A strong intraday rebound witnessed in mid-morning trade proved short lived. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty once again slipped into the red from green after reversing intraday losses in mid-morning trade. The Sensex was currently trading above the psychological 28,000 level. Earlier, the Sensex had regained the the psychological 28,000 level after falling below that mark in mid-morning trade. High volatility on the domestic bourses materialized after the Reserve Bank of India (RBI) kept its benchmark lending rate viz. