Key benchmark indices continued to hover in negative zone in morning trade as weakness in global stocks hurt sentiment on the domestic bourses. At 10:15 IST, the barometer index, the S&P BSE Sensex was down 116.73 points or 0.46% at 25,282.92. The Nifty 50 index was currently down 39.70 points or 0.51% at 7,719.10. The Sensex fell 154.19 points or 0.6% at the day's low of 25,245.46 in morning trade. The barometer index lost 27.21 points or 0.1% at the day's high of 25,372.44 in early trade. The Nifty fell 43.45 points or 0.56% at the day's low of 7,715.35 in morning trade. The index lost 22.50 points or 0.28% at the day's high of 7,736.30 in early trade.
The Reserve Bank of India (RBI) will announce the First Bi-monthly Monetary Policy Statement, 2016-17 at 11:00 IST today, 5 April 2016. Market expectations are that the RBI will cut its benchmark lending rate viz. the repo rate by atleast 25 basis points, with the government sticking to its fiscal deficit target for year 2016-17 in the Union Budget 2016-17 on 29 February 2016. The government's announcement of a reduction in interest rates on small savings schemes for Q1 June 2016 has reinforced market expectations of a rate cut from the RBI.
In overseas stock markets, Japanese stocks led decline in Asian markets on uncertainty regarding the quantum and timing of interest rate hikes in the United States. The Nikkei 225 Average was currently off 1.94%. US stocks closed lower yesterday, 4 April 2016, as pressure from a decline in oil prices mostly offset gains in health care stocks. Contradictory comments from Federal Reserve policy makers have added to uncertainty about the quantum and timing of interest rate hikes in the United States. During speech at a conference on cybersecurity, Boston Fed President Eric Rosengren yesterday, 4 April 2016, said rate-hikes may come sooner than the market is expecting. Rosengren is a voting member of the Fed policy committee this year. On 1 April 2016, Federal Reserve Bank of Cleveland President Loretta Mester cautioned that waiting too long to raise rates could be a risk to the economy. She is a voting member of the Fed's rate-setting policy committee. In a speech in New York on 29 March 2016, Federal Reserve Chairwoman Janet Yellen stressed a need for a cautious stance on interest-rate increases in the backdrop of global economic slowdown.
Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 964 shares fell and 743 shares rose. A total of 70 shares were unchanged. The BSE Mid-Cap index was currently off 0.37%. The BSE Small-Cap index was currently off 0.28%. The losses for both these indices were lower in percentage terms than those for the Sensex.
Aviation stocks edged higher on decline in crude oil prices. SpiceJet (up 2.05%), Jet Airways (India) (up 1.93%), InterGlobe Aviation (up 1.03%) rose. Lower crude oil prices benefit aviation firms as jet fuel prices, which typically constitute about 50% of airlines' operating costs, are directly linked to international crude oil prices.
Shares of oil exploration & production (E&P) companies edged lower on decline in crude oil prices. Cairn India (down 1.22%), Oil India (down 0.4%) and ONGC (down 0.41%) declined.
Index heayweight Reliance Industries (RIL) was up 0.23% at Rs 1,037.55. The stock hit a high of Rs 1,042 and a low of Rs 1,030 so far during the day.
Shares of public sector oil marketing companies (PSU OMCs) rose after announcing a hike in petrol and diesel prices. BPCL (up 2.71%), HPCL (up 2.11%) and Indian Oil Corporation (IOCL) (up 1.58%) edged higher. IOCL yesterday, 4 April 2016, announced an increase in the price of petrol and diesel with effect from the midnight of 4/5 April 2016. Petrol price was hiked by Rs 2.19 per litre at Delhi (including state levies) and diesel price was raised by 98 paise a litre, with corresponding price revision in other states. After the latest revision, petrol in Delhi costs Rs 61.87 per litre and diesel costs Rs 49.31 a litre.
Meanwhile, decline in crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. The government has already decontrolled pricing of petrol and diesel.
Crude oil prices edged lower in the global commodities markets on mounting skepticism that key global crude producers would reach an agreement to freeze production at a meeting later this month. Brent for June settlement was currently down 12 cents at $37.57 a barrel. The contract had declined 98 cents or 2.53% to settle at $37.69 a barrel during the previous trading session. Saudi Arabia on Friday, 1 April 2016, said that it would freeze oil production only if Iran follows suit. Iran has ruled out freezing output until its production recovers to pre-sanction levels.
The world's major crude oil producers led by Russia and Saudi Arabia have convened a meeting on 17 April 2016 in Doha, Qatar to discuss measures to stabilise prices, including a proposal to freeze output.
Index heavyweight and cigarette major ITC was off 1.22% at Rs 326.90, with the stock extending losses registered in previous trading session triggered by the company announcing closure of its manufacturing operations at all its cigarette factories in India with effect from 1 April 2016 until clarity emerges on the quantum of mandatory pictorial health warning on cigarette packages. The stock had lost 1.5% to settle at Rs 330.95 yesterday, 4 April 2016.
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