Weakness in global stocks and anemic domestic industrial production data for April 2016 triggered a fresh slide of key benchmark indices today, 13 June 2016. The barometer index, the S&P BSE Sensex lost 238.98 points or 0.9% to settle at 26,396.77. The losses for the Nifty 50 index were lower in percentage terms than those for the Sensex. The Nifty shed 59.45 points or 0.73% to settle at 8,110.60. The Sensex and the Nifty, both, hit their lowest closing level in 2-1/2 weeks. Capital goods, realty and bank stocks led decline on the bourses. Key indices dropped for the third day in a row today, 13 June 2016.
The Sensex lost 238.98 points or 0.9% to settle at 26,396.77, its lowest closing level since 26 May 2016. The index declined 373.48 points or 1.4% at the day's low of 26,262.27. The index fell 167.48 points or 0.62% at the day's high of 26,468.27.
The Nifty shed 59.45 points or 0.73% to settle at 8,110.60, its lowest closing level since 26 May 2016. The index lost 106.15 points or 1.29% at the day's low of 8,063.90. The index fell 44.80 points or 0.54% at the day's high of 8,125.25.
In overseas markets, European stocks edged lower after Asian stocks settled sharply lower ahead of central bank meetings in the US and Japan this week. The worries about a potential exit by the UK from the European Union also left investors scrambling for safe haven assets. The UK government holds a referendum on 23 June 2016 on whether the country should remain a member of the European Union (EU). In mainland China, the Shanghai Composite settled 3.21% lower. In Hong Kong, the Hang Seng index ended 2.52% down. In Japan, the Nikkei 225 index closed 3.51% lower. Data released today, 13 June 2016 showed that growth in China's fixed-asset investment and retail sales cooled unexpectedly in May, but factory output growth was steady, doing little to clear up uncertainty over prospects for the world's second-largest economy. US stocks declined on Friday, 10 June 2016 as nervousness over an impending vote that could see the UK leave the European Union, as well as a drop in oil prices, spurred a global selloff.
Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,473 shares declined and 1,108 shares rose. A total of 163 shares were unchanged. The BSE Mid-Cap index shed 0.5%. The BSE Small-Cap index dropped 0.45%. The fall in both these indices was lower than the Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 2607 crore, higher than turnover of Rs 2370.40 crore registered during the previous trading session on Friday, 13 June 2016.
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Among the sectoral indices on BSE, the S&P BSE Metal index (down 1.09%), the S&P BSE Utilities index (down 1.01%), the S&P BSE Power index (down 1.17%), the S&P BSE Realty index (down 1.32%), the S&P BSE Bankex (down 1.29%), the S&P BSE Telecom index (down 1.74%), the S&P BSE Industrials index (down 1.26%), the S&P BSE Finance index (down 1.38%), the S&P BSE Auto index (down 0.96%) and the S&P BSE Capital Goods index (down 1.17%) underperformed the Sensex.
The S&P BSE Energy index (up 0.09%), the S&P BSE Oil & Gas index (down 0.02%), the S&P BSE Consumer Durables index (down 0.62%), the S&P BSE Basic Materials index (down 0.38%), the S&P BSE Healthcare index (up 0.1%), the S&P BSE Consumer Discretionary Goods & Services index (down 0.29%), the S&P BSE FMCG index (down 0.22%), the S&P BSE Teck index (down 0.33%) and the S&P BSE IT index (down 0.11%) outperformed the Sensex.
Index heavyweight and housing finance major HDFC declined 1.58%. The company announced after market hours on Friday, 10 June 2016 that it will issue secured redeemable non convertible debentures amounting to Rs 1000 crore on private placement basis. Debentures carry a coupon rate of 8.46% per annum and tenor of 10 years and will mature on 15 June 2026. The issue will open on 15 June 2016 and will close on the same day. The object of the issue is to augment the long term resources of the company. The proceeds will be utilized for financing/refinancing the housing finance requirements of the company.
Bank stocks dropped. Among private bank stocks, ICICI Bank (down 3.3%), Axis Bank (down 1.72%), HDFC Bank (down 0.81%), and IndusInd Bank (down 0.43%) declined. Kotak Mahindra Bank rose 0.65%.
Yes Bank rose 0.64% after the Reserve Bank of India (RBI) raised the ceiling on investment by foreign institutional investors (FIIs) to 74% of the private sector bank's paid up capital from earlier 60%. RBI's nod for higher ceiling on investment by FIIs came after Yes Bank's board of directors and shareholders approved the proposal. The RBI has capped the total foreign shareholding from all sources in Yes Bank at 74% of the bank's equity. Last month, the Cabinet Committee on Economic Affairs cleared Yes Bank's proposal for increase in foreign investment limit in the bank's equity capital to 74% from 41.87% without any sub-limits.
Among PSU bank stocks, State Bank of India (SBI) (down 1.94%), Allahabad Bank (down 2.63%), Punjab National Bank (down 1.19%), Bank of Baroda (down 0.38%), Canara Bank (down 1.76%), Bank of India (down 1.74%) and Union Bank of India (down 1.5%) dropped. IDBI Bank rose 0.38%.
