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, fell 127.97 points or 0.51% to settle at 25,101.73. The Nifty 50 index fell 40.45 points or 0.52% to settle at 7,706.55. 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. With third straight day of losses, the Sensex and the Nifty, both, hit their lowest closing levels in more than three weeks.
The broad market depicted weakness. More than two stocks dropped for each stock that rose on BSE. 1,784 shares declined and 784 shares rose. A total of 119 shares were unchanged. Quite a few stocks forming part of the broad based BSE Small-Cap index registered losses exceeding 3%. 602 stocks constituting 78.69% of a total of 765 stocks forming part of the BSE Small-Cap index registered losses. The BSE Small-Cap index fell 0.98%. The BSE Mid-Cap index fell 1.22%. The losses for both these indices were higher than the Sensex's decline in percentage terms.
Metal and mining stocks edged lower in the wake of weaker-than-expected Chinese manufacturing data for April 2016. Shares of oil exploration and production (E&P) firms declined on lower crude oil prices. Index heavyweight and cigarette major ITC edged lower 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. Index heavyweight and housing finance major HDFC edged higher, with the stock extending post-result gains. Yes Bank dropped after the private sector bank announced reduction in lending rate by 10 basis points across tenors.
Adani Ports and Special Economic Zone (APSEZ) fell 11.98% in a single trading session 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. Tata Motors tumbled after the company revised downward the rate of growth in sales volume for April 2016 from the figures announced previously.
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.
The Sensex fell 127.97 points or 0.51% to settle at 25,101.73, its lowest closing level since 11 April 2016. The index lost 168.66 points or 0.66% at the day's low of 25,061.04. The index rose 16 points or 0.06% at the day's high of 25,245.70.
The Nifty 50 index fell 40.45 points or 0.52% to settle at 7,706.55, its lowest closing level since 11 April 2016. The index lost 49.75 points or 0.64% at the day's low of 7,697.25. The index rose 2 points or 0.02% at the day's high of 7,749.
Total turnover on BSE amounted to Rs 2478 crore, lower than turnover of Rs 2736.89 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Metal index (down 3.49%), the S&P BSE Industrials index (down 2.8%), the S&P BSE Realty index (down 2.29%), the S&P BSE Basic Materials index (down 2.08%), the S&P BSE Auto index (down 2.05%), the S&P BSE Telecom index (down 1.64%), the S&P BSE Consumer Durables index (down 1.33%), the S&P BSE Power index (down 1.27%), the S&P BSE Oil & Gas index (down 1.01%), the S&P BSE FMCG index (down 1%), the S&P BSE Capital Goods index (down 0.94%), the S&P BSE Bankex (down 0.86%), the S&P BSE Utilities index (down 0.79%), the S&P BSE Consumer Discretionary Goods & Services index (down 0.72%) and the S&P BSE Energy index (down 0.56%), underperformed the Sensex. The S&P BSE Finance index (down 0.23%), the S&P BSE Teck index (down 0.2%), the S&P BSE Healthcare index (down 0.02%) and the S&P BSE IT index (up 0.23%), outperformed the Sensex.
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 112 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.
Sun Pharmaceutical Industries (Sun Pharma) fell 0.55% at Rs 802.75. The company during market hours today, 4 May 2016, announced that the company has signed an agreement with International Centre for Genetic Engineering and Biotechnology (ICGEB) to develop a novel botanical drug for treatment of dengue. Through this agreement, Sun Pharma commits development of Cissampelos pariera (Cipa), a botanical drug in collaboration with ICGEB. Through this agreement, Sun Pharma will follow up on earlier pre-clinical collaboration between ICGEB and erstwhile Ranbaxy Laboratories. Sun Pharma will develop Cipa, a botanical drug following a drug registration process similar to a new chemical entity, consisting of all required in-vitro, in-vivo, pre-clinical and clinical studies meeting all regulatory standards of India and other regulatory agencies worldwide.
