After a sharp slide in mid-morning trade after the the Reserve Bank of India's (RBI) announcement of a cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review, key benchmark indices trimmed losses in early afternoon trade. The market breadth indicating the overall health of the market was weak. The barometer index, the S&P BSE Sensex, was currently off 270.40 points or 0.97% at 27,578.59. RBI Governor Dr. Raghuram G. Rajan said in a statement that the RBI decided to front-load a rate cut at today's policy and wait for more certainty on both the monsoon outturn as well as the effects of government responses if it turns out to be weak.
In overseas markets, Asian stocks edged lower after an encouraging reading on US manufacturing activity in May increased the likelihood that the US Federal Reserve will raise interest rates this year. Bank stocks edged lower.
Real estate and automobiles stocks edged lower after the Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015, matching market expectations.
Meanwhile, data released by the government after trading hours yesterday, 1 June 2015, showed that the output of eight core infrastructure sector, carrying 38% weight in the Index of Industrial Production, declined 0.4% in April 2015.
Foreign portfolio investors bought shares worth a net Rs 113.47 crore yesterday, 1 June 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 49.34 crore yesterday, 1 June 2015, as per provisional data released by the stock exchanges.
In overseas markets, Asian stocks edged lower after an encouraging reading on US manufacturing activity in May increased the likelihood that the US Federal Reserve will raise interest rates this year. US stocks ended with modest gains yesterday, 1 June 2015, recovering part of last week's losses in a session marked by cautious trading as investors reacted to mixed economic data.
At 12:17 IST, the S&P BSE Sensex was down 270.40 points or 0.97% at 27,578.59. The index lost 444.83 points at the day's low of 27,404.16 in early afternoon trade, its lowest level since 28 May 2015. The index rose 53.54 points at the day's high of 27,902.53 in early trade.
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The 50-unit CNX Nifty was down 82.35 points or 0.98% at 8,351.05. The index hit a low of 8,296.60 in intraday trade, its lowest level since 28 May 2015. The index hit a high of 8,445.35 in intraday trade.
The BSE Mid-Cap index was down 64.21 points or 0.60% at 10,648.22. The BSE Small-Cap index was down 72.17 points or 0.64% at 11,207.61. The fall in both these indices was lower than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was weak. On BSE, 1,466 shares fell and 854 shares rose. A total of 81 shares were unchanged.
Interest rate sensitive sectors such real estate and automobiles edged lower after the Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015, matching market expectations.
Auto stocks edged lower after the Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015, matching market expectations. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Escorts (down 1.77%), Eicher Motors (down 1.34%), Ashok Leyland (down 0.83%), Mahindra & Mahindra (down 0.62%) and Maruti Suzuki (India) (down 0.55%) edged lower.
Bajaj Auto fell 0.69% to Rs 2,320.25 after total sales fell 2% to 3.45 lakh units in May 2015 over May 2014. The announcement was made during market hours today, 2 June 2015. Bajaj Auto's motorcycle sales dropped 4% to 3.01 lakh units in May 2015 over May 2014. Commercial vehicles sales rose 13% to 43,576 units in May 2015 over May 2014. Exports rose 2% to 1.58 lakh units in May 2015 over May 2014.
Hero MotoCorp fell 3.34% to Rs 2,619.30 after the company said its total two-wheeler sales fell 5.41% to 5.69 lakh units in May 2015 over May 2014. The announcement was made after trading hours yesterday, 1 June 2015.
Tata Motors fell 0.94% to Rs 467.70. Tata Motors' total commercial and passenger vehicles sales including exports rose 5% to 39,496 units in May 2015 over May 2014. Domestic sales of Tata commercial and passenger vehicles for May 2015 were at 34,818 units, unchanged from May 2014. Sales of Tata Motors passenger vehicles rose 21% to 11,138 units in May 2015 over May 2014. The growth trend was driven by the cars segment, specifically the new launches of Zest and Bolt and with positive early response to the new GenX Nano, Tata Motors said after trading hours yesterday, 1 June 2015. The sales of the passenger cars rose 32% to 9,176 units in May 2015 over May 2014. The UV sales fell 15% to 1,962 units in May 2015 over May 2014. In the commercial vehicles, M&HCV sales rose 17% to 10,788 units in May 2015 over May 2014. The light & small commercial vehicle sales dropped 19% to 12,892 units in May 2015 over May 2014, reflecting the industry decline. These impacted the overall commercial vehicles sales for the company in the domestic market which dropped 6% to 23,680 units in May 2015 over May 2014. Exports rose 47% to 4,678 units in May 2015 over May 2014.
