Volatility continued in early afternoon trade as the key benchmark indices once again regained positive zone after sinking in the red following a steep intraday pullback in mid-morning trade. At 12:22 IST, the barometer index, the S&P BSE Sensex, was up 46.14 points or 0.18% at 25,662.98. The 50-unit CNX Nifty was up 3.40 points or 0.04% at 7,799.10. Earlier, the Sensex hit three week low when it dropped 329.51 points at the day's low of 25,287.33 in mid-morning trade. The Nifty also hit its lowest level in over 2-1/2 weeks when it fell 104.50 points at the day's low of 7,691.20 in mid-morning trade. Gains triggered by a steeper-than-expected rate cut by the Reserve Bank of India (RBI) after its fourth bi-monthly monetary policy review for the year 2015-16 today, 29 September 2015 helped domestic bourses outpace losses caused by weak global cues.
The market breadth indicating the overall health of the market was weak. On BSE, 1,292 shares declined and 918 shares rose. A total of 105 shares were unchanged. The BSE Mid-Cap index was off 0.12%. The BSE Small-Cap index was off 0.3%. Both these indices underperformed the Sensex.
The Reserve Bank of India (RBI) surprised the financial markets by announcing a steeper-than-expected cut in the policy repo rate under the liquidity adjustment facility by 50 basis points to 6.75% at its fourth bi-monthly monetary policy review for the year 2015-16 today, 29 September 2015. The RBI has kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liability (NDTL). The RBI marked down slightly the FY16 gross domestic product (GDP) growth target to 7.4% from 7.6% earlier as global growth and trade were slower than initial expectations, a continuing lack of appetite for new investment in the private sector, the constraint imposed by stressed assets on bank lending and waning business confidence.
In overseas markets, Asian stocks dropped to 3-1/2-year lows following sharp losses on Wall Street after weak Chinese data rekindled worries about its fragile economy. South Korean markets are closed for a Thanksgiving holiday. US stocks settled yesterday, 28 September 2015 at their lowest levels since late August as concerns about slowing economic growth in China and mixed domestic economic data unnerved investors.
Metal and mining stocks declined weak Chinese data rekindled worries about its fragile economy. China is the world's largest consumer of steel, copper and aluminum.
Vedanta (down 5.21%), JSW Steel (down 2.51%), Steel Authority of India (Sail) (down 2.33%), National Aluminium Company (down 0.83%), Hindustan Zinc (down 1.89%), Jindal Steel & Power (down 1.8%), Hindalco Industries (down 3.04%), NMDC (down 1.01%) and Hindustan Copper (down 0.84%) edged lower.
Tata Steel dropped 3.7% to Rs 201.70. The stock hit a low of Rs 200 in intraday trade so far, which is 52-week low for the counter.
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Realty stocks reversed intraday fall in volatile trade after the RBI surprised the financial markets by announcing a steeper-than-expected cut in repo rate by 50 basis points to 6.75% at its fourth bi-monthly monetary policy review for the year 2015-16 today, 29 September 2015. Purchases of both residential and commercial property are largely driven by finance.
DLF (up 2.13%), Indiabulls Real Estate (up 2.6%), Housing Development and Infrastructure (up 2.27%), D B Realty (up 0.12%), Unitech (up 0.49%), Sobha (up 2.43%), and Orbit Corporation (up 2.63%) gained. Godrej Properties (down 1.13%) and Oberoi Realty (down 1.62%) declined.
Container Corporation of India (Concor) rose 3.88% to Rs 1,372.55 on bargain hunting. Shares of Concor had declined 5.87% in the preceding two trading sessions to settle at Rs 1,321.30 yesterday, 28 September 2015, from a recent high of Rs 1,403.80 on 23 September 2015.
In overseas markets, concern over a slowdown in China, the world's second-largest economy, and its potential impact on the US Federal Reserve's plans to normalize monetary policy after years of rock-bottom rates, has fueled market volatility in recent weeks. In China, data yesterday, 28 September 2015 showed industrial profits dropping the most in at least four years.
US economic data released yesterday, 28 September 2015 showed household spending climbed more than forecast in August and incomes also rose as the biggest part of the US economy continued to power past a global slowdown. Separate data showed contract signings to purchase previously owned US homes unexpectedly declined in August for just the second time this year, signaling residential real estate might have difficulty building on recent momentum.
Meanwhile, Federal Reserve Bank of New York President William C. Dudley reportedly said yesterday, 28 September 2015 the central bank will probably raise interest rates later this year despite uncertainties over global growth. John Williams, head of the San Francisco Fed, also reportedly signaled support for an interest rate hike this year, though Chicago Fed chief Charles Evans sounded a far more dovish tone.
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