Data showing slowdown in growth in the services sector and weakness in global stocks triggered modest losses for Indian stocks. The barometer index, the S&P BSE Sensex, lost 148.11 points or 0.59% at 25,081.59, as per the provisional closing data. The Nifty 50 index lost 40.45 points or 0.52% at 7,706.55, as per the provisional closing data. Losses for metal stocks, public sector banks and index heavyweight ITC led losses for the two key benchmark indices. Concerns about global economic slowdown weighed on global stocks. The Sensex and the Nifty edged lower for the third straight trading session.
The Sensex hit its lowest level in more than three weeks when it lost 168.66 points or 0.66% at the day's low of 25,061.04 in late trade. The barometer index rose 16 points or 0.06% at the day's high of 25,245.70 in afternoon trade. The Nifty, too, hit its lowest level in more than three weeks when it lost 49.75 points or 0.64% at the day's low of 7,697.25 in late trade. The index rose 2 points or 0.02% at the day's high of 7,749 in afternoon trade.
The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,776 shares declined and 791 shares rose. A total of 120 shares were unchanged. The BSE Mid-Cap index was provisionally down 1.22%. The BSE Small-Cap index was provisionally down 0.98%. The losses for both these indices were higher than the Sensex's decline in percentage terms.
Meanwhile, the outcome of a monthly survey showed that growth in India's services sector eased last month due to a slower expansion in new business inflows. The seasonally adjusted Nikkei Services Business Activity Index dropped to 53.7 in April 2016 from 54.3 in March 2016. April data highlighted a general lack of pressure on the capacity of Indian service providers, as unfinished business declined. Services firms' sentiment weakened slightly in April, with the degree of optimism being modest by historical standards.
In overseas stock markets, European stocks reversed initial gains on concerns about global economic slowdown. Earlier during the global day, most Asian stocks edged lower amid renewed global growth concerns in the wake of weaker-than-expected Chinese manufacturing data. The Caixin China general manufacturing purchasing managers' index fell to 49.4 in April 2016 from 49.7 in March 2016. A reading below 50 indicates economic contraction. The data was released during trading hours in Asia yesterday, 3 May 2016. China's official manufacturing PMI, a competing gauge, came in at 50.1 in April 2016 compared with 50.2 in March 2016, according to data released by the National Bureau of Statistics on 1 May 2016. The Chinese economy is the world's second biggest economy after the United States.
Meanwhile, China's central bank reportedly set the yuan's daily reference rate nearly 0.6% percent weaker against the US dollar today, 4 May 2016, the biggest downward move since devaluing the unit in August last year. China rattled global investors with a surprise devaluation in August 2015, when it guided the normally stable yuan down nearly five percent over a week. China only allows the yuan to rise or fall two percent on either side of the daily fix, one of the ways it maintains control over the currency.
A surprise interest-rate cut by Australia's central bank has added to global economic jitters. The Reserve Bank of Australia yesterday, 3 May 2016, cut its benchmark interest rate by 25 basis points to record low of 1.75% in a bid to combat record-low inflation and a strong local currency. The decision was announced during trading hours in Asia.
Trading in US stock index futures indicated losses for US stocks at the opening bell. Trading in US index futures indicated that the Dow Jones Industrial Average could slide 107 points at the opening bell today, 4 May 2016. US stocks closed lower yesterday, 3 May 2016, led by declines in energy and materials stocks amid renewed global growth worries. Meanwhile, Cleveland Fed President Loretta Mester yesterday, 3 May 2016, said in a speech that waiting for global financial markets to calm down before raising interest rates may backfire and just lead to more volatility. Mester said she would like to see gradual interest-rate hikes this year. Mester is a voting member of the policy-setting Federal Open Market Committee (FOMC) this year. The FOMC next undertakes monetary policy review at a two-day meeting on 14-15 June 2016.
Total turnover on BSE amounted to Rs 2478 crore, lower than turnover of Rs 2736.89 crore registered during the previous trading session.
Metal and mining stocks edged lower in the wake of weaker-than-expected Chinese manufacturing data for April 2016. Hindalco Industries (down 5.47%), National Aluminium Company (down 6.4%), Vedanta (down 5.54%), JSW Steel (down 2.75%), Steel Authority of India (down 9%), Hindustan Zinc (down 3.99%), Hindustan Copper (down 1.94%) and NMDC (down 4.37%) edged lower. China is the world's largest consumer of steel, copper and aluminum.