Dr Reddy's Laboratories (DRL) rose 1.16% after the company inked a definitive agreement with Teva Pharmaceutical Industries and an affiliate of Allergan plc to acquire a portfolio of eight Abbreviated New Drug Applications (ANDAs) in the US for $350 million in cash. The acquired portfolio consists of products that are being divested by Teva as a precondition to its completion of the acquisition of Allergan's generics business. The portfolio being acquired is a mix of filed ANDAs pending approval and one approved ANDA. The portfolio comprises of complex generic products across diverse dosage forms. The branded versions of these drugs had aggregate sales of about $3.5 billion in the United States for 12-month period ended April 2016, according to IMS Health data. DRL is acquiring this portfolio of drugs on a cash-free, debt-free basis and expects to finance the transaction using a combination of cash on hand and available borrowings under existing credit facilities. The acquisition of these ANDAs is contingent on the successful completion of the Teva/Allergan generics transaction and approval by the US Federal Trade Commission of DRL as a buyer.
Realty stocks dropped. DLF (down 2.61%), Indiabulls Real Estate (down 2.7%), Housing Development and Infrastructure (down 2.53%), D B Realty (down 1.57%), Sobha (down 1.36%), Godrej Properties (down 1.1%) and Oberoi Realty (down 2.08%) declined.
Unitech jumped 16.91% on media reports that the authorities in Greater Noida may soon implement an exit policy to allow builders to surrender surplus land. Arun Vir Singh, CEO of Yamuna Expressway Industrial Development Authority (YEIDA) was quoted by media as saying that authorities of Noida, Greater Noida and Yamuna Expressway will soon firm up a proposal on this and send it to the Uttar Pradesh government for approval. He added that many developers had been asking for an exit policy because of slow sales.
Unitech has a large exposure in NCR, which encompasses the entire National Capital Territory of Delhi.
Capital goods stocks edged lower. L&T (down 1.49%), Bharat Heavy Electricals (Bhel) (down 2.67%), BEML (down 1.34%), Bharat Electronics (down 1.29%), and Crompton Greaves (down 2.26%) declined. Siemens (up 0.2%) and Thermax (up 2.67%) rose.
Shares of power generation and power distribution companies edged lower. Torrent Power (down 3.86%), GVK Power & Infrastructure (down 0.36%), NHPC (down 0.41%), NTPC (down 1.59%), Adani Power (down 1.18%), Power Grid Corporation of India (down 1.04%), Reliance Infrastructure (down 2.27%) and Reliance Power (down 1.82%) declined.
Tata Power Company dropped 0.33% and Welspun Enterprises rose 1.06% after Tata Power Renewable Energy signed a share purchase agreement to acquire Welspun Renewable Energy Private Limited. Tata Power Renewable Energy (TPREL) is a wholly owned subsidiary of Tata Power Company. Welspun Enterprises holds 15.49% stake in Welspun Energy Private Limited. Welspun Renewable Energy Private Limited (WREPL) is a subsidiary of Welspun Energy Private Limited. Tata Power said that acquisition of WREPL will enable it to expand its renewable energy portfolio. WREPL is engaged in the business of power generation in renewable sector. It has about 1,140 megawatts (MW) of renewable power projects comprising of about 990 MW solar power projects and about 150 MW of wind power projects. Out of 1,140 MW renewable portfolio, nearly 1,000 MW of capacity is operational and balance capacity is under advanced stages of implementation. After the acquisition of WREPL, TPREL will have renewable assets portfolio of about 2,300 MW, making it the largest renewable power company in India. TPREL is Tata Power's primary investment vehicle for the clean and renewable energy based power generation capacity.
The acquisition is being made at an enterprise value of Rs 9249 crore, subject to closing adjustments. WREPL reported consolidated revenue of Rs 768 crore for the year ended 31 March 2016 (FY 2016). The transaction is expected to be completed by end of September 2016
Key indices dropped for the third day in a row today, 13 June 2016. The Sensex has declined 623.89 points or 2.3% in three sessions from its close of 27,020.66 on 8 June 2016. The Sensex has declined 271.19 points or 1.01% in this month so far (till 13 June 2016). The Sensex has risen 279.23 points or 1.06% in calendar year 2016 so far (till 13 June 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 3,902.16 points or 17.34%. The Sensex is off 2,181.56 points or 7.63% from a 52-week high of 28,578.33 hit on 23 July 2015. The Sensex is off 3,627.97 points 12.08% from a record high of 30,024.74 hit on 4 March 2015.
On the macro front, data released after market hours on Friday, 10 June 2016 showed that India's industrial production (IIP) contracted by 0.8% in April 2016. Factory output measured in terms of the IIP had expanded by 3% in April 2015. The electricity generation surged at two-year high pace of 14.6%, while the mining output also moved up 1.4% in April 2016. However, the manufacturing sector production dipped 3.1% contributing to the decline in industrial output in April 2016. The IIP growth in March 2016 has been revised upwards to 0.3% in the first revision compared with 0.05% reported provisionally. Meanwhile, the growth in January 2016 has been revised downwards to -1.6% at the final revision from -1.5% at first revision and reported provisionally.
Meanwhile, the government is scheduled to unveil the consumer price index (CPI) data (rural, urban and combined) for the month of May 2016 at 17:30 IST today, 13 June 2016. The all-India General CPI inflation surged to 5.39% in April 2016 (new base 2012=100) from six months low of 4.8% recorded in March 2016.
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