Index heavyweight and housing finance major HDFC led losses for key benchmark indices. Shares of the housing finance major edged lower after the company reported a muted growth in bottom line in Q1 June 2015. The barometer index, the S&P BSE Sensex, was provisionally off 102.76 points or 0.37% to 27,458.62. The market breadth indicating the overall health of the market turned negative from positive in late trade. The market sentiment was edgy after the latest data showed that foreign portfolio investors (FPIs) pressed sales of Indian stocks yesterday, 27 July 2015.
Shares of upstream oil companies declined as crude oil prices declined. Most power generation stocks declined.
Benchmark indices witnessed intraday volatility today, 28 July 2015. Earlier, the Sensex hit its lowest level in more than four weeks and the 50-unit CNX Nifty hit 2-1/2-week in mid-afternoon trade as these two key benchmark indices extended intraday losses.
Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month July 2015 series to August 2015 series. The near month July 2015 derivatives contracts expire on Thursday, 30 July 2015.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said yesterday, 27 July 2015, that inflation targets should not be changed every three years as that would mean changing goal posts as soon as the system starts to internalize it.
Foreign portfolio investors sold shares worth a net Rs 859.94 crore yesterday, 27 July 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 238.66 crore yesterday, 27 July 2015, as per provisional data released by the stock exchanges.
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In overseas markets, European stocks edged higher, recovering from a selloff during the previous trading session triggered by a rout in Chinese stocks. Asian stocks were mixed. US stocks fell yesterday, 27 July 2015, after the steepest decline in Chinese stocks in eight years raised concerns that cooling growth in the world's No. 2 economy could hurt China's trading partners.
As per provisional closing, the S&P BSE Sensex fell 102.76 points or 0.37% to 27,458.62. The index fell 144.99 points at the day's low of 27,416.39 in mid-afternoon trade, its lowest level since 29 June 2015. The index jumped 115.27 points at the day's high of 27,676.65 in morning trade.
The Nifty was down 19.40 points or 0.23% at 8,341.60, as per provisional closing. The index hit a low of 8,321.75 in intraday trade, its lowest level since 10 July 2015. The index hit a high of 8,397.40 in intraday trade.
The BSE Mid-Cap index was down 20.02 points or 0.18% at 10,974. The BSE Small-Cap index was down 20.18 points or 0.17% at 11,522.93. The decline in both these indices was lower than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market turned negative from positive in late trade. On BSE, 1,389 shares fell and 1,352 shares rose. A total of 138 shares were unchanged.
The total turnover on BSE amounted to Rs 3307 crore, higher than turnover of Rs 2961.17 crore registered during the previous trading session.
HDFC fell 2.64% to Rs 1,300. The company's net profit rose 1.21% to Rs 1360.98 crore on 9.39% rise in total income to Rs 7068.28 crore in Q1 June 2015 over Q1 June 2014. The result was announced during market hours today, 28 July 2015. On consolidated basis, HDFC's net profit rose 17.69% to Rs 2204.29 crore on 13.76% growth in total income to Rs 11440.62 crore in Q1 June 2015 over Q1 June 2014.
HDFC's loan book stood at Rs 2.31 lakh crore as on 30 June 2015 as against loan book of Rs 2.03 lakh crore as on 30 June 2014. This is after considering the loans sold during the preceding 12 months amounting to Rs 10949 crore.
HDFC said that in the previous financial year, the company had received dividend of Rs 269.35 crore from HDFC Bank in June 2014 and accordingly the income was accounted for in Q1 June 2014. In the current year, dividend of Rs 314.57 crore from HDFC Bank has been received in July 2015. This income will consequently be accounted for in Q2 September 2015, HDFC said. To this extent, the result of Q1 June 2015 is not comparable with Q1 June 2014 results, the company said.
Commercial vehicles major Tata Motors was off 1.88% to Rs 370.50. The stock hit a high of Rs 375.10 and a low of Rs 366.25 in intraday trade. The stock had lost 3.46% to settle at Rs 377.60 yesterday, 27 July 2015.
Shares of upstream oil companies declined as crude oil prices declined. Oil India (down 1.49%), Cairn India (down 1.57%) and ONGC (down 0.55%) edged lower. Shares of Reliance Industries (RIL) were up 0.61%.
Lower crude oil prices would result in lower realizations from crude sales for oil exploration firms.
