Weakness persisted on the bourses in morning trade after key benchmark indices saw a gap-down opening on dismal global cues. At 10:18 IST, the barometer index, the S&P BSE Sensex, was down 242.79 points or 0.95% at 25,374.05. The 50-unit CNX Nifty was down 89 points or 1.14% at 7,706.70. Earlier, the Sensex hit its lowest level in over 2-1/2 weeks when it dropped 308.90 points at the day's low of 25,307.94 in early trade. The Nifty also hit its lowest level in over 2-1/2 weeks when it fell 94.80 points at the day's low of 7,700.90 in early trade.
The market breadth indicating the overall health of the market was weak with over two losers for every gainer. On BSE, 1,264 shares declined and 512 shares rose. A total of 81 shares were unchanged. The BSE Mid-Cap index was off 1.18%. The BSE Small-Cap index was off 0.96%. The fall in both these indices was higher than the Sensex's decline in percentage terms.
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. 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.
Bank stocks dropped ahead of the Reserve Bank of India's (RBI) fourth bi-monthly monetary policy review for the year 2015-16 scheduled today, 29 September 2015.
Among private bank stocks Kotak Mahindra Bank (down 1.63%), Axis Bank (down 3.32%), Federal Bank (down 0.16%), IndusInd Bank (down 0.22%), HDFC Bank (down 1.26%), ICICI Bank (down 3.5%) and Yes Bank (down 2.1%) edged lower.
Among PSU bank stocks Bank of India (down 1.69%), State Bank of India (down 1.27%), Union Bank of India (down 1.42%), Allahabad Bank (down 0.78%), Andhra Bank (down 1.41%), Punjab National Bank (down 1.74%), and Bank of Baroda (down 1.01%) edged lower. IDBI Bank rose 2.66%.
The RBI had kept its benchmark lending rate viz. the repo rate unchanged at 7.25% after a monetary policy review on 4 August 2015. RBI Governor Dr. Raghuram G. Rajan had at that time indicated in his written monetary policy statement that going ahead RBI will monitor developments for emerging room for further reduction in the policy rate. The RBI has cut the benchmark lending rate viz. the repo rate by 75 basis points since January 2015.
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Oil exploration firms declined as crude oil prices dropped in the previous trading session. Lower crude oil prices would result in lower realizations from crude sales for oil exploration firms.
Reliance Industries (RIL) (down 0.55%), Cairn India (down 0.98%) and ONGC (down 1.29%) declined. Oil India rose 1.03%.
In the global commodities markets, Brent crude oil futures steadied after a drop in the previous session triggered by concerns over Asia's economic health and as production remained high. Brent for November settlement was up 2 cents at $47.36 a barrel. The contract had fallen $1.26 a barrel or 2.59% to settle at $47.34 a barrel during previous trading session.
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.
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