After languishing in red, key benchmark indices extended losses in mid-morning trade. At 11:15 IST, the barometer index, the S&P BSE Sensex was off 277.45 points or 1.07% at 25,589.50. The losses for the Sensex were higher in percentage terms than those for the Nifty 50 index. The Nifty was off 77 points or 0.98% at 7,748. Data showing acceleration of consumer price inflation in October 2015, deceleration in industrial production growth in September 2015 and weakness in global stocks weighed on the domestic bourses. The Sensex and Nifty, both, hit their lowest level in more than 6 weeks. The Sensex dropped 291.37 points or 1.12% at the day's low of 25,575.58 in mid-morning trade. The Nifty 50 slumped 83.90 points or 1.07% at the day's low of 7,741.10 in mid-morning trade.
The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,449 shares declined and 646 shares advanced. A total of 116 shares were unchanged. The BSE Mid-Cap index was currently down 1.42%. The decline in this index was higher than the Sensex's decline in percentage terms. The BSE Small-Cap index was currently down 0.83%. The decline in this index was lower than Sensex's decline in percentage terms.
In overseas stock markets, Chinese stocks led decline in Asian equities as a slump in commodities markets deterred investors from riskier assets and as investors took the latest remarks from various US Federal Reserve officials as fresh a signal that the Fed is coming close to committing to an interest-rate increase in December 2015. US stocks dropped sharply yesterday, 12 November 2015, as a sharp slide in commodities triggered sell-off in shares of energy and raw-material providers.
The Fed-funds futures market is now pricing in 70% probability of an increase in US benchmark interest rate in December 2015. Investors in emerging markets, including India are worried that once the Fed starts raising interest rates, it will drain liquidity from global emerging markets and redirect it to developed economies. The Fed has held its benchmark short-term interest rate near zero since December 2008. The ultra-loose monetary policy in the US has encouraged heavy investment in higher-yielding emerging markets. The next monetary policy review from the Fed is scheduled on 15-16 December 2015.
Telecom stocks fell. Idea Cellular (down 1.41%), MTNL (down 0.85%), Tata Teleservices (Maharashtra) (down 1.2%) and Reliance Communications (down 0.19%) declined.
Bharti Airtel rose 0.44% to Rs 332.55. The stock was volatile. The stock hit a high of Rs 332.70 and low of Rs 325.30 so far during the day. Bharti Airtel announced that the company intends issuing its maiden Sterling Bond of up to GBP 500 million. This bond, when issued, will be listed on the London Stock Exchange. The intended issue and its timing remains subject to necessary authorizations and approvals, global credit environment and market conditions. Bharti Airtel Group Treasurer Harjeet Kohli said that the maiden issue of bonds in the UK will be used for refinancing the company's existing loan portfolio.
FMCG stocks declined across the board. Britannia Industries (down 2.58%), GlaxoSmithkline Consumer Healthcare (down 1.02%), Colgate-Palmolive (India) (down 1.33%), Dabur India (down 1.09%), Godrej Consumer Products (down 3.68%), Hindustan Unilever (down 1.1%), Marico (down 1.87%), Nestle India (down 1.75%), Tata Global Beverages (down 0.82%), Procter & Gamble Hygiene and Health Care (down 1.28%) edged lower. Jyothy Laboratories (up 0.25%) and Bajaj Corp (up 0.87%) rose.
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Macro economic data released yesterday, 12 November 2015, showed that industrial production growth moderated to 3.6% in September 2015 over a year ago compared with the revised growth of 6.3% in August 2015. The slowdown in growth was due base effect. In 2014, Diwali was in October whereas this year the festival is in November.
Another data released yesterday, 12 November 2015, showed that the inflation based on the consumer price index (CPI) accelerated to four-month high of 5% in October 2015, compared with 4.4% reading in September 2015. Among the CPI components, inflation of food and beverages increased to 5.3% in October 2015 from 4.3% in September 2015 mainly contributing to the rise in CPI inflation. The increase in prices of pulses was the key driver of food price inflation.
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