TVS Motor Company's (TVS Motor) fell 2.54% to Rs 230. The company's total sales rose 6% to 2.20 lakh units in May 2015 over May 2014. The announcement was made after market hours yesterday, 1 June 2015.
Realty stocks edged lower after the Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015, matching market expectations. Prestige Estates Projects (down 5.27%), Indiabulls Real Estate (down 2.71%), Sunteck Realty (down 2.66%), Peninsula Land (down 2.63%), Sobha (down 2.58%), Godrej Properties (down 2.41%), Unitech (down 2.37%), DLF (down 1.35%), D B Realty (down 1.27%), Anant Raj (down 0.82%) and Housing Development and Infrastructure (HDIL) (down 0.55%), edged lower. Phoenix Mills (up 0.32%), Parsvnath Developers (up 1.96%) and Oberoi Realty (up 2.10%) edged higher.
Purchases of both residential and commercial property are largely driven by finance.
The Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015, matching market expectations. The announcement was made at 11:00 IST. The RBI kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL).
The RBI has raised inflation forecast while trimming growth forecast for the current fiscal year. Inflation based on the consumer price index (CPI) is expected to be pulled down by base effects till August 2015 and will start rising thereafter to about 6% by January 2016, which is slightly higher than the RBI's projections in its April policy review. In its April policy review, the RBI had said that CPI inflation is expected to ease to around 4% by August 2015 and rise therefore to reach 5.8% by the end of the current financial year. The central bank has trimmed its forecast of GDP growth for the current fiscal year to 7.6%, with a downward bias. At its policy review on 7 April 2015, the RBI had forecast GDP growth at 7.8% for the current fiscal year assuming a normal monsoon this year.
RBI Governor Dr. Raghuram G. Rajan said in a statement that the RBI decided to front-load a rate cut at today's policy and wait for data that clarify uncertainty. With still weak investment and the need to reduce supply constraints over the medium term to stay on the proposed disinflationary path, a more appropriate stance is to front-load a rate cut today and then wait for data that clarify uncertainty, Rajan said. The agricultural activity was adversely affected by unseasonal rains and hailstorms in north India during March 2015, impinging on an estimated 94 lakh hectares of area sown under the Rabi crop. Successive estimates have been pointing to a worsening of the situation, with the damage to crops like pulses and oilseeds -- where buffer foodstocks are not available in the central pool -- posing an upside risk to food inflation. For the Kharif season, the outlook is clouded by the first estimates of the India Meteorological Department (IMD), predicting that the southwest monsoon will be 7% below the long period average. This has been exacerbated by the confirmation of the onset of El Nino by the Australian Bureau of Meteorology.
Among other risks to inflation, crude prices have been firming amidst considerable volatility and geo-political risks are ever present. The RBI also said that volatility in the external environment could impact inflation. Therefore, a conservative strategy would be to wait, especially for more certainty on both the monsoon outturn as well as the effects of government responses if it turns out to be weak.
Meanwhile, data released by the government after trading hours yesterday, 1 June 2015, showed that the output of eight core infrastructure sector, carrying 38% weight in the Index of Industrial Production, declined 0.4% in April 2015.
Meanwhile, the onset of monsoon in Kerala has been delayed. The India Meteorological Department (IMD) yesterday, 1 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.
In global commodity markets, Brent crude oil futures edged higher today, 2 June 2015. Brent for July settlement was up 10 cents at $64.98 a barrel. The contract had lost 68 cents or 1.03% to settle at $64.88 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 stocks edged lower today, 2 June 2015, after an encouraging reading on US manufacturing activity in May increased the likelihood that the US Federal Reserve will raise interest rates this year. Key indices in Taiwan, Singapore, Japan, Hong Kong and South Korea were off 0.05% to 1.27%. China's Shanghai Composite was up 1.09%.
US stocks ended with modest gains yesterday, 1 June 2015, recovering part of last week's losses in a session marked by cautious trading as investors reacted to mixed economic data. Among macro data in US, a report from ISM showed the pace of manufacturing growth rose in May. Other data showed construction spending surged in April but consumer spending was unexpectedly flat in April.
In Europe, Greece is expected this week to once again remain in sharp focus ahead of a key debt repayment due to the International Monetary Fund on Friday, 5 June 2015. Greece is still struggling to agree on a reform program with the creditors, which is a prerequisite for receiving the next tranche of bailout money. In an interview with French daily Le Monde on Sunday, 31 May 2015, Greek Prime Minister Alexis Tsipras blamed the creditor institutions for the lack of progress in reaching a reform deal, calling the demands absurd. He also said the lenders displayed a total indifference to the recent democratic choice of the Greek people.
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.
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