making from recycling with downstream production and the manufacture of advanced engineering products.
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In order to take the bid forward Liberty has appointed an internal project team and a panel of leading external advisers to work on this acquisition, dubbed "Project GREENSTEEL Pluto".
Most realty shares edged lower. Unitech (down 4.52%), Sunteck Realty (down 2.31%), DLF (down 1.61%), Parsvnath Developers (down 1.59%), Housing Development and Infrastructure (HDIL) (down 1.44%), Peninsula Land (down 1.23%), Indiabulls Real Estate (down 1.22%), D B Realty (down 0.79%), Mahindra Lifespace Developers (down 0.4%), Godrej Properties (down 0.12%) and Phoenix Mills (down 0.06%), edged lower. Anant Raj (up 0.12%), Sobha (up 1.07%), Oberoi Realty (up 1.17%) and Prestige Estates Projects (up 5.26%) edged higher.
Most FMCG shares declined. Dabur India (down 2.12%), Godrej Consumer Products (down 1.66%), Marico (down 1.65%), Jyothy Laboratories (down 1.13%), Colgate Palmolive (India) (down 0.97%), Tata Global Beverages (down 0.8%), Britannia Industries (down 0.61%), Procter & Gamble Hygiene & Health Care (down 0.49%) and GlaxoSmithKline Consumer Healthcare (down 0.12%), edged lower. Nestle India (up 0.01%), Hindustan Unilever (up 0.14%) and Bajaj Corp (up 0.80%), edged higher.
Yes Bank shed 0.74% after the private sector bank announced reduction in lending rate by 10 basis points across tenors with effect from 1 May 2016. The bank's marginal cost of funds based lending rate (MCLR) for one-year loans now stands at 9.5%. All rupee loans sanctioned and credit limits renewed with effect from 1 April 2016 are priced with reference to MCLR, which is the internal benchmark of the concerned bank. Actual lending rates are determined by adding the components of spread to the MCLR.
Speciality Restaurants fell 3.24% after the company temporarily suspended operations of its Sigree Global Grill restaurant at Bengaluru with effect from 2 May 2016. The company did not mention the reason for the temporary suspension of operations of the restaurant and the expected timeline for resumption of operations.
Meanwhile, the outcome of a monthly survey showed that growth in India's services sector eased last month due to a slower expansion in new business inflows. The seasonally adjusted Nikkei Services Business Activity Index dropped to 53.7 in April 2016 from 54.3 in March 2016. April data highlighted a general lack of pressure on the capacity of Indian service providers, as unfinished business declined. Services firms' sentiment weakened slightly in April, with the degree of optimism being modest by historical standards.
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