Recovery gathers steam

Key benchmark indices trimmed losses after a strong intraday rebound in mid-afternoon trade. The intraday recovery on the domestic bourses materialized as European stocks traded off the day's low after a sharp initial slide. US index future also trimmed initial losses. Though key equity indices in France, Germany, Italy and France were off initial lows, the benchmark indices were still currently trading with substantial losses for the day -- ranging from 2.98% to 3.53%. Stocks fell across the globe today, 29 June 2015, as the Greek financial crisis worsened, with odds of a default increasing after the country announced plans for a referendum on its bailout conditions.

The barometer index, the S&P BSE Sensex, was currently off 245.16 points or 0.88% at 27,566.68. The broad market depicted weakness. There were more than two losers against every gainer on BSE. The BSE Mid-Cap index was off 1.72%. The BSE Small-Cap index was off 1.91%. The decline in both these indices was higher than the Sensex's decline in percentage terms.

FMCG shares were mixed. Shares of automobile firms declined.

Greece shut down its banking system, ordering lenders to stay closed for six days starting today, 29 June 2015, to avoid a run on the country's banks and its central bank moved to impose controls to prevent money from flooding out of the country. The steps, a fateful climax to five years of debt crisis, puts Greece closer than it ever has been to an exit from the euro. The decision came after the European Central Bank yesterday, 28 June 2015, capped the level of emergency funding for Greece's banking system.

Earlier, key equity benchmark indices in India had slumped in mid-morning trade as the collapse of Greek rescue talks roiled global markets. The Sensex and the 50-unit Nifty, both, hit their lowest levels in more than a week in mid-morning trade as these two key benchmark indices extended intraday losses.

Foreign portfolio investors sold shares worth a net Rs 203.74 crore during the previous trading session on Friday, 26 June 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 234.21 crore on Friday, 26 June 2015, as per provisional data released by the stock exchanges.

At 14:15 IST, the S&P BSE Sensex was down 245.16 points or 0.88% at 27,566.68. The index fell 224.41 points at the day's high of 27,587.43 in mid-afternoon trade. The index fell 602.65 points at the day's low of 27,209.19 in mid-morning trade, its lowest level since 19 June 2015.

The 50-unit CNX Nifty was down 80.65 points or 0.96% at 8,300.45. The index hit a high of 8,305.30 in intraday trade. The index hit a low of 8,195.65 in intraday trade so far, which is exactly the same as intraday low of the Nifty on 19 June 2015.

The BSE Mid-Cap index was down 183.98 points or 1.72% at 10,502.13. The BSE Small-Cap index was down 212.03 points or 1.91% at 10,912.46. The decline in both these indices was higher than the Sensex's decline in percentage terms.

The market breadth indicating the overall health of the market was quite weak. There were more than two losers against every gainer on BSE. 1,872 shares fell and 650 shares rose. A total of 113 shares were unchanged.

Shares of automobile firms declined. Escorts (down 4.67%), TVS Motor Company (down 3.51%), Tata Motors (down 2.56%), Maruti Suzuki (India) (down 2.37%), Ashok Leyland (down 1.82%), Eicher Motors (down 1.49%), Mahindra & Mahindra (M&M) (down 1.31%) and Hero MotoCorp (down 0.58%), edged lower. Bajaj Auto was up 0.03%.

FMCG shares were mixed. Tata Global Beverages (down 3.74%), Marico (down 2.9%), Jyothy Laboratories (down 1.99%), Britannia Industries (down 1.85%), Colgate Palmolive (India) (down 1.54%) and Procter & Gamble Hygiene & Health Care (down 0.36%), edged lower.

Dabur India (up 0.18%), GlaxoSmithKline Consumer Healthcare (up 0.32%), Hindustan Unilever (up 0.42%), Bajaj Corp (up 0.59%), Godrej Consumer Products (up 0.77%) and Nestle India (up 1.01%), edged higher.

The weekly data released by the Ministry of Agriculture after trading hours on Friday, 26 June 2015, showed a pick up in planting of Kharif crops. Increase in agricultural production could boost rural income which in turn could boost demand for consumer goods. FMCG companies derive substantial revenue from rural India.

