A bout of volatility was witnessed in afternoon trade as key benchmark indices further extended recovery from the lower level. At 13:18 IST, the barometer index, the S&P BSE Sensex, was down 63.06 points or 0.23% at 27,879.05. The losses for the Nifty 50 index were lower in percentage terms than those for the Sensex. The Nifty was currently down 10.85 points or 0.13% at 8,554.15. Key indices dropped today, 15 July 2016 as a post result setback in index heavyweight and IT major Infosys weighed on the bourses. Infosys tumbled after the company reduced revenue growth guidance in constant currency terms at the time of announcing its Q1 June 2016 results during trading hours. The Sensex failed to hold the psychologically important 28,000 mark after moving past that mark in early trade.
The Sensex dropped 206.24 points or 0.74% at the day's low of 27,735.87 in early afternoon trade, its lowest level since 12 July 2016. The barometer index rose 106.59 points or 0.38% at the day's high of 28,048.70 in early trade, its highest level since 17 August 2015. The Nifty fell 54.95 points or 0.64% at the day's low of 8,510.05 in early afternoon trade. The index gained 29.80 points or 0.35% at the day's high of 8,594.80 in early trade, its highest level since 10 August 2015.
In overseas stock markets, European stocks edged lower in early trade weighed by a terror attack carried out by using a heavy truck in the southern French city of Nice that killed at least 80 people late yesterday, 14 July 2016. The Bank of England (BOE) left key rates unchanged at 0.5% after a monetary policy review yesterday, 14 July 2016. The Monetary Policy Committee (MPC) voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at 375 billion. BOE said in a statement that the MPC is committed to taking whatever action is needed to support growth and to return inflation to the target over an appropriate horizon. To that end, most members of the committee expect monetary policy to be loosened at the next MPC meeting in August. Committee members made initial assessments of the impact of UK's vote to leave the European Union on demand, supply and the exchange rate. According to the initial assessment, economic activity is likely to weaken in the near term. The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.
Asian shares rose after Wall Street struck another record high overnight. Chinese stocks eked out small gains after the release of a slew of economic reports. In mainland China, the Shanghai Composite index was currently up 0.01%. In Hong Kong, the Hang Seng index was currently up 0.56%. China's economy grew 6.7% in the second quarter from a year earlier, steady from the first quarter and slightly better than expected as the government stepped up efforts to stabilise growth in the world's second-largest economy. The National Bureau of Statistics also said today, 15 July 2016, that industrial output rose 6.2% in June from a year earlier, accelerating from 6% growth in May, while fixed-asset investment climbed 9% year on year for the January-June period, compared with an increase of 9.6% in the year's first five months. Retail sales grew 10.6% in June from a year earlier, accelerating from a 10% increase in May. The industrial-production and retail figures were better than expected while the investment figure was below expectation.
US stocks extended their run into the record books as the Dow Jones Industrial Average and the S&P 500 notched record closing highs yesterday, 14 July 2016. Stronger-than-expected results from large financial institutions, including J.P. Morgan Chase, as well as upbeat economic powered the climb.
Closer home, the market breadth indicating the overall health of the market was weak. On BSE, 1,453 shares fell and 937 shares rose. A total of 187 shares were unchanged. The BSE Mid-Cap index was currently up 0.427%, outperforming the Sensex. The BSE Small-Cap index was currently off 0.31%. The fall in this index was higher than the Sensex's decline in percentage terms.
Bharat Heavy Electricals (Bhel) dropped 0.69%. The company announced that it has successfully commissioned another 250 megawatts (MW) thermal unit based on eco-friendly circulating fluidized bed combustion (CFBC) technology, using low quality coal (lignite) as the primary fuel. The announcement was made during market hours today, 15 July 2016. The lignite based thermal unit has been commissioned at Bhavnagar district of Gujarat.
IT major and index heavyweight Infosys slumped after the company trimmed revenue growth guidance for the year ending 31 March 2017 (FY 2017) at the time of announcing its Q1 June 2016 results during trading hours. The stock was off 8.87% at Rs 1,071.60. In constant currency terms, the company has forecast 10.5%-12% growth in revenue for FY 2017. At the time of announcement of Q4 March 2016 and FY 2016 results, the company had forecast 11.5%-13.5% growth in revenue for FY 2017 in constant currency terms.
On a consolidated basis, Infosys' net profit fell 4.5% to Rs 3436 crore on 1.4% growth in revenue to Rs 16782 crore in Q1 June 2016 over Q4 March 2016. The results are as per International Financial Reporting Standards (IFRS). Infosys CEO Vishal Sikka said in a statement that the company witnessed unanticipated headwinds in discretionary spending in consulting services and package implementations as well as slower project ramp-ups in large deals, resulting in a lower than expected growth in Q1 June 2016.
Realty stocks were mixed. Sobha (up 1.26%), Oberoi Realty (up 0.22%), and DLF (up 0.51%) gained. Indiabulls Real Estate (down 1.86%), Godrej Properties (down 0.52%), Unitech (down 2.44%), and Omaxe (down 0.03%) edged lower.
The BSE Realty index had outperformed the market over the past one month till 14 July 2016, gaining 11.37% compared with 5.86% rise in the Sensex. The index had also outperformed the market in past one quarter, advancing 24.43% as against Sensex's 9.03% rise.
Shares of power generation and power distribution companies edged lower. Torrent Power (down 0.15%), GVK Power & Infrastructure (down 1.69%), NHPC (down 0.79%), Adani Power (down 0.17%), Power Grid Corporation of India (down 0.73%), Reliance Infrastructure (down 0.15%) and Reliance Power (down 0.29%) declined. Tata Power Company rose 0.28%.
NTPC lost 1.39% to Rs 156.05 on reports that the company's employees have resorted to heavy selling of shares after lock-in period post subscription to the company's shares in the offer for sale held in February this year. It may be recalled that NTPC had announced last month that the Government of India (GOI) had offered 2.06 crore shares to the eligible employees of the company at discounted price of Rs 115.90 per share i.e. 5% discount to the cut off price of Rs 122 discovered through the offer for sale (OFS) of shares of NTPC carried out by GOI on 23 February 2016 and 24 February 2016.
The BSE Power index had outperformed the market over the past one month till 14 July 2016, gaining 5.97% compared with 5.86% rise in the Sensex. The index had, however, underperformed the market in past one quarter, advancing 8.77% as against Sensex's 9.03% rise.
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