A selloff in global stocks triggered by the outcome of a British referendum showing UK had voted to leave the European Union pulled Indian stocks sharply lower. The barometer index, the S&P BSE Sensex, lost 600.43 points or 2.22% at 26,401.79, as per the provisional closing data. The Nifty 50 index fell 193.90 points or 2.34% to 8,076.55, as per the provisional closing data. The two key benchmark indices staged a strong recovery from a steep intraday slide. The Nifty provisionally settled above the psychologically important 8,000 mark after falling below that level in morning trade. The Sensex provisionally settled above the psychologically important 26,000 level. Earlier, the Sensex first fell below the psychologically important 27,000 and then below the next psychologically important 26,000 level. After opening with a downward gap, the Sensex and the Nifty hovered in negative zone throughout the trading session.
The outcome of the closely watched Brexit referendum has stunned global financial markets. Global stocks had risen recently as investors bet that Britons would vote to reject Brexit, or a British exit from the European Union.
The Sensex fell 1,090.89 points, or 4.04% at the day's low of 25,911.33 in afternoon trade, its lowest level since 25 May 2016. The barometer index fell 566.37 points, or 2.10% at the day's high of 26,435.85 in late trade. The Nifty fell 343.40 points, or 4.15% at the day's low of 7,927.05 in afternoon trade, its lowest level since 25 May 2016. The index fell 169.75 points, or 2.05% at the day's high of 8,100.70 in late trade.
The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,822 shares fell and 704 shares rose. A total of 154 shares were unchanged. The BSE Mid-Cap index provisionally fell 1.07%. The BSE Small-Cap index provisionally fell 1.46%. The decline in both these indices was lower than the Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 3820 crore, higher than turnover of Rs 2283.98 crore registered during the previous trading session.
In overseas stock markets, European stocks tumbled as the UK voted to leave the European Union in a historic referendum dubbed "Brexit". The FTSE 100 index was currently down 4.86%. In Germany, the DAX index was currently down 6.66%. In France, the CAC 40 index was currently off 7.73%. Investors fear that Britain's exit from the EU could destabilize the trade bloc. Britain has been a member of the trading bloc since 1973.
UK's Prime Minister David Cameron said he will resign, after Britain voted to leave the European Union in a hotly fought referendum. During a speech after the Brexit results were announced, the prime minister said the break-up negotiations with Europe need to take place under a new leader. The new prime minister will take over in October, he said.
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UK's central bank Bank of England (BoE) said in a statement that it is monitoring developments closely. The BoE said it has undertaken extensive contingency planning and is working closely with the UK Treasury, other domestic authorities and overseas central banks. The BoE said it will take all necessary steps to meet its responsibilities for monetary and financial stability.
Trading in US index futures indicated a sharp setback for US stocks at the opening bell after Britain voted to leave the European Union in a historic referendum. Trading in index futures indicated that the Dow Jones Industrial Average could slump 489 points at the opening bell today, 24 June 2016.
Asian shares dropped as results from the UK's referendum on its European Union membership showed the country had voted to leave the trading bloc. In Japan, the Nikkei 225 Average settled 7.92% lower. The safe-haven yen surged against the dollar. A stronger yen hurts the competitiveness of Japanese exporters. The Japanese currency is perceived as a haven in times of global financial and global economic worries.
Closer home, Finance Minister Arun Jaitley said in a statement that the Indian economy is well prepared to deal with the short and medium term consequences of Brexit. India is strongly committed to macro-economic framework with its focus on maintaining stability, Jaitley said. The finance minister said that India's macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline and declining inflation. He further said that India's immediate and medium-term firewalls are solid in the form of a healthy foreign exchange reserves position.
Jaitley said that the Indian government, the Reserve Bank of India and other Indian regulators are well prepared and are working closely together to deal with any short term volatility. He said that the government will steadfastly pursue its ambitious reform agendaincluding early passage of the goods and services tax(GST)that will help India realize its medium term growth potential of 8-9%.
Reserve Bank of India (RBI) Governor Raghuram Rajan said in a statement that the central bank is continuously maintaining a close vigil on the market developments, both domestically and internationally, and will take all necessary steps, including liquidity support (both dollar and INR), to ensure orderly conditions in financial markets. Rajan said India's economy has good fundamentals, low short term external debt and sizeable foreign exchange reserves. These should stand the country in good stead in the days to come.
Index heavyweight and cigarette major ITC fell 2.21% to Rs 352.30. The stock hit a high of Rs 359.95 and a low of Rs 350.35 in intraday trade.
Index heavyweight and housing finance major HDFC fell 1.49%. The company today, 24 June 2016, announced that it has filed term sheet for issuing secured redeemable non-convertible debentures worth Rs 1035 crore on private placement basis. The coupon rate on debentures is 8.5% per annum. The tenor of the debentures is three years with redemption date being 28 June 2019. The issue opens on 28 June 2016 and closes on the same day. The object of the issue is to augment long term resources of the company, HDFC said. The proceeds of the present issue would be utilized for financing/refinancing the housing finance business requirements of the company.
Sun Pharmaceutical Industries rose 0.04% after the company announced after market hours yesterday, 23 June 2016, that its board approved buyback of the company's equity shares. The company will buy back up to 75 lakh shares at a price of Rs 900 each through the tender offer route. The buyback price was at 19.73% premium to the stock's closing price Rs 751.70 on the BSE on 23 June 2016. The company said that the buyback is being undertaken to return surplus funds to the equity shareholders and thereby, enhancing the overall returns to share holders. The record date for the buyback is 15 July 2016. Under Securities and Exchange Board of India (Sebi) guidelines, 15% of the buyback offer is reserved for small investors holding shares worth not more than Rs 2 lakh as on the record date.
The promoters of the company have indicated their intention to participate in the proposed buyback in such a manner that their aggregate shareholding percentage in the company will not fall below their current aggregate percentage shareholding.
Car major Maruti Suzuki India lost 1.87% as the Japanese yen strengthened against the dollar after results from the UK's referendum on its European Union membership showed the country had voted to leave the trading bloc. A strong yen adversely impacts Maruti's operating profit margin. Maruti pays royalty to its Japanese parent Suzuki Motor Corporation in yen terms for some of its earlier models. Maruti has reportedly started paying royalty to its Japanese parent in rupee terms on all new models from 1 April 2016. Maruti also has an exposure to the yen to the extent it imports raw materials from Japan.
Tata Motors (down 8.25%) and Tata Steel (down 6.61%) as results from the UK's referendum on its European Union membership showed the country had voted to leave the trading bloc. Tata Motors derives majority of its revenue from its British luxury car unit Jaguar Land Rover (JLR). JLR is the largest automotive manufacturer in Britain. It is one of the UK's largest exporters and generates over 80% of its revenue from exports.
Tata Steel is Europe's second largest steel producer, with steelmaking in the UK and Netherlands, and manufacturing plants across Europe. Tata Steel Europe has initiated the process to sell its UK business viz. Tata Steel UK. Tata Steel Europe has invited seven short listed potential investors to submit binding bids for Tata Steel UK.
IT stocks witnessed selling pressure as results from the UK's referendum on its European Union membership, dubbed "Brexit", showed the country had voted to leave the trading bloc. Tech Mahindra (down 4.7%), HCL Technologies (down 3.42%), TCS (down 2.79%), Oracle Financial Services Software (down 2.21%), Wipro (down 1.58%), Infosys (down 1.49%), Hexaware Technologies (down 1.33%) and MindTree (down 0.17%), edged lower. MphasiS (up 0.54%) and Persistent Systems (up 1.31%), edged higher. The UK is the second biggest IT outsourcing market after the United States.
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