Key benchmark indices drifted lower in mid-afternoon trade as European stocks reversed initial gains. At 14:16 IST, the barometer index, the S&P BSE Sensex, was down 84.51 points or 0.33% at 25,145.19. The decline for the Nifty 50 index was higher than the Sensex's fall in percentage terms. The Nifty was currently down 36.45 points or 0.47% at 7,710.55. 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 Sensex hit its lowest level in more than three weeks when it lost 133.51 points or 0.52% at the day's low of 25,096.19 in mid-morning 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 43.15 points or 0.55% at the day's low of 7,703.85 in mid-morning 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. 1,615 shares declined and 791 shares rose. A total of 106 shares were unchanged. The BSE Mid-Cap index was currently down 0.83%. The BSE Small-Cap index was currently down 0.61%. The losses for both these indices were higher than the Sensex's decline in percentage terms.
In overseas stock markets, European stocks reversed initial gains on concerns about global economic slowdown. 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.
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.
Stocks of public sector banks declined. Indian Overseas Bank (down 2.11%), Union Bank of India (down 3.26%), Indian Bank (down 1.19%), State Bank of India (down 1.74%), Canara Bank (down 2.09%), Bank of Baroda (down 1.37%), IDBI Bank (down 0.37%), Punjab National Bank (down 0.54%), Corporation Bank (down 0.53%) and Bank of India (down 0.68%) edged lower.
Stocks of private sector banks were mixed. ICICI Bank (down 1.74%) and Axis Bank (down 1.58%) edged lower. HDFC Bank (up 1.03%) and Kotak Mahindra Bank (up 1.13%) edged higher. IndusInd Bank was unchanged at Rs 1,038.70.
Yes Bank fell 1.29% at Rs 920 after the private sector bank announced reduction in lending rate by 10 basis points across tenors with effect from 1 May 2016. The bank's marginal cost of funds based lending rate (MCLR) for one-year loans now stands at 9.5%. All rupee loans sanctioned and credit limits renewed with effect from 1 April 2016 are priced with reference to MCLR, which is the internal benchmark of the concerned bank. Actual lending rates are determined by adding the components of spread to the MCLR.
Shares of oil exploration and production (E&P) firms declined on lower crude oil prices. Cairn India (down 4.75%), Oil India (down 2.05%) and ONGC (down 1.28%) edged lower. Lower crude oil prices will result in lower realization from crude sales for oil exploration firms.
Index heavyweight Reliance Industries (RIL) was up 0.2% at Rs 978. The stock hit a high of Rs 983.65 and a low of Rs 974.25 so far during the day.
Shares of public sector oil marketing companies also edged lower. Indian Oil Corporation (down 2.07%) and BPCL (down 0.05%) edged lower. HPCL (up 0.01%) edged higher.
In the global commodities markets, Brent for July settlement was currently down 2 cents at $44.95 a barrel. The contract had declined 86 cents or 1.87% to settle at $44.97 a barrel during the previous trading session.
Index heavyweight and housing finance major HDFC rose 3% at Rs 1,132.45, with the stock extending post-result gains. HDFC's net profit rose 39.98% to Rs 2607.05 crore on 23.72% growth in total income to Rs 9225.72 crore in Q4 March 2016 over Q4 March 2015. The surge in net profit was due to profit on sale of a part of its stake in the life insurance joint venture to the company's joint venture partner Standard Life. The company announced Q4 March 2016 results during market hours on 2 May 2016.
Tata Motors declined 5.87% at Rs 385.45 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.
Alstom T&D India dropped 5.13% at Rs 358.75 after net profit fell 44.72% to Rs 29.87 crore on 28.53% decrease in total income to Rs 977.93 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours yesterday, 3 May 2016.
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.
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