Meanwhile, the Reserve Bank of India (RBI) yesterday, 28 June 2015, clarified that RBI Governor Dr. Raghuram G. Rajan had not suggested at a London Business School conference on 25 June 2015 that the world risked sliding into another Great Depression as reported by sections of the media. The RBI clarified that what Rajan had said at that conference was that the policies followed by major central banks around the world were in danger of slipping into the kind of beggar-thy-neighbour strategies that were followed in the 1930s. Rajan called for new rules of the game in the international monetary system, a call that he has made before and is gaining some traction. The Great Depression was a period of great turmoil caused by many factors and not just beggar-thy-neighbour policies, according to the clarification issued by the RBI.

Meanwhile, the weekly data released by the Ministry of Agriculture after trading hours on Friday, 26 June 2015, showed that the sowing of Kharif crops is gathering pace. The total sown area for Kharif crops as on 26 June 2015 stood at 165.62 lakh hectares compared with 134.18 lakh hectares at this time last year.

Meanwhile, the India Meteorological Department (IMD) said in its daily monsoon update issued yesterday, 28 June 2015, that the Southwest Monsoon was vigorous over Bihar and active over Andaman & Nicobar Islands, West Bengal & Sikkim, Jharkhand and Kerala during the past 24 hours until 8:30 IST, IMD said.

For the country as a whole, the cumulative rainfall during this year's monsoon season was 23% above the Long Period Average (LPA) until 27 June 2015. Region wise, the southwest monsoon was 39% above the LPA in Central India, 33% above the LPA in Northwest India, 28% above the LPA in South Peninsula and 1% above the LPA in East & Northeast India until 27 June 2015.

On Friday, 26 June 2015, the IMD had announced that the monsoon has covered the entire country.

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 slumped today, 29 June 2015, as the Greek crisis entered a new phase following the imposition of capital controls to prevent a run on the country's banks. Key indices in Germany, UK and France were off 1.58% to 2.98%. In Italy, the FTSE MIB index was currently off 3.53%. In Spain, the IBEX 35 index was currently off 3.5%.

Greek leaders imposed capital controls and closed banks for at least six days beginning today, 29 June 2015, to prevent further panicked withdrawals from citizens after the European Central Bank yesterday, 28 June 2015, capped the level of emergency funding for Greece's banking system. Talks between Greece and its creditors broke down on Saturday, 27 June 2015, and the nation looks set to miss a debt repayment to the International Monetary Fund which is due tomorrow, 30 June 2015. Greece's international bailout also expires on 30 June 2015.

Greek Prime Minister Alexis Tsipras has called a referendum on Sunday, 5 July 2015, on whether the country should accept creditors' bailout terms. Greeks will be asked to decide whether to accept reform measures demanded by the country's lenders that would ultimately unlock about euro 15.3 billion in funds.

The European Commission yesterday, 28 June 2015, offered Greek voters a 10-point plan for bailout requirements, urging Greece to stay in the euro area.

International Monetary Fund (IMF) Managing Director Christine Lagarde yesterday, 29 June 2015, said that the IMF is still open for talks with Greece to find a way out of the country's debt crisis. The coming days will clearly be important, she said.

Meanwhile, Greece Capital Markets Commission today, 29 June 2015, said that Greece's stock market will remain closed for as long as banks aren't open to the public.

Meanwhile, a European Commission spokesperson reportedly said today, 29 June 2015, that the European Commission does not plan to release new reform proposals for Greece today, 29 June 2015. The statement contradicts comments from Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, reported earlier by a news agency. Moscovici reportedly said in a post to Twitter that the most recent proposals from the EU Commission are known and published. He noted that Juncker is scheduled to hold a press conference today, 29 June 2015, on the way forward for Greece.

Asian stocks fell today, 29 June 2015, as investors brace for an increasingly likely Greek exit from the eurozone. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan were down by 0.90% to 3.34%.

China's central bank cut interest rates on Saturday, 27 June 2015, and reduced the reserves that certain banks must hold. The People's Bank of China (PBoC) cut the benchmark 1-year lending rate by a quarter percentage point to 4.85%, its fourth rate cut since November. The PBoC also lowered the reserve requirement ratio for some lenders by half of a percentage point.

Trading in US index futures indicated that the Dow could fall 196 points at the opening bell today, 29 June 2015. It was a mixed day for US stocks on Friday, 26 June 2015, with technology stocks posting a decline and the Dow rising with the help of Nike.

US consumer sentiment rose to a final June reading of 96.1, reaching a five-month high after a decline in May, according to reports on the University of Michigan gauge.

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