Global meltdown, oil woes drag Sensex 239 points lower; FOMC eyed

Sharp fall in capital goods production and manufacturing activity also dented sentiments

Benchmark share indices ended at two week low after sharp decline in the rupee, slide in crude oil prices and weakness among global peers led to sell off across the board by investors.

Further, profit booking by domestic institutional investors and retail players also weighed on market sentiment.

Besides, industrial output contracted 0.8% in April, the first decline in three months, on the back of sharp fall in capital goods production and manufacturing activity which further dented sentiments.

Key macroeconomic data that are lined up are release of consumer price index (CPI) today and inflation based on the wholesale price index (WPI) for May on Tuesday.

 
The S&P BSE Sensex ended down 239 points to settle at 26,397 and the Nifty50 closed 59 points lower at 8,111. In the broader market, both BSE Midcap and Smallcap indices performed better than the front-liners with losses of 0.6% and 0.5%, each.  

"Indian stocks, poised to open lower on the backdrop of weak IIP data, were further dragged lower by weak Asian indices, ahead of US, Japan monetary policy meetings. Expectations of CPI having risen more than previous month may also have added to bearish cues, especially after the RBI governor airing his concerns in the recently concluded monetary policy review. With global visibility reducing, investors looking for domestic cues would be eyeing the finance ministers’ in Kolkata on 14-15 June on GST, as well as revenue Gyan Sangam on 16-17 June," said Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services. 

The rupee again hit the 67-mark against the US dollar after plunging 24 paise on sustained demand for the American currency from importers and bankers amid a lower opening in the domestic equity market.

Oil prices fell with international Brent crude oil futures slipping below $50 per barrel, weighed down by growing economic concerns in Asia and strengthening in the US dollar, making fuel imports for countries using other currencies more expensive.

Fears Britain is on the verge of voting to leave the European Union next week spread through global financial markets on Monday, sending Asian and European shares sharply lower and the pound to an eight-week low.

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 2.8% down. In Japan, the Nikkei 225 index closed 3.51% lower.

Data released today 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.

Back home, ICICI Bank, Tata Motors, Tata Steel, BHEL, Axis Bank and SBI slumped between 2%-4%.

Tata Steel melted by 3%. Goldman Sachs has downgraded the stock to "sell" from "neutral", saying stock is pricing in most of the potentially positive drivers such as higher profitability and sale of UK assets.

Capital goods majors witnessed selling pressure in trades today due to contraction of industrial output by 0.8% in April, the first decline in three months. BHEL and L&T plunged between 2%-3%.

From the financial space, ICICI Bank, Axis Bank, SBI and HDFC were down 2%-4% on account of profit booking after recent run up in past few trading sessions.

The healthcare stocks outperformed in the weak market with Lupin being the top gainer, rising by 1%. Dr Reddy’s Laboratories inched up by 0.5%. Dr Reddy’s Laboratories is ramping up its US business with the acquisition of eight drugs from the world’s largest generic drug-maker Teva and an affiliate of Allergan for $350 million (over Rs 2,300 crore).

Coal India's two subsidiaries Mahanadi Coalfields and Northern Coalfields will buyback total shares worth around Rs 1,978 crore from their shareholders. Shares of Coal India rose by 0.3%.

Stock prices of SpiceJet, Jet Airways and Indigo slipped 1%-3% after the civil aviation ministry proposed changes to Civil Aviation Requirements to be followed by aviation firms which could result in increase in costs for aviation firms.

Shares of 9 sugar companies have seen their market price appreciation of more than 100% thus far in the calendar year 2016. Upper Ganges Sugar & Industries, Mawana Sugars, Oudh Sugar Mills, Ugar Sugar Works, Dharani Sugars, Dwarikesh Sugar Industries, Uttam Sugar Mills, Thiru Arooran Sugars and Rajshree Sugars have rallied up to 350% so far in the current calendar year.

Fortis Healthcare slumped 3% after the company said its subsidiary has received an order from the Directorate General of Health Services (DHS) to deposit Rs 503.36 crore for non-compliance of conditions of land allotment lease.

Tata Metaliks moved higher to its new high of Rs 365 on the BSE, extending nearly one-month long rally on the bourses, in an otherwise weak market. Out of 20 sessions, in 17 trading sessions the stock locked in upper limit of circuit filter with no sellers on the counter.

Shares of A2Z Infra Engineering surged 5% after the company won a $13.56 million (around Rs 90 crore) contract from Nepal government for expansion of electricity distribution network.

Debt-ridden automobile component maker Amtek is close to selling its profitable German unit, Tekfor, for about $700 million to a foreign buyer in a bid to reduce its debt. The stock surged by 5.6%.