Copper edged lower in the global commodities markets. High Grade Copper for July 2016 delivery was currently down 0.88% at $2.1995 per pound on the COMEX.
Tata Steel slumped 5.44% at Rs 329.50. Global metals group Liberty House Group yesterday, 3 May 2016, formally submitted a letter of intent to Tata Steel Europe containing its indicative bid for the entire issued share capital of Tata Steel UK. Liberty has put in the bid for all of Tata Steel's UK assets, excluding its Long Products division, which is in the process of being sold separately, and the Scottish Plate Assets that Liberty already acquired from Tata Steel. Tata Steel has put Tata Steel, UK on the block due to the deteriorating financial performance of the UK subsidiary.
The bid is based on Liberty's GREENSTEEL business model and would involve a transition from steelmaking in blast furnaces to recycling steel in electric arc furnaces over time while ensuring the company continues to meet key customers' quality requirements. Steelmaking would be ultimately powered by renewable energy sources. Liberty said in a statement that it believes that the UK steel industry can achieve long-term viability if based on an agile, sustainable, non-cyclical model which integrates liquid steel making from recycling with downstream production and the manufacture of advanced engineering products.
In order to take the bid forward Liberty has appointed an internal project team and a panel of leading external advisers to work on this acquisition, dubbed "Project GREENSTEEL Pluto".
Jindal Steel & Power (JSPL) was off 3.48% at Rs 66.60. The company's board of directors at its meeting held yesterday, 3 May 2016, approved the divestment of 1,000 megawatts (MW) power plant unit in Chhattisgarh of its power subsidiary Jindal Power (JPL) into a special purpose vehicle (SPV), for purposes of transferring the unit to JSW Energy through sale of the entire share capital and other securities of the unit in terms of the share purchase agreement for an enterprise value of Rs 6500 crore plus the value of net current assets as on the closing date. The valuation may vary based upon the achievement of power purchase agreements (PPAs) as prescribed in the agreement subject to minimum of Rs 4000 crore plus the value of net current assets as on the closing date, JSPL said in a statement. The announcement was made before market hours today, 4 May 2016. Shares of JSW Energy were up 0.08% at Rs 66.65.
Index heavyweight and cigarette major ITC was down 1.91% to Rs 310.85 on reports that the Supreme Court today, 4 May 2016, told the tobacco industry to adhere to rules requiring stringent health warnings on cigarette packs. The stock hit a high of Rs 319.35 and a low of Rs 310.40 in intraday trade. The tobacco industry should not violate any rule prevailing as of today, the two-judge bench reportedly said, and added that the Karnataka high court should hear all pleas challenging the new rules. Last month, Indian tobacco companies shut down production in protest against requirements that 85% of a cigarette pack's surface be covered in health warnings, up from 20%. The tobacco industry has taken the government to court, saying the rules are impractical and will boost smuggling of imported cigarettes. The government backs the stringent rules to cut tobacco consumption.
Tata Motors declined 6.45% at Rs 383.10 after the company revised downward the rate of growth in sales volume for April 2016 from the figures announced previously. The company announced that its total sales rose 8.9% to 39,418 units in April 2016 over April 2015. The company had earlier announced 9.9% growth in total sales in April 2016. The company announced the revised monthly sales volume data after market hours yesterday, 3 May 2016.
Adani Ports and Special Economic Zone (APSEZ) tumbled 12.38% at Rs 206.70 on equity dilution worries after the company's board of directors decided to seek shareholders' approval to raise funds by way of issue of equity shares/convertible bonds up to Rs 10000 crore. APSEZ's consolidated net profit rose 38.34% to Rs 914.06 crore on 18% increase in total income to Rs 2161.65 crore in Q4 March 2016 over Q4 March 2015. EBITDA (earnings before interest, taxes, depreciation and amortization) excluding other income rose 12% to Rs 1225 crore in Q4 March 2016 over Q4 March 2015.
Cargo across all ports handled by the company rose 5% to 152 million metric tonnes (MMT) in the year ended 31 March 2016 over the year ended 31 March 2015. The company has given guidance of 10% to 15% growth in cargo volumes for the year ending 31 March 2017 (FY 2017). It has given guidance of 10% to 15% growth in net profit for FY 2017.
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