A divergent trend for index constituents caused modest losses for key benchmark indices. While metal and PSU bank stocks rose, shares of telecom companies and oil exploration and production (E&P) firms dropped. Benchmark indices witnessed high intraday volatility. The barometer index, the S&P BSE Sensex, provisionally settled above the psychological 28,000 level, having alternately moved above and below that mark in intraday trade. Earlier, the Sensex had fallen below the psychological 28,000 level amid high volatility in mid-morning trade. The market breadth indicating the overall health of the market was positive. The Sensex was provisionally off 96.54 points or 0.34% at 28,090.52. The BSE Mid-Cap index was provisionally up 1.11%, outperforming the Sensex.
Key indices edged lower today, 4 August 2015, after India's weather office predicted below normal rains during the second half of southwest monsoon season (August to September), with a probability of 86%. Meanwhile, the Reserve Bank of India (RBI) kept its benchmark lending rate viz. the repo rate unchanged at 7.25% after a monetary policy review today, 4 August 2015. RBI Governor Dr. Raghuram G. Rajan said that the RBI has retained the accommodative stance of monetary policy.
Index heavyweight and housing finance major HDFC fell. Shares of oil exploration and production (E&P) companies fell after crude oil prices dropped sharply yesterday, 3 August 2015. Shares of state-run gas transmission and distribution firm GAIL (India) hit 52-week low.
Benchmark indices witnessed high intraday volatility today, 4 August 2015. The Sensex and the 50-unit CNX Nifty, both, reversed direction after hitting 1-1/2-week high at the onset of the trading session. After languishing in negative zone, key benchmark indices extended losses in morning trade. Volatility ruled the roost as key benchmark indices recovered from lower level soon after extending intraday losses in mid-morning trade. High volatility on the domestic bourses materialized after the RBI kept its benchmark lending rate viz. the repo rate unchanged at 7.25% after a monetary policy review. The RBI 's monetary policy statement was announced at 11:00 IST. Key indices once again slipped into the red from green after reversing intraday losses in mid-morning trade. A sudden slide pushed key benchmark indices further lower in afternoon trade. Gains in metal stocks and intraday recovery in bank stocks aided recovery for key benchmark indices in mid-afternoon trade.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 350.41 crore yesterday, 3 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 33.36 crore yesterday, 3 August 2015, as per provisional data released by the stock exchanges.
In overseas markets, European shares edged higher in choppy trade. Asian stocks edged lower after an overnight decline in US stocks triggered by downbeat economic data. US stocks edged lower yesterday, 3 August 2015, after weak economic data and a further slump in crude-oil prices.
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As per provisional closing, the S&P BSE Sensex was down 96.54 points or 0.34% at 28,090.52. The index fell 320.94 points at the day's low of 27,866.12 in afternoon trade, its lowest level since 31 July 2015. The index gained 77.66 points at the day's high of 28,264.72 at the onset of the trading session, its highest level since 24 July 2015.
The CNX Nifty was down 26.15 points or 0.31% at 8,516.90. The index hit a low of 8,448.25 in intraday trade, its lowest level since 31 July 2015. The index hit a high of 8,565.15 in intraday trade, its highest level since 24 July 2015.
The market breadth indicating the overall health of the market was positive. On BSE, 1,626 shares rose and 1,267 shares fell. A total of 123 shares were unchanged.
The BSE Mid-Cap index was up 126.32 points or 1.11% at 11,457.23. The index scaled a record high of 11,467.48 in intraday trade. The BSE Small-Cap index was up 79.94 points or 0.67% at 12,021.14. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 4454 crore, higher than turnover of Rs 3727.57 crore registered during the previous trading session.
Index heavyweight and housing finance major HDFC fell 1.27% to Rs 1,305. The stock hit high of Rs 1,330.60 and low of Rs 1,299.05.
Shares of oil exploration and production (E&P) companies fell after crude oil prices dropped sharply yesterday, 3 August 2015. Cairn India (down 2.77%), ONGC (down 2.1%), and Reliance Industries (RIL) (down 1.16%) declined. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms. Oil India rose 0.03%
Shares of state-run gas transmission and distribution firm GAIL (India) dropped 2.44% to Rs 345.40. The stock hit a 52-week low of Rs 343.30 in intraday trade today, 4 August 2015.
Shares of public sector oil marketing companies (PSU OMCs) edged higher as global crude oil prices dropped sharply yesterday, 3 August 2015. Indian Oil Corporation (up 0.48%), HPCL (up 0.95%) and BPCL (up 2.83%) edged higher.
Decline in crude oil prices will reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. The government has already decontrolled pricing of petrol and diesel.
Meanwhile, India's weather office, the India Meteorological Department (IMD), after trading hours yesterday, 3 August 2015, announced that the rainfall over the country as a whole during second half of southwest monsoon season (August to September) is likely to be below normal with a probability of 86%. Quantitatively, the rainfall over the country as a whole during the second half of the season (August to September) is likely to be 84% of long period average (LPA), with a model error of plus/minus 8%. From April to July 2015, El Nino conditions have strengthened from weak to moderate level. Latest forecast from ESSO-IMD-IITM coupled model indicates 72% probability of El Nino conditions to become strong during remaining part of the monsoon season. Over the Indian Ocean, there is 86% probability of current neutral Indian Ocean Dipole conditions to continue during the monsoon season.
The rainfall during August 2015 is likely to be 90% of LPA, with a model error of plus/minus 9% as was forecasted in June. The season rainfall (June to September) over the country as a whole is likely to be deficient. The season rainfall (June to September) over the country as a whole is likely to be 88% of LPA with a model error of plus/minus 4% as was forecasted in June, the IMD said.