In a separate announcement after trading hours today, 4 May 2016, the company announced that the two pivotal phase-3 clinical trials evaluating the efficacy and safety of the investigational IL-23p19 inhibitor antibody tildrakizumab (MK-3222) in patients with moderate-to-severe plaque psoriasis met their primary endpoints for both evaluated doses. The overall safety profile of tildrakizumab in both phase-3 clinical trials was consistent with the safety data observed in previously reported studies, the company said. The preparations for submission of a Biologics License Application to the US Food and Drug Administration (USFDA) are proceeding. The detailed findings from the phase-3 clinical trials will be presented at upcoming scientific meetings.
Index heavyweight and housing finance major HDFC rose 2.86% at Rs 1,131, 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 its Q4 March 2016 results during market hours on 2 May 2016.
HDFC after trading hours today, 4 May 2016, announced that it intends to raise Rs 1135 crore through private placement of senior secured redeemable non-convertible debentures. HDFC said that the coupon rate of debentures is 8.34% per annum with a tenor of 2 years and 10 months. The issue opens and closes on the same day on 6 May 2016. The object of the issue is to augment the long-term resources of the company.
Stocks of public sector banks declined. Andhra Bank (down 5.21%), Union Bank of India (down 5.19%), Allahabad Bank (down 5.05%), UCO Bank (down 4.94%), Canara Bank (down 3.59%), Corporation Bank (down 2.92%), Syndicate Bank (down 2.78%), Bank of Baroda (down 2.75%), Bank of India (down 2.45%), State Bank of India (down 2.23%), Punjab National Bank (down 1.93%), Punjab and Sind Bank (down 1.82%), IDBI Bank (down 1.62%), United Bank of India (down 1.55%), Dena Bank (down 1.36%), Indian Bank (down 1.09%), Bank of Maharashtra (down 0.68%) and Central Bank of India (down 0.55%) edged lower. Vijaya Bank rose 0.32%.
Stocks of private sector banks were mixed. Federal Bank (up 4.05%), HDFC Bank (up 0.89%), City Union Bank (up 0.84%), Kotak Mahindra Bank (up 0.49%), edged higher. IndusInd Bank (down 0.35%), Axis Bank (down 1.59%) and ICICI Bank (down 2.98%), edged lower
Yes Bank fell 1.53% at Rs 917.70 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 5.43%), Oil India (down 2.82%) and ONGC (down 2.18%) edged lower. Lower crude oil prices will result in lower realization from crude sales for oil exploration firms.
Index heavyweight Reliance Industries (RIL) rose 0.15% at Rs 977.50. 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 1.67%), BPCL (down 1.10%) and HPCL (up 1.07%) edged lower.
In the global commodities markets, Brent for July settlement was currently up 10 cents at $45.07 a barrel. The contract had declined 86 cents or 1.87% to settle at $44.97 a barrel during the previous trading session on renewed fears of an oil supply glut.
Metal and mining stocks edged lower in the wake of weaker-than-expected Chinese manufacturing data for April 2016. Steel Authority of India (down 8.46%), National Aluminium Company (down 7.36%), Hindalco Industries (down 5.83%), Vedanta (down 4.95%), NMDC (down 4.06%), Hindustan Zinc (down 3.36%), JSW Steel (down 2.73%), Bhushan Steel (down 2.28%) and Hindustan Copper (down 2.12%), 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 1.24% at $2.1915 per pound on the COMEX.
Tata Steel slumped 5.60% at Rs 328.95. 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) fell 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 fell 1.29% to Rs 312.80 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 6.76% at Rs 381.80 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 11.98% at Rs 207.65 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.
The Sensex and the Nifty edged lower for the third straight trading session. The Sensex has fallen 504.89 points or 1.97% in three trading sessions from its close of 25,606.62 on 29 April 2016. The Sensex has fallen 1,010.81 points or 3.87% in calendar year 2016 so far (till 4 May 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 2,610.12 points or 11.60%. The Sensex is off 3,474.60 points or 12.16% from a 52-week high of 28578.33 hit on 23 July 2015. The Sensex is off 4,922.01 points or 16.39% from a record high of 30,024.74 hit on 4 March 2015.
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