 "Brexit jitters hit markets; BOJ, US Fed stand pat")
Indian equities tumbled in today’s trade mirroring massive sell-off in the Asian equities after Bank of Japan maintained status quo and refrained from adding fresh stimulus.
Cautious policy stance by the US Fed on global growth worries and Brexit fears sparked panic selling at D-Street.
Cautious policy stance by the US Fed on global growth worries and Brexit fears sparked panic selling at D-Street.
The S&P BSE Sensex slumped 201 points to close at 26,525 and the Nifty50 dropped 66 points to end at 8,141 levels.
“After an initial round of volatility, the indices managed to save the day by closing less than 1% down. It was a good recovery led purely by PSU Banks. How rare do we see the markets taking support due to PSU Banks. However, the overall breadth of the market also saw improvement at the closing hour,” said Kunal Bothra, Head-Advisory, LKP Securities.
“For Nifty, the key support is at 8,080 levels and resistance at 8,280. A break and close below the bands could trigger a short term trend. Till then the volatility would get absorbed and stock specific moves would continue to be the trading strategy, he adds.
Also, participants remained concerned with report that India’s merchandise exports contracted again, albeit at their slowest pace in 18 months in May as non-petroleum exports finally turned positive, led by exports of engineering goods and gems and jewellery. Exports contracted at 0.79% in May while imports slipped 13.16%, leaving a trade deficit of $6.27 billion.
"Markets fell largely due to “Brexit” concerns coupled with the uncertainty over the US economic growth. The Fed has reduced its growth forecast for the US economy for the next two years. Going ahead, Brexit will take attention and continue to weigh on the markets until the run-up to the referendum. In the event of an exit of Britain from the EU, most emerging markets will be impacted. However, we expect India to be relatively less impacted because of its improving fundamentals," said Dipen Shah, Senior VP & Head Private Client Group Research, Kotak Securities in a note.
"Markets fell largely due to “Brexit” concerns coupled with the uncertainty over the US economic growth. The Fed has reduced its growth forecast for the US economy for the next two years. Going ahead, Brexit will take attention and continue to weigh on the markets until the run-up to the referendum. In the event of an exit of Britain from the EU, most emerging markets will be impacted. However, we expect India to be relatively less impacted because of its improving fundamentals," said Dipen Shah, Senior VP & Head Private Client Group Research, Kotak Securities in a note.
GLOBAL EVENTS
The Bank of Japan left key rates unchanged and refrained from adding fresh stimulus. Asian equities bled with Nikkei cracking over 3% on a rising Yen. Meanwhile, Hong Kong’s Hang Seng and China’s Shanghai Composite dropped between 0.4%-1%.
Meanwhile, the US Federal Reserve maintained status quo and indicated on hiking rates twice in 2016. However, it said that sluggish economic growth amid Brexit fears would crimp the pace of monetary policy tightening in future years.
Following the tandem, European stocks slipped amid decline in crude oil prices. BOJ stance and cautious policy stance by the US Fed further hurt sentiments. FTSE 100, CAC 40 and DAX dropped between 0.7%-1%.
KEY STOCKS
Shares of all three listed associate banks of State Bank India (SBI) moved higher for the second straight trading session, after the Union Cabinet on Wednesday gave a go-ahead to the merger of five associate lenders and Bharatiya Mahila Bank with the SBI.
State Bank of Mysore up 20%, State Bank of Travancore up 16% and State Bank of Bikaner & Jaipur up 16%. SBI gained 0.3%.
Maruti Suzuki fell 2.6% on the back of a rising Yen. Japanese Yen gained beyond 105 per dollar for the first time since Sept 2014.
Weak growth outlook about US economy and a weak dollar hurt the export oriented healthcare and technology shares. In the healthcare space, Dr Reddy’s Lab, Cipla and Sun Pharma lost between 0.2%-1.5%. Meanwhile, IT stocks derailed with TCS and Infosys between 0.2%-0.7%.
Meanwhile, Wipro gained 0.5% after it launched its analytics solution, Data Discovery Platform. The solution provides pertinent business insights across the value of chain of an industry through pre-defined ‘apps’.
Oil marketing companies such as IOC, BPCL and HPCL shed up to 0.6% after petrol price was marginally hiked by 5 paise a litre and diesel by Rs 1.26 a litre, the fourth increase in rates in six weeks.
Moody’s Investors revised Tata Power shares to stable from negative. The stock lost over 1%.
Ujjivan Financial Services shed 3% after the Reserve Bank of India (RBI) notified that the aggregate foreign shareholdings in the company has crossed the permissible limit, which means overseas investors will not be able to buy further equity in the company.
