Key benchmark indices dropped today, 3 August 2016 as weakness in global stocks weighed on sentiment on the domestic bourses. The barometer index, the S&P BSE Sensex slipped 302.47 points or 1.08% at 27,679.24, as per the provisional closing data. The losses for the Nifty 50 index were lower in percentage terms than those for the Sensex. The Nifty dropped 83 points or 0.96% at 8,539.90, as per the provisional closing data. The Sensex provisionally closed below the psychologically important 28,000 level. It had briefly crossed that level at the onset of trading session. Key indices extended losses and hit fresh intraday low in late trade. The Sensex hit lowest level in almost two-weeks. The Nifty hit lowest level in more than one-week.
Key indices languished in the negative terrain throughout the session after witnessing mild gains at the start of the session. The Sensex fell 334.57 points or 1.19% at the day's low of 27,647.14 in late trade, its lowest level since 22 July 2016. The barometer index rose 33.72 points or 0.12% at the day's high of 28,015.43 at the onset of trading session. The Nifty declined 93.30 points or 1.08% at the day's low of 8,529.60 in late trade, its lowest level since 25 July 2016. The index rose 12.55 points or 0.14% at the day's high of 8,635.45 at the onset of trading session.
In overseas stock markets, European and Asian markets edged lower after US stocks took their biggest loss in almost a month yesterday, 2 August 2016, underscoring simmering worries about global economic growth. Meanwhile, growth in China's services sector cooled in July, a private survey showed today, 3 August 2016. The Caixin/Markit services purchasing managers' index (PMI) fell to 51.7 in July on a seasonally adjusted basis, from an 11-month peak of 52.7 in June. US stocks fell yesterday, 2 August 2016 on the back of disappointing auto sales and a steep drop for retailers on forecasts of poor summer sales.
Closer home, the broad market depicted weakness. There were almost two losers against every gainer on BSE. 1,815 shares fell and 914 shares rose. A total of 140 shares were unchanged. The BSE Mid-Cap index provisionally fell 1.5%. The BSE Small-Cap index provisionally shed 1.14%. The decline in both indices was higher than the Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 3251 crore, lower than turnover of Rs 3723.50 crore registered during the previous trading session.
Index heavyweight Reliance Industries (RIL) shed 1.85% to Rs 992.30. The stock hit high of Rs 1,013.05 and low of Rs 992 in intraday trade.
Auto stocks declined. Mahindra & Mahindra (M&M) (down 0.94%), Ashok Leyland (down 2.61%), Eicher Motors (down 2.56%), Bajaj Auto (down 1.4%), Hero MotoCorp (down 1.35%) and TVS Motor Company (down 0.68%) declined.
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Maruti Suzuki India declined 2.36%. The company announced that it inaugurated MyNEXA Cocierge airport display and lounge for its customers at T3, Indira Gandhi International Airport, New Delhi. NEXA, the new automobile sales channel of the company, recently completed one year of operations in India. The announcement was made during market hours today, 3 August 2016.
Separately, Maruti Suzuki India said during market hours today, 3 August 2016 that production rose 2.58% to 1.36 lakh units in July 2016 over July 2015.
The BSE Auto index had outperformed the market over the past one month till 2 August 2016, rising 6.6% compared with 3.08% rise in the Sensex. The index had also outperformed the market in past one quarter, rising 13.99% as against Sensex's 10% rise.
HCL Technologies rose 3.12% to Rs 825.60 after consolidated net profit rose 1.84% to Rs 2050.78 crore on 5.96% increase in total income from operations to Rs 11336.32 crore in Q1 June 2016 over Q4 March 2016. The result was announced before trading hours today, 3 August 2016. In an investor release, HCL Tech said that its consolidated net profit as per US Generally Accepted Accounting Principles (GAAP) rose 6.3% to Rs 2047 crore on 6% increase in revenue to Rs 11336 crore in Q1 June 2016 over Q4 March 2016. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 6% to Rs 2521 crore in Q1 June 2016 over Q4 March 2016. EBITDA margin stood at 22.2% in Q1 June 2016, same as in Q4 March 2016.
The company has given a guidance of 12% to 14% growth in revenue in constant currency terms for the year ending 31 March 2017 (FY 2017). This is against revenue growth of 11.2% on year on year basis in constant currency terms achieved in Q1 June 2016. Revenue growth for trailing twelve months ended 30 June 2016 on year on year basis in constant currency terms stood at 10.7%. The constant currency guidance translates to 11.2% to 13.2% growth in revenue in US dollar terms for FY 2017 based on 30 June 2016 exchange rates.
In FY 2017, profit margin based on earnings before interest and tax is expected to be in the range of 19.5% to 20.5%.
The outcome of a monthly survey showed that Indian service providers enjoyed a welcome upturn in demand during July, with a faster increase in new business underpinning stronger growth of output and boosting confidence. Part of the upswing in incoming new work was supported by price discounts. The seasonally adjusted Nikkei India Services Business Activity Index rose to 51.9 in July, posting above the no-change mark of 50 for the thirteenth month running, highlighting ongoing growth of output in the sector. Up from 50.3 in June, the headline index was at a three-month high and indicative of a modest rate of expansion.
Meanwhile, investors are awaiting the progress on the Goods and Services Tax (GST) constitutional amendment bill in parliament. According to reports, the debate on the long-pending GST Bill has started after the bill was tabled in the Rajya Sabha today, 3 August 2016 amidst strong indications that the most far-reaching taxation reform would be supported by Congress and all other major political parties. The government is keen to get the GST Bill approved during the Monsoon Session of Parliament ending on 12 August 2016.
The GST bill, which has been approved by the Lok Sabha, is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. A constitutional amendment bill requires at least 50% attendance and support of two-third of those present and voting in the house. For the GST bill to become a law, the bill also needs to be approved by half the state assemblies after its passage in the parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. The GST seeks to create a seamless national market in the country by replacing plethora of state taxes and central taxes by one tax.
Meanwhile, the India Meteorological Department (IMD) said that this year the Southwest monsoon rainfall was 11% below the Long Period Average (LPA) during June, however, July rainfall has been 7% above the LPA. The rainfall data was released yesterday, 2 August 2016. Rainfall over the country as a whole during second half of southwest monsoon season from August to September is most likely to be above normal that is more than 106% of LPA with a probability of 55%. Quantitatively, the rainfall for the country as a whole during second half of the season is likely to be 107% of LPA with a model error of 8%. The rainfall during August is likely to be 104 9% of LPA as was forecasted in June. The rainfall in monsoon season from June to September over the country as a whole is likely to be 106% 4% of LPA as was forecasted in June.
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