Key benchmark indices further extended intraday losses in afternoon trade on weak cues from global markets. At 13:18 IST, the barometer index, the S&P BSE Sensex, was down 396.98 points or 1.56% at 25,002.67. The Nifty 50 index was currently down 119.55 points or 1.54% at 7,639.25. The Sensex regained the psychologically important 25,000 mark after falling below that level in afternoon trade. The weakness on the domestic bourses was a part of weakness in global stocks triggered by uncertainty regarding the quantum and timing of interest rate hikes in the United States.
Meanwhile, the Reserve Bank of India's (RBI) announcement of a reduction in its benchmark lending rate viz. the repo rate by 25 basis points (bps) after a monetary policy review came in line with market expectations.
The Sensex hit one-week low when it fell 433.50 points or 1.71% at the day's low of 24,966.15 in afternoon 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, too, hit one-week low when it fell 130.40 points or 1.68% at the day's low of 7,628.40 in afternoon trade. The index lost 22.50 points or 0.28% at the day's high of 7,736.30 in early trade.
The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,600 shares fell and 701 shares rose. A total of 104 shares were unchanged. The BSE Mid-Cap index was currently off 1.06%. The BSE Small-Cap index was currently off 1.11%. The losses for both these indices were lower in percentage terms than those for the Sensex.
In overseas stock markets, European markets edged lower as oil price volatility continued to weigh on markets worldwide and investors digested a raft of new data from the euro zone. New data for Germany painted a gloomy picture. Industrial orders in the euro zone's largest economy fell in February as foreign demand weakened. 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 closed 2.42% lower.
US stocks edged 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.
Metal stocks edged lower. Vedanta (down 4.58%), Jindal Steel & Power (down 3.71%), Hindalco Industries (down 3.14%), Steel Authority of India (down 2.52%), Hindustan Copper (down 2.51%), Tata Steel (down 2.48%), National Aluminium Company (down 2.03%), JSW Steel (down 1.2%), NMDC (down 0.46%), Bhushan Steel (down 0.4%) and Hindustan Zinc (down 0.29%) edged lower.
Copper edged higher in the global commodities markets. High Grade Copper for May 2016 delivery was currently up 0.35% at $2.148 per pound on the COMEX.
Capital goods shares edged lower. Jindal Saw (down 3.63%), Bharat Heavy Electricals (down 3.54%), Praj Industries (down 3.22%), Reliance Defence and Engineering (down 2.91%), BEML (down 2.85%), Crompton Greaves (down 2.41%), Bharat Electronics (down 2.03%), Suzlon Energy (down 2.03%), ABB India (down 1.97%), Alstom T&D India (down 1.93%), Punj Lloyd (down 1.63%), Thermax (down 1.49%), Siemens (down 1.46%), Havells India (down 0.94%), ALSTOM India (down 0.88%), AIA Engineering (down 0.32%) and Lakshmi Machine Works (down 0.26%), edged lower. SKF India was up 0.09%.
Drug maker Aurobindo Pharma was down 0.17% to Rs 751.85 after the company announced that it has received final approval from the US Food & Drug Administration to manufacture and market Polymyxin B for Injection USP, 5 lakh units/vial. The announcement was made during market hours today, 5 April 2016.
Aurobindo Pharma said that the product is expected to be launched in Q2 September 2016. The approved abbreviated new drug application (ANDA) is bioequivalent and therapeutically equivalent to the reference listed drug product (RLD) Polymyxin B for Injection USP, 5 lakh units/vial of Eurohealth International Sarl. Polymyxin B for Injection is an anti-infective used in the treatment of infections of the urinary tract, meninges, bloodstream and eye caused by susceptible strains of Pseudomonas aeruginosa. The approved product has an estimated market size of $7.6 million in the United States for the twelve months ended February 2016 according to IMS.
On the macro front, the RBI announced reduction in repo rate by 25 basis points (bps) to 6.5% from 6.75% after a scheduled monetary policy review today, 5 April 2016. With a view to ensuring finer alignment of the weighted average call rate (WACR) with the repo rate, the central bank raised the reverse repo rate by 25 basis points to 6% and cut the marginal standing facility (MSF) rate by 75 basis points to 7%. The central bank reduced the minimum daily maintenance of the cash reserve ratio (CRR) to 90% from 95% with effect from the fortnight beginning 16 April 2016 even as it kept the CRR unchanged at 4% of net demand and time liabilities (NDTL). The RBI said it would continue to provide liquidity to the banking system as required. The RBI will progressively lower the average ex ante liquidity deficit in the system from one per cent of NDTL to a position closer to neutrality.
RBI expects inflation based on the consumer price index (CPI) to decelerate modestly and remain around 5% during 2016-17 with small inter-quarter variations. According to the central bank, a normal southwest monsoon in 2016 would work as a favourable supply shock. The central bank expects inflation to trend towards the 5% target in March 2017 under reasonable assumptions.
The uneven recovery in India's economic growth in 2015-16 is likely to strengthen gradually in 2016-17 assuming a normal monsoon, the likely boost to consumption demand from the implementation of the 7th Pay Commission recommendations, the effects of the one-rank-one-pension (OROP) award and continuing monetary policy accommodation. The RBI has pegged GVA growth projection for 2016-17 at 7.6%. While retaining the accommodative stance of the monetary policy, RBI Governor Raghuram Rajan indicated in his monetary policy that the RBI may cut the repo rate further in the coming months if macroeconomic and financial developments provide room for further rate cut.
Meanwhile, the central bank announced fine-tuning the liquidity management framework, measures for strengthening the banking structure and measures for broadening and deepening financial markets. The central bank has decided to launch futures on the money market rate. In order to broaden participation in OTC derivatives and to provide a safe trading environment, it is proposed to put in place a policy framework for authorisation of electronic platforms with linkage to an approved central counterparty for settlement. The framework will also cover forex platforms to facilitate hedging by small and retail customers. The RBI has decided to allow NRIs to participate in the Exchange Traded Currency Derivatives (ETCD), subject to limits and other conditions that are stipulated by the exchanges recognised by the Securities and Exchange Board of India (Sebi).
The central bank has decided to undertake a comprehensive review of collateralised money market segments, including introduction of tripartite repo, in consultation with market participants. The central bank has also decided to undertake a comprehensive review of exiting guidelines with the objective of strengthening disclosure requirements by issuers of Commercial Paper (CP) in the light of a spurt in the issuance of CP.
Powered by Capital Market - Live News
