Led by losses for pharma stocks and index heavyweights HDFC and ITC, the two key benchmark indices fell further in mid-afternoon trade. At 14:19 IST, the barometer index, the S&P BSE Sensex, was down 272.82 points or 1.1% at 24,531.46. The 50-unit Nifty 50 index was down 81.80 points or 1.09% at 7,456.95. Weakness in global stocks weighed on domestic bourses.
The Sensex dropped 283.56 points or 1.14% at the day's low of 24,520.72 mid-afternoon trade, its lowest level since 10 March 2016. The barometer index rose 36.49 points or 0.14% at the day's high of 24,840.77 at the onset of the trading session. The Nifty shed 84.95 points or 1.12% at the day's low of 7,453.80 in mid-afternoon trade, its lowest level since 10 March 2016. The index rose 6.45 points or 0.08% at the day's high of 7,545.20 at the onset of the trading session.
The broad market depicted weakness. There were almost two losers against every gainer on BSE. 1,656 shares fell and 843 shares rose. A total of 151 shares were unchanged. The BSE Mid-Cap index was currently down 0.89%. The BSE Small-Cap index was currently down 0.68%. The decline in both these indices was lower in percentage terms than the Sensex's decline.
In overseas markets, European stocks edged lower as investors remained cautious ahead of the outcome of US Federal Reserve's monetary policy meeting. The Federal Reserve's two-day monetary policy meeting begins today, 15 March 2016. Federal Reserve officials are likely to hold short-term interest rates steady at its policy meeting amid uncertainties about global financial markets and global growth. The Fed in December 2015 raised its benchmark federal-funds rate from near zero to a range between 0.25% and 0.5%.
Asian stocks edged lower as investors braced for a run of policy announcements from the world's major central banks this week and after the Bank of Japan held policy steady as expected. Japan's Nikkei Average settled 0.68% lower. At the conclusion of a two-day monetary policy meeting today, 15 March 2016, the Bank of Japan (BOJ) maintained its commitment to raise the monetary base by 80 trillion yen annually and decided to continue applying a negative interest rate of minus 0.1% to the policy-rate balances in current accounts held by financial institutions at the bank. If needed, additional easing steps will be taken to hit 2% inflation, the BOJ said. BOJ had stunned markets in January by adopting negative rates.
Index heavyweight and housing finance major HDFC edged lower on media reports that a foreign brokerage has downgraded the stock to sell from neutral. The stock was currently off 3.2% at Rs 1,118.15. The foreign brokerage reportedly said that structural changes may dampen HDFC's profitability and its core business is likely to be pressured. HDFC may now have structurally lower growth and core return on assets (ROAs) will decline further, the foreign brokerage reportedly said.
Shares of public sector oil marketing companies (PSU OMCs) rose after a foreign brokerage house reportedly said that it expects refining margins to remain strong as demand-supply tightens. BPCL (up 1.39%), Indian Oil Corporation (IOCL) (up 1.78%) and HPCL (up 2.12%) gained.
Meanwhile, lower crude oil prices will reduce under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports. The government has already freed pricing of petrol and diesel.
In the global commodities markets, Brent for May settlement was down 80 cents at $38.73 a barrel. The contract had declined 86 cents or 2.12% to settle at $39.53 a barrel during the previous trading session.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 67.315, compared with closing of 67.105 during the previous trading session.
Shares of oil exploration and production companies fell after global crude oil prices dropped. Cairn India (down 0.4%), Oil India (down 0.71%), and ONGC (down 1.06%) edged lower. Reliance Industries (RIL) rose 0.38%. Lower crude oil prices would result in lower realization from crude sales for oil exploration firms.
Cement stocks were mixed. ACC (up 0.3%) and Ambuja Cements (up 0.21%) gained. Shree Cement (down 0.84%) and UltraTech Cement (down 0.36%), declined.
Grasim Industries declined 0.96%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
Procter & Gamble Hygiene and Health Care dropped 2.09% after the company announced that it has discontinued the manufacture and sale of its OTC drug Vicks Action 500 Extra with immediate effect. The decision to discontinue the manufacture and sale of the drug was made after the Government of India vide its gazette notification on 10 March 2016 prohibited manufacturing, selling and distributing fixed dose combination drugs (Paracetamol + Phenylephrine + Caffeine) with immediate effect. Vicks Action 500 Extra has the same fixed dose combination and gets covered under the notification, Procter & Gamble Hygiene and Health Care said. The company said that all Vicks products, including Vicks Action 500 Extra, are backed by research to support quality, safety and efficacy.
On the macro front, the latest data showed that inflation based on the consumer price index (CPI) dipped to four month low of 5.18% in February 2016 from 5.69% in January 2016. The decline was due to easing of food price inflation. The Consumer Food Price index (CFPI) eased sharply to 5.3% in February 2016 from 6.85% in January 2016. The core CPI inflation rose to 4.77% in February 2016 from 4.5% in January 2016.
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