Most power generation stocks declined. JSW Energy (down 7.45%), Jaiprakash Power Ventures (down 3.92%), Reliance Power (down 1.86%), GMR Infrastructure (down 1.79%), Torrent Power (down 1.16%), Adani Power (down 0.37%), Tata Power (down 0.14%), edged lower. Reliance Infrastructure (up 0.14%), CESC (up 0.26%), NHPC (up 0.27%) and NTPC (up 2.13%) edged higher.
Meanwhile, in the global commodities markets, Brent crude oil futures edged lower on persistent worries about a global supply glut. Brent for September settlement was currently off 52 cents at $52.95 a barrel. The contract had fallen $1.15 a barrel or 2.11% to settle at $53.47 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.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said yesterday, 27 July 2015, that inflation targets should not be changed every three years as that would mean changing goal posts as soon as the system starts to internalize it. The RBI governor's comments follow the release of a new draft of the proposed Indian Financial Code which suggested that inflation targets should be reset every three years following consultations between the government and the RBI. The draft also suggested setting up a seven-member monetary policy committee (MPC) which would have four members appointed by the government. An earlier proposal to give the RBI governor veto power over decisions of the MPC has also been removed.
At the inauguration of the Meghnad Desai Academy of Economics in Mumbai, the RBI governor reiterated that there was no trade off between inflation and growth. The best way to achieve sustained growth is to try and achieve low inflation, Rajan said, according to reports. Beyond that growth depends on other factors, such as business environment, government policy, taxation policy, Rajan said. From a central bank's perspective over the last 20 years, there's been a focus on bringing inflation credibly down over the medium term, Rajan said.
Rajan also said that using foreign exchange reserves for funding various projects may not be prudent. Rajan mentioned that the RBI had received a number of proposals to use forex reserves to fund various projects at low rates of interest. Commenting on the issue of bad loans in the banking system, Rajan said that there was enormous pressure on the RBI to not call stressed assets as non-performing assets (NPAs).
Meanwhile, India's weather office, the India Meteorological Department (IMD), said in its daily monsoon update issued yesterday, 27 July 2015, that the Southwest Monsoon was vigorous over Rajasthan and Gujarat state and was active over Gangetic West Bengal, Odisha and West Madhya Pradesh during the past 24 hours until 8:30 IST.
For the country as a whole, cumulative rainfall during this year's monsoon season was 4% below the Long Period Average (LPA) until 27 July 2015. Region wise, the rainfall was 15% below the LPA in South Peninsula, 7% below the LPA in East & Northeast India, 5% below the LPA in Central India and 11% above the LPA in Northwest India until 27 July 2015.
The quantum of and the spatial distribution of rainfall this month holds key; July accounts for about 33% of precipitation during the June-September monsoon season and is critical for crops. 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 edged higher today, 28 July 2015, recovering from a selloff during the previous trading session triggered by a rout in Chinese stocks. Key indices in Germany, France and UK were up 0.83% to 0.87%.
In UK, the UK Office for National Statistics today, 28 July 2015, announced that UK's gross domestic product expanded 0.7% between April and June, an annualized rate of 2.8%. The figures are just a preliminary estimate, but they spell out that the economy has recovered from a slight slump in the first quarter--when quarterly growth was 0.4%--and is ready to gather pace during the remainder of the year.
Chinese shares edged lower in volatile trade today, 28 July 2015. In mainland China, the Shanghai Composite lost 1.68%. In Hong Kong, the Hang Seng index rose 0.62%. China's central bank People's Bank of China today, 28 July 2015, announced that it would inject 50 billion yuan ($8.05 billion) into money markets in its biggest liquidity boost since 7 July 2015. The central bank also said in a statement before the stock market opened that it would use "various monetary tools" to maintain "appropriate levels of liquidity", a signal that the further monetary easing could be in store. The Shanghai Composite Index fell 8.5% yesterday, 27 July 2015, marking its biggest one day drop in more than eight years.
In other Asian markets, key benchmark indices in South Korea and Taiwan were up 0.01% to 0.3%. Key benchmark indices in Japan, Singapore and Indonesia and were off 0.1% to 1.18%.
US stocks fell yesterday, 27 July 2015, after the steepest decline in Chinese stocks in eight years raised concerns that cooling growth in the world's No. 2 economy could hurt China's trading partners. Market reaction to better-than-expected durable-goods orders also was negative, as investors continued to view each data-point as a factor in the Federal Reserve's decision about the timing and pace of interest rate hikes.
Meanwhile, a two-day policy meeting of the Federal Reserve Open Market Committee (FOMC) begins today, 28 July 2015. The US central bank is widely expected to keep interest rates at a record low at the meeting, but expectations are rising that a rate hike could come later this year.
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