Banking stocks and index heavyweights ITC, HDFC, L&T and Reliance Industries (RIL) led a strong intraday rebound for key benchmark indices today, 29 June 2015. Recovery on the domestic bourses began in early afternoon trade. Earlier during the trading session, equity benchmark indices in India had slumped as the collapse of Greek rescue talks roiled global markets. The strong intraday recovery on the domestic bourses materialised as global crude oil prices fell.
The barometer index, the S&P BSE Sensex, was provisionally off 127.97 points or 0.46% to 27683.87. The broad market depicted weakness. There were more than two losers against every gainer on BSE. The BSE Mid-Cap index was off 1.37%. The BSE Small-Cap index was off 1.49%. The decline in both these indices was higher than the Sensex's decline in percentage terms.
Shares of Tech Mahindra slumped after company said in its business update announced during trading hours that the company's Q1 June 2015 results have some headwinds and tailwinds which could see a risk of marginal decline in both revenue and EBITDA (earnings before interest, taxation, depreciation and amortization) margin of the company on sequential basis.
Negotiations between Greece and its creditors deteriorated over the weekend after Greece's Prime Minister Alexis Tsipras unexpectedly called for a referendum on whether to accept reform measures demanded by the country's lenders. Greece shut down its banking system, ordering lenders to stay closed for six days starting Monday, 29 June 2015, to avoid a run on the country's banks and the nation's central bank moved to impose controls to prevent money from flooding out of the country. The steps, a fateful climax to five years of debt crisis, puts Greece closer than it ever has been to an exit from the euro. The decision came after the European Central Bank yesterday, 28 June 2015, capped the level of emergency funding for Greece's banking system.
Earlier, key equity benchmark indices in India had slumped in mid-morning trade as the collapse of Greek rescue talks roiled global markets. The Sensex and the 50-unit Nifty, both, hit their lowest levels in more than a week in mid-morning trade as these two key benchmark indices extended intraday losses.
Foreign portfolio investors sold shares worth a net Rs 203.74 crore during the previous trading session on Friday, 26 June 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 234.21 crore on Friday, 26 June 2015, as per provisional data released by the stock exchanges.
As per provisional closing, the S&P BSE Sensex was down 127.97 points or 0.46% to 27683.87. The index fell 116.52 points at the day's high of 27,695.32 in late trade. The index fell 602.65 points at the day's low of 27,209.19 in mid-morning trade, its lowest level since 19 June 2015.
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The 50-unit CNX Nifty was down 62.70 points or 0.75% at 8,318.40, as per provisional closing. The index hit a high of 8,329.45 in intraday trade. The index hit a low of 8,195.65 in intraday trade so far, which is exactly the same as intraday low of the Nifty on 19 June 2015.
The BSE Mid-Cap index was down 145.98 points or 1.37% at 10,540.13. The BSE Small-Cap index was down 165.93 points or 1.49% at 10,958.56. The decline 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. There were more than two losers against every gainer on BSE. 1,790 shares fell and 890 shares rose. A total of 117 shares were unchanged.
The total turnover on BSE amounted to Rs 2527 crore, lower than turnover of Rs 3055.90 crore registered during the previous trading session.
Index heavyweight and housing finance major HDFC rose 0.34% at Rs 1,292.65. The stock hit a high of Rs 1,292.65 and a low of Rs 1,260.90 in intraday trade.
Another index heavyweight Reliance Industries (RIL) fell 0.86% at Rs 991. The stock hit a high of Rs 993.60 and a low of Rs 972.60 in intraday trade. RIL during market hours today, 29 June 2015, announced that the SEZ unit of Jamnagar refinery of the company is planning to shut down one crude distillation unit for routine maintenance and inspection activities in the first half of July for about 10 days. This opportunity would also be utilized to carry out necessary modifications to improve the reliability and performance of the unit, RIL said. The other three crude distillation units, including major secondary processing units are planned to operate at normal throughput, RIL said. The planned maintenance turnaround at the refinery is not expected to have any impact on commercial commitments, RIL said in a statement.
