Pharma stocks and index heavyweights HDFC and ITC led losses as the two key benchmark indices snapped two-day winning streak. The barometer index, the S&P BSE Sensex, fell 253.11 points or 1.02% to settle at 24,551.17. The 50-unit Nifty 50 index fell 78.15 points or 1.04% to settle at 7,460.60. The decline on the domestic bourses mirrored a slide in global stocks. The Sensex and the Nifty, both, hit their lowest closing level in almost two weeks.
Index heavyweight and housing finance major HDFC edged lower on media reports that a foreign brokerage has downgraded the stock to sell from neutral. Lupin fell sharply after the company clarified during trading hours that the United States Food and Drug Administration (USFDA) inspected its Goa facility last week and cited 9 observations. Procter & Gamble Hygiene and Health Care edged lower after the company announced that it has discontinued the manufacture and sale of its OTC drug Vicks Action 500 Extra with immediate effect.
Shares of public sector banks edged higher as the latest data showing easing of headline inflation in February 2016 gave rise to expectations for a policy rate cut at the Reserve Bank of India's next policy meeting on 5 April 2016.
In overseas stock markets, European stocks declined as investors remained cautious ahead of the outcome of US Federal Reserve's monetary policy meeting. The Federal Reserve's two-day monetary policy meeting begins today, 15 March 2016. Federal Reserve officials are likely to hold short-term interest rates steady at its policy meeting amid uncertainties about global financial markets and global growth. The Fed in December 2015 raised its benchmark federal-funds rate from near zero to a range between 0.25% and 0.5%.
Earlier during the global day, Asian stocks edged lower as investors braced for a run of policy announcements from the world's major central banks this week and after the Bank of Japan held policy steady as expected. Japan's Nikkei Average settled 0.68% lower. At the conclusion of a two-day monetary policy meeting today, 15 March 2016, the Bank of Japan (BOJ) maintained its commitment to raise the monetary base by 80 trillion yen annually and decided to continue applying a negative interest rate of minus 0.1% to the policy-rate balances in current accounts held by financial institutions at the bank. If needed, additional easing steps will be taken to hit 2% inflation, the BOJ said. BOJ had stunned markets in January by adopting negative rates.
The Sensex fell 253.11 points or 1.02% to settle at 24,551.17, its lowest closing level since 2 March 2016. The index dropped 287 points or 1.15% at the day's low of 24,517.28. The index rose 36.49 points or 0.14% at the day's high of 24,840.77.
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The Nifty 50 index fell 78.15 points or 1.04% to settle at 7,460.60, its lowest closing level since 2 March 2016. The index shed 85.95 points or 1.14% at the day's low of 7,452.80. The index rose 6.45 points or 0.08% at the day's high of 7,545.20.
The BSE Mid-Cap index fell 0.79%. The BSE Small-Cap index fell 0.62%. The decline in both these indices was lower than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was weak. On BSE, 1,633 shares fell and 1,011 shares rose. A total of 157 shares were unchanged.
The total turnover on BSE amounted to Rs 2358 crore, lower than turnover of Rs 4253.37 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Bankex (up 0.36%), the S&P BSE Oil & Gas index (up 0.29%), the S&P BSE Metal index (up 0.19%), the S&P BSE Energy index (up 0.18%), the S&P BSE Consumer Durables index (up 0.02%), the S&P BSE Basic Materials index (down 0.07%), the S&P BSE Realty index (down 0.09%), the S&P BSE Power index (down 0.19%), the S&P BSE Capital Goods index (down 0.22%), the S&P BSE Utilities index (down 0.29%), the S&P BSE Telecom index (down 0.49%), the S&P BSE Industrials index (down 0.53%), the S&P BSE Finance index (down 0.59%), the S&P BSE Auto index (down 0.7%), the S&P BSE Consumer Discretionary Goods & Services index (down 0.85%), the S&P BSE IT index (down 0.85%) and the S&P BSE Teck index (down 0.93%), outperformed the Sensex. The S&P BSE FMCG index (down 1.54%) and the S&P BSE Healthcare index (down 3.01%), underperformed the Sensex.
Index heavyweight and cigarette major ITC fell 2.30% to Rs 316.85. The stock hit a high of Rs 325.50 and a low of Rs 315.50 in intraday trade.
Index heavyweight and housing finance major HDFC edged lower on media reports that a foreign brokerage has downgraded the stock to sell from neutral. The stock shed 3.63% at Rs 1,114.10. The foreign brokerage reportedly said that structural changes may dampen HDFC's profitability and its core business is likely to be pressured. HDFC may now have structurally lower growth and core return on assets (ROAs) will decline further, the foreign brokerage reportedly said.
Zee Entertainment Enterprises (Zee) declined 3.69% to Rs 386.80 after the company's board of directors approved in-principle an acquisition of 100% equity stake in Fly By Wire International (FBW), Bangalore. FBW provides aircraft charter services under a NSOP license obtained from Director General of Civil Aviation (DGCA) and currently owns and operates one Bombardier Challenger 605 aircraft. Subsequent to sale of the smaller aircraft owned by the company, Zee has been chartering the aircraft from FBW on an exclusive basis. However, due to frequent use of the aircraft owned by FBW, besides dependency on the aircraft, the cost of hiring has increased, Zee said. Hence in order to save costs and for ensuring better operational and administrative efficiency, it is considered expedient to own the aircraft by acquiring 100% equity stake in FBW, Zee said.
