A range bound movement was witnessed as key benchmark indices hovered in positive zone in mid-morning trade. At 11:17 IST, the barometer index, the S&P BSE Sensex, was up 70.63 points or 0.27% at 26,696.54. The Nifty 50 index was currently up 15.90 points or 0.19% at 8,186.10. Gains in global stocks aided the upmove on the domestic bourses.
In overseas stock markets, Asian stocks witnessed a mixed trend. Japanese stocks edged higher as the yen weakened against the dollar amid rising expectations of Britain voting to remain in the European Union (EU) lifted risk sentiment. The Nikkei 225 Average was currently up 2.44%. Three British opinion polls ahead of the EU membership referendum on 23 June 2016 showed the 'remain' camp recovering some momentum, although the overall picture remained one of an evenly split electorate.
Trading in US index futures indicated a surge in US stocks at the opening bell. Trading in US index futures indicated that the Dow Jones Industrial Average could jump 170 points at the opening bell today, 20 June 2016. US stocks fell during the previous trading session on Friday, 17 June 2016, as investors continued to fret over the possibility that the UK may leave the EU.
The UK government holds a referendum on Thursday, 23 June 2016, on whether the country should remain a member of the European Union (EU). The Organization for Economic Cooperation and Development (OECD) has warned that Britain's leaving the EU -- the so-called Brexit -- could send shocks through global financial markets. The OECD said on 1 June 2016 that a United Kingdom vote to leave the EU would trigger negative economic effects on the UK, other European countries and the rest of the world. Brexit would lead to economic uncertainty and hinder trade growth, with global effects being even stronger if the British withdrawal from the EU triggers volatility in financial markets, the OECD said. By 2030, post-Brexit UK GDP could be over 5% lower than if the country remained in the European Union, the OECD said.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,136 shares rose and 1,001 shares fell. A total of 138 shares were unchanged. The BSE Mid-Cap index was currently down 0.02%. The BSE Small-Cap index was currently up 0.15%. Both these indices underperformed the Sensex.
Metal shares were mixed. Tata Steel (up 1.32%), Vedanta (up 1.31%), Hindalco Industries (up 1.10%), National Aluminium Company (up 0.36%) and JSW Steel (up 0.29%) edged higher. Steel Authority of India (down 0.11%), Hindustan Zinc (down 0.2%), Hindustan Copper (down 0.47%), Jindal Steel & Power (down 0.53%), NMDC (down 0.59%) and Bhushan Steel (down 0.63%), edged lower.
Meanwhile, copper price edged higher in the global commodities markets. High Grade Copper for July 2016 delivery was currently up 0.98% at $2.071 per pound on the COMEX.
Most pharmaceutical shares edged lower. Piramal Enterprises (down 1.69%), Lupin (down 0.99%), Strides Shasun (down 0.64%), IPCA Laboratories (down 0.63%), Wockhardt (down 0.58%), Divi's Laboratories (down 0.53%), Aurobindo Pharma (down 0.5%), Sun Pharmaceutical Industries (down 0.5%), Alkem Laboratories (down 0.45%) and GlaxoSmithKline Pharmaceuticals (down 0.31%), edged lower. Cipla (up 0.09%), Glenmark Pharmaceuticals (up 0.51%), Dr Reddy's Laboratories (up 0.77%) and Cadila Healthcare (up 1.37%), edged higher.
Tata Chemicals shed 0.91% after the company said it has decided to temporarily suspended production of complex fertilisers, including Di-ammonium Phosphate (DAP) at its at Haldia, West Bengal unit due to emerging market conditions. The company has decided to supply DAP to its customers from inventory in hand and imports with effect from 19 June 2016. The company will notify as and when production of DAP resumes. The announcement was made after market hours on Friday, 17 June 2016.
Gammon India was locked at 20% upper circuit at Rs 14.89 after the company reported net profit of Rs 53.38 crore in the quarter ended 31 March 2016 compared with net loss of Rs 73.53 crore in the quarter ended 31 March 2015. Nt sales rose 9.4% to Rs 1115.08 crore in the quarter ended 31 March 2016 over the quarter ended 31 March 2015. The result was announced on Saturday, 18 June 2016.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan surprised financial markets by announcing over the weekend that he will not seek a second term as the RBI chief and will be returning to academia when his term as RBI Governor ends on 4 September 2016. While announcing his decision in a letter to the RBI staff on Saturday, 18 June 2016, not to seek a second term as RBI Governor, Rajan said he has accomplished all of what was laid out on the first day of his term as agenda for action. He, however, added that two subsequent developments are yet to be completed. Inflation is in the target zone, but the monetary policy committee that will set policy has yet to be formed. Moreover, the bank clean up initiated under the Asset Quality Review, having already brought more credibility to bank balance sheets, is still ongoing. International developments also pose some risks in the short term. Rajan, however, added in his statement that India's financial markets are prepared to ride out imminent sources of market volatility like the threat of Brexit. Brexit refers to the referendum on 23 June 2016 by British voters to decide whether the country should remain a member of the European Union or leave it.
Rajan also said that India has made adequate preparations for the repayment of Foreign Currency Non-Resident (B) deposits and their outflow, managed properly, should largely be a non-event.
Rajan has been credited with stabilizing the rupee against the dollar, bringing down inflation and cleaning the bad-loan mess in the Indian banking system.
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