Index heavyweight and IT major Infosys fell 1.42% at Rs 991.85. The stock hit a high of Rs 999 and a low of Rs 980 in intraday trade. The company during trading hours today, 29 June 2015, announced the launch of Finacle SME Enable to help banks enhance support and service for their small and media enterprise (SME) customers. The first-of-its-kind, mobile-based financial and business management solution is exclusively designed to help SMEs not only experience banking services on the move, but also manage their business operations efficiently, Infosys said in a statement.
Tech Mahindra fell 7.45% to Rs 483. In its business update, the company announced during trading hours today, 29 June 2015, that the company's Q1 June 2015 results have some headwinds and tailwinds which could see a risk of marginal decline in both revenue and EBITDA (earnings before interest, taxation, depreciation and amortization) margin of the company on sequential basis. Tech Mahindra said that a seasonally weak mobility business will be a drag on Q1 revenues and EBITDA of the company. H1 B visa costs will be another drag on margins, the company said. On the other hand, favourable currency movements could help both revenue and margins, the company said.
For the current financial year, the management's endeavour will be grow enterprise business in line or above industry. Improving EBITDA margin is one of the top priorities of the company for FY 2016, Tech Mahindra said. The company further said that the organic growth of the communications business of the company could remain subdued in FY 2016 due to delayed decision making. The deal pipeline of the communications business remains healthy, the company said.
Private sector lender HDFC Bank fell 0.48% at Rs 1,058. The stock hit a high of Rs 1,062.25 and a low of Rs 1,031.15 in intraday trade.
Index heavyweight and construction major L&T rose 0.68% at Rs 1,792. The stock hit a high of Rs 1,792.70 and a low of Rs 1,720 in intraday trade. The company announced during trading hours today, 29 June 2015, that its construction division won orders worth Rs 2035 crore across various business segments in June 2015.
Crompton Greaves (CG) fell 1.73% to Rs 162.20. The company announced during trading hours today, 29 June 2015, that it has bagged two important orders, one for 8 bays of 138kV, 60Hz, AIS Switchyard in the Philippines for MINERGY Coal Corporation and the other for 30 MVA, 132kV mobile substations for Wellington Turbines, a Venezuelan enterprise. The scope of work for both projects includes design, manufacture, supply, construction and installation and commissioning of the substations.
In global commodities markets, Brent crude oil futures edged lower, pushed down by concerns about a possible Greek default and a consequently stronger US dollar. Brent for August settlement was off $1.50 a barrel at $61.76 a barrel. The contract had risen 6 cents a barrel or 0.09% to settle at $63.26 a barrel during the previous trading session.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was currently hovering at 63.91, compared with its close of 63.645 during the previous trading session.
The decline in global crude oil prices and deregulation of diesel price announced by the Indian government in October last year will help reduce the government's fuel subsidy burden and help contain its fiscal deficit. The slide in global crude oil prices will also help India in containing its current account deficit and fuel price inflation. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports. India imports 80% of its crude oil requirement.
Meanwhile, the Reserve Bank of India (RBI) yesterday, 28 June 2015, clarified that RBI Governor Dr. Raghuram G. Rajan had not suggested at a London Business School conference on 25 June 2015 that the world risked sliding into another Great Depression as reported by sections of the media. The RBI clarified that what Rajan had said at that conference was that the policies followed by major central banks around the world were in danger of slipping into the kind of beggar-thy-neighbour strategies that were followed in the 1930s. Rajan called for new rules of the game in the international monetary system, a call that he has made before and is gaining some traction. The Great Depression was a period of great turmoil caused by many factors and not just beggar-thy-neighbour policies, according to the clarification issued by the RBI.
Meanwhile, the weekly data released by the Ministry of Agriculture after trading hours on Friday, 26 June 2015, showed that the sowing of Kharif crops is gathering pace. The total sown area for Kharif crops as on 26 June 2015 stood at 165.62 lakh hectares compared with 134.18 lakh hectares at this time last year.
Meanwhile, the India Meteorological Department (IMD) said in its daily monsoon update issued yesterday, 28 June 2015, that the Southwest Monsoon was vigorous over Bihar and active over Andaman & Nicobar Islands, West Bengal & Sikkim, Jharkhand and Kerala during the past 24 hours until 8:30 IST, IMD said.
For the country as a whole, the cumulative rainfall during this year's monsoon season was 23% above the Long Period Average (LPA) until 27 June 2015. Region wise, the southwest monsoon was 39% above the LPA in Central India, 33% above the LPA in Northwest India, 28% above the LPA in South Peninsula and 1% above the LPA in East & Northeast India until 27 June 2015.
On Friday, 26 June 2015, the IMD had announced that the monsoon has covered the entire country.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
In overseas markets, European stocks slumped today, 29 June 2015, as the Greek crisis entered a new phase following the imposition of capital controls to prevent a run on the country's banks. Key indices in Germany, UK and France were off 1.66% to 3.44%. In Italy, the FTSE MIB index was currently off 3.7%. In Spain, the IBEX 35 index was currently off 3.8%.
Greek leaders imposed capital controls and closed banks for at least six days beginning Monday, 29 June 2015, to prevent further panicked withdrawals from citizens after the European Central Bank yesterday, 28 June 2015, capped the level of emergency funding for Greece's banking system. Talks between Greece and its creditors broke down on Saturday, 27 June 2015, and the nation looks set to miss a debt repayment to the International Monetary Fund which is due tomorrow, 30 June 2015. Greece's international bailout also expires on 30 June 2015.
Greek Prime Minister Alexis Tsipras has called a referendum on Sunday, 5 July 2015, on whether the country should accept creditors' bailout terms. Greeks will be asked to decide whether to accept reform measures demanded by the country's lenders that would ultimately unlock about euro 15.3 billion in funds.
The European Commission yesterday, 28 June 2015, offered Greek voters a 10-point plan for bailout requirements, urging Greece to stay in the euro area.
International Monetary Fund (IMF) Managing Director Christine Lagarde yesterday, 29 June 2015, said that the IMF is still open for talks with Greece to find a way out of the country's debt crisis. The coming days will clearly be important, she said.
Meanwhile, Greece Capital Markets Commission today, 29 June 2015, said that Greece's stock market will remain closed for as long as banks aren't open to the public.
Meanwhile, a European Commission spokesperson reportedly said today, 29 June 2015, that the European Commission does not plan to release new reform proposals for Greece today, 29 June 2015. The statement contradicts comments from Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, reported earlier by a news agency. Moscovici reportedly said in a post to Twitter that the most recent proposals from the EU Commission are known and published. He noted that Juncker is scheduled to hold a press conference today, 29 June 2015, on the way forward for Greece.
Asian stocks fell today, 29 June 2015, as investors brace for an increasingly likely Greek exit from the eurozone. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan were down by 0.82% to 3.34%.
China's central bank cut interest rates on Saturday, 27 June 2015, and reduced the reserves that certain banks must hold. The People's Bank of China (PBoC) cut the benchmark 1-year lending rate by a quarter percentage point to 4.85%, its fourth rate cut since November. The PBoC also lowered the reserve requirement ratio for some lenders by half of a percentage point.
Trading in US index futures indicated that the Dow could fall 173 points at the opening bell today, 29 June 2015. It was a mixed day for US stocks on Friday, 26 June 2015, with technology stocks posting a decline and the Dow rising with the help of Nike.
US consumer sentiment rose to a final June reading of 96.1, reaching a five-month high after a decline in May, according to reports on the University of Michigan gauge.
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