The acquisition shall be an all-cash deal. In addition to the consideration of Rs 2.75 crore payable for the entire stake in FBW, Zee will assume outstanding bank loan of Rs 58.50 crore. Zee initially proposes to acquire 49% equity stake in FBW and the balance 51% equity stake shall be acquired within 5 days of receipt of approval from Ministry of Civil Aviation. The process is expected to be completed by mid-July 2016, Zee said. FBW clocked turnover of Rs 1.33 crore in the year ended 31 March 2015.
Pharma stocks declined. Divi's Laboratories (down 5.06%), Aurobindo Pharma (down 3.41%), Dr Reddy's Laboratories (down 2.96%), Cadila Healthcare (down 2.84%), Cipla (down 2.48%), Sun Pharmaceutical Industries (down 2.33%), Glenmark Pharmaceuticals (down 2.08%), Strides Shasun (down 1.96%), Wockhardt (down 1.6%) and IPCA Laboratories (down 1.21%), edged lower. Alkem Laboratories (up 0.22%), GlaxoSmithKline Pharmaceuticals (up 0.27%) and Piramal Enterprises (up 1.02%), edged higher.
Lupin tumbled 7.59% to Rs 1,726.60 after the company clarified during trading hours today, 15 March 2016, that the United States Food and Drug Administration (USFDA) inspected its Goa facility last week and cited 9 observations. The observations are on aspects such as inadequacy and adherence to Standard Operating Procedures (SOPs). Lupin said that it is in the midst of putting together a response to address the USFDA's observations. The company issued the clarification after media reports suggested that the USFDA cited nine observations in its inspection of the company's Goa facility last week.
Procter & Gamble Hygiene and Health Care dropped 0.99% to Rs 6,067.85 after the company announced that it has discontinued the manufacture and sale of its OTC drug Vicks Action 500 Extra with immediate effect. The decision to discontinue the manufacture and sale of the drug was made after the Government of India vide its gazette notification on 10 March 2016 prohibited manufacturing, selling and distributing fixed dose combination drugs (Paracetamol + Phenylephrine + Caffeine) with immediate effect. Vicks Action 500 Extra has the same fixed dose combination and gets covered under the notification, Procter & Gamble Hygiene and Health Care said. The company said that all Vicks products, including Vicks Action 500 Extra, are backed by research to support quality, safety and efficacy.
Shares of public sector banks edged higher as the latest data showing easing of headline inflation in February 2016 gave rise to expectations for a policy rate cut at the Reserve Bank of India's next policy meeting on 5 April 2016. UCO Bank (up 1.93%), State Bank of India (up 1.84%), Syndicate Bank (up 1.79%), Bank of Baroda (up 1.60%), Vijaya Bank (up 1.60%), Bank of India (up 1.33%), Punjab National Bank (up 1.28%), IDBI Bank (up 1.17%), Canara Bank (up 0.84%), Dena Bank (up 0.71%), Bank of Maharashtra (up 0.69%), Union Bank of India (up 0.40%), United Bank of India (up 0.26%) and Allahabad Bank (up 0.19%), edged higher. Indian Bank (down 0.05%), Central Bank of India (down 0.65%), Andhra Bank (down 0.77%), Punjab and Sind Bank (down 1.28%) and Corporation Bank (down 1.78%) edged lower.
Private sector banks were mixed. Yes Bank (up 1.06%), Axis Bank (up 0.77%), City Union Bank (up 0.40%) and Kotak Mahindra Bank (up 0.27%), edged higher. HDFC Bank (down 0.05%), IndusInd Bank (down 0.12%) and Federal Bank (down 1.24%), edged lower.
ICICI Bank fell 0.16% to Rs 221.35. The private sector bank through its DIFC (Dubai) branch priced an issuance of 10 year fixed rate notes of an aggregate principal amount of $700 million. The notes carry a coupon of 4% and were offered at an issue price of 99.592. The announcement was made before market hours today, 15 March 2016.
On the macro front, the latest data showed that inflation based on the consumer price index (CPI) dipped to four month low of 5.18% in February 2016 from 5.69% in January 2016. The decline was due to easing of food price inflation. The Consumer Food Price index (CFPI) eased sharply to 5.3% in February 2016 from 6.85% in January 2016. The core CPI inflation rose to 4.77% in February 2016 from 4.5% in January 2016.
The Sensex snapped two-day winning streak. The barometer index had risen 180.94 points or 0.73% in the preceding two trading sessions to settle at 24,804.28 yesterday, 14 March 2016, from its close of 24,623.34 on 10 March 2016. The Sensex has risen 1,552.17 points or 6.75% in this month so far (till 15 March 2016). The Sensex has fallen 1,562.37 points or 5.98% in calendar year 2016 so far (till 15 March 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the Sensex has risen 2,058.56 points or 9.15%. The Sensex is off 4,542.44 points or 15.61% from a 52-week high of 29,094.61 hit on 15 April 2015. The Sensex is off 5,473.57 points or 18.23% from a record high of 30,024.74 hit on 4 March 2015.
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