Stocks of metal and mining companies, oil sector firms and public sector companies led losses for key benchmark indices. The barometer index, the S&P BSE Sensex, lost 334.79 points or 1.35% at 24,490.04, as per the provisional closing data. The 50-unit Nifty 50 index lost 100.40 points or 1.33% at 7,455.55, as per the provisional closing data. After seeing high volatility in mid-morning trade in the aftermath of the Reserve Bank of India's (RBI) decision to keep its benchmark interest rate unchanged after a monetary policy review, the Sensex and the Nifty moved decisively lower later on weakness in European stocks and losses for US index futures. The two key benchmark indices extended losses in late trade. World stocks fell as fresh losses for oil weighed on sentiment.
The Sensex lost 364.30 points or 1.46% at the day's low of 24,460.53 in late trade, its lowest level since 29 January 2016. The index rose 103.92 points or 0.41% at the day's high of 24,928.75 in early afternoon trade. The Nifty lost 127.90 points or 1.69% at the day's low of 7,428.05 in late trade, its lowest level since 29 January 2016. The index rose 20.35 points or 0.26% at the day's high of 7,576.30 in early afternoon trade.
The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,842 shares fell and 858 shares rose. A total of 108 shares were unchanged. The BSE Mid-Cap index was provisionally down 1.74%. The BSE Small-Cap index was provisionally down 1.25%. The losses for both these indices were higher in percentage terms than those for the Sensex.
The total turnover on BSE amounted to Rs 2888 crore, higher than turnover of Rs 2603.85 crore registered during the previous trading session.
In overseas stock markets, European stocks edged lower as oil prices resumed their downward trend and as concerns over global economic growth persisted. Trading in US stock index futures pointed to losses for US stocks at the opening bell. Trading in US index futures indicated that the Dow Jones Industrial Average could slide 150.50 points at the opening bell today, 2 February 2016.
Asian equities edged lower on fresh weakness in oil prices. But Chinese stocks edged higher after the country's central bank injected more liquidity into the financial system, in a move to stave off potential liquidity squeezes ahead of the weeklong Lunar New Year holiday that starts on 7 February 2016. The Shanghai Composite index settled 2.26% higher.
Bank stocks edged lower after the RBI kept the repo rate and the cash reserve ratio (CRR) unchanged after the latest policy review. Among public sector banks, State Bank of India (down 2.28%), Bank of Baroda (down 0.86%), Punjab National Bank (down 1%), Indian Bank (down 1.85%), Canara Bank (down 0.99%) and Bank of India (down 1.38%) declined. IDBI Bank (up 1.2%) edged higher.
Among private sector banks, ICICI Bank (down 2.95%), Axis Bank (down 2.03%), IndusInd Bank (down 1.91%), Kotak Mahindra Bank (down 2.14%), Yes Bank (down 1.06%) and HDFC Bank (down 0.73%) edged lower.
Steel stocks led decline in metal and mining stocks. Tata Steel (down 7.6%), Jindal Steel & Power (down 5.72%), Steel Authority of India (down 7.61%) and JSW Steel (down 4.43%) edged lower. Among other metal stocks, Hindalco Industries (down 3.8%), Hindustan Zinc (down 2.96%) and National Aluminium Company (down 1.44%) declined.
Stocks of iron ore makers edged lower. Vedanta (down 8.38%) and NMDC (down 1.18%) declined. According to reports, the mines ministry has written to the finance ministry to withdraw 10% export duty on low-quality iron ore from Goa to help boost sales amid a sharp fall in prices. Goa is known for low-grade ore used mainly by Chinese steel mills.
Index heavyweight and housing finance major HDFC fell 0.36% at Rs 1,175.25. The stock hit a high of Rs 1,192.85 and a low of Rs 1,166.50 in intraday trade. HDFC announced during market hours today, 2 February 2016, that it intends to raise Rs 510 crore through private placement of senior secured redeemable non-convertible debentures. The debentures have a tenor of 3 years 131 days with a coupon rate of 8.59% per annum. The issue opens and closes on the same day tomorrow, 3 February 2016.
Tech Mahindra dropped after announcing Q3 results. The stock lost 4.68% at Rs 475.45 . Tech Mahindra's consolidated net profit fell 3.4% to Rs 759 crore on 1.3% increase in revenue to Rs 6701 crore in Q3 December 2015 over Q2 September 2015. The sequential decline in bottom line was due to a sharp fall in non-operational income or the so called other income. The other income dropped 61.43% to Rs 63.94 crore in Q3 December 2015 over Q2 September 2015. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 3.2% to Rs 1136 crore in Q3 December 2015 over Q2 September 2015. The EBITDA margin edged higher to 16.95% in Q3 December 2015 from 16.64% in Q2 September 2015. The result was announced after market hours yesterday, 1 February 2016.
In US dollar terms, Tech Mahindra's net profit fell 3.7% to $115 million on 0.4% growth in revenue at $1015 million in Q3 December 2015 over Q2 September 2015. EBITDA rose 2.5% at $172 million in Q3 December 2015 over Q2 September 2015. The EBITDA margin stood at 16.9% in Q3 December 2015, an increase of 30 basis points on sequential basis. In constant currency terms, Tech Mahindra's revenue rose 1.2% on sequential basis in Q3 December 2015.
Lupin rose 0.71% at Rs 1,713.45 after the company announced that its US subsidiary Lupin Pharmaceuticals Inc. has launched its Metformin HCI ER Tablets, 500 mg and 1000 mg to market a generic equivalent of Santarus Inc.'s Glumetza HCI ER Tablets, 500 mg and 1000 mg. Lupin is eligible for 180 days of generic drug exclusivity for its Metformin HCI ER Tablets, 500 mg and 1000 mg. Glumetza HCI ER Tablets had annual sales of $450.4 million in the US as per IMS MAT Septemer 2015 data. The announcement was made during market hours today, 2 February 2016.
Metformin HCI ER Tablets, 500 mg and 1000 mg are indicated as an adjunct to diet and exercise to improve glycemic control in adults with type II diabetes mellitus.
Meanwhile, the Reserve Bank of India kept its benchmark interest rate viz. the repo rate unchanged at 6.75% after a scheduled monetary policy review today, 2 February 2016. The RBI kept the cash reserve ratio (CRR) unchanged at 4% of net demand and time liability (NDTL). While retaining accommodative stance of the monetary policy, RBI Governor Raghuram Rajan said in a statement that structural reforms in the Union Budget 2016-17 that boost growth while controlling spending will create more space for monetary policy to support growth. With unfavourable base effects on the ebb and benign prices of fruits and vegetables and crude oil, the January 2016 consumer price inflation target of 6% should be met, the RBI said. Consumer price inflation stood at 5.61% in December 2015.
Going forward, under the assumption of a normal monsoon and the current level of international crude oil prices and exchange rates, inflation is expected to be inertial and be around 5% by the end of fiscal 2016-17, RBI said. However, the implementation of the VII Central Pay Commission award, which has not been factored into these projections, will impart upward momentum to this trajectory for a period of one to two years, the RBI said.
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