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.
The IMD said in a daily report issued yesterday, 3 August 2015, that the Southwest Monsoon was active over Arunachal Pradesh, Odisha, Jharkhand and Chhattisgarh during past 24 hours until 8:30 IST. For the country as a whole, cumulative rainfall during this year's monsoon season was 6% below the Long Period Average (LPA) until 3 August 2015. Region wise, the rainfall was 22% below the LPA in South Peninsula, 8% below the LPA in East & Northeast India, 7% below the LPA in Central India and 8% above the LPA in Northwest India until 3 August 2015.
Meanwhile, the Reserve Bank of India (RBI) kept its benchmark lending rate viz. the repo rate unchanged at 7.25% after a monetary policy review today, 4 August 2015. The RBI also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liability (NDTL). RBI Governor Dr. Raghuram G. Rajan said that the RBI has retained the accommodative stance of monetary policy. As the RBI awaits greater transmission of its front-loaded repo rate cuts since January 2015, it will monitor developments for emerging room for more accommodation, Rajan said in the written monetary policy statement. While the RBI has cut repo rate by 75 basis points since January 2015, the median base lending rates of banks has fallen by only around 30 basis points so far.
The RBI is concerned about the sustained hardening of inflation excluding food and fuel. Rajan said that risks to inflation are broadly balanced around the target of 6% for January 2016. The RBI said that the full effects of the service tax increase, which took effect from June, will feed through over the rest of the year. Rajan said that RBI will keep a close watch on the movement of food prices. Some food prices, particularly of protein-rich items, pulses and oilseeds have risen sharply in recent months. This assumes significance in view of households' inflation expectations rising again. Several factors, however, could have a significant mitigating influence on inflation. These include the sharp fall in crude prices since June and the increase in planting of pulses and oilseeds and prospects of rainfall in August and September according to some forecasters. The RBI also appreciated the government's current pro-active supply management to contain shocks to food prices, especially of vegetables and its decision to keep increases in minimum support prices moderate.
The RBI has retained the projected GDP growth forecast unchanged at 7.6% for 2015-16. The RBI said that the outlook for growth is improving gradually. Favourable real income effects could accrue from weaker commodity prices, in particular crude oil, and a possible step-up in agricultural activity if monsoon conditions continue to improve, the RBI said. On the other hand, global growth projections for 2015 have generally been revised downwards and, therefore, the export contraction could become a prolonged drag on growth going forward. Notwithstanding some improvement in the state of stalled projects, supply constraints continue to be binding and new investment demand emanating from the private sector and the central government remains subdued.
Meanwhile, Rajan reportedly said at a press conference today, 4 August 2015, that the RBI and the government have reached a broad consensus on the setting up of the monetary policy committee (MPC). Rajan said RBI has always supported the idea of institutionalizing the process of monetary policy formulation, according to reports. This is vital given that RBI now has a clear inflation-targeting mandate, Rajan said. The governor highlighted the benefits of an MPC, saying that studies indicate that policies set up by a committee tend to be better that those set by a single person. He added that a committee-based structure also ensures greater continuity in policy and helps mitigate pressure that may fall on a single person responsible for policy setting. While the governor stopped short of detailing the structure of the MPC agreed upon between RBI and the government, he indicated that he is not opposed to the governor's veto powers being taken away. It may be recalled that a revised draft put out by the Financial Sector Legislative Reforms Commission (FSLRC) and released by the finance ministry on 23 July 2015 had suggested vesting the government with the power to appoint the majority of the members of the MPC and withdrawing the veto available to the RBI governor in an earlier report. Currently, the RBI governor has almost absolute power to set interest rates.
Meanwhile, in the global commodities markets, Brent crude oil futures edged higher after a sharp slide overnight. Brent for September settlement was currently up 54 cents at $50.06 a barrel. The contract had dropped $2.69 a barrel or 5.15% to settle at $49.52 a barrel during the previous trading session.
India imports about 80% of its crude requirements and a decline in crude eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure
In overseas markets, European shares edged higher today, 4 August 2015. Key benchmark indices in UK and Germany were up 0.08% to 0.14%. In France, the CAC 40 was off 0.3%.
In Greece, the Athex Composite was currently off 1.81%. The index had tumbled yesterday, 3 August 2015, after trading on the bourses resumed after a five-week shutdown. Trading on the Greece stock market was suspended on 29 June 2015 after Greek Prime Minister Alexis Tsipras called a referendum on the country's bailout terms.
Asian stocks edged lower today, 4 August 2015, after an overnight decline in US stocks triggered by downbeat economic data. Key benchmark indices in Taiwan, Japan, Hong Kong, Singapore and Indonesia fell by 0.02% to 0.4%. South Korea's Seoul Composite was up 0.97%.
Chinese stocks edged higher after the Shanghai and Shenzhen stock exchanges announced revised rules on short selling to curb volatility. The Shanghai Composite index jumped 3.69%.
US markets dropped yesterday, 3 August 2015, following weak economic data and a further slump in crude-oil prices. In US economic news, the Commerce Department yesterday, 3 August 2015 said personal spending by US consumers rose 0.2% in June, while personal income grew by 0.4%. Another data showed that the Institute for Supply Management's index of national factory activity slipped to 52.7 in July, falling short of reading of 53.5 in June.
The influential monthly US nonfarm payroll report for July 2015 is due on Friday, 7 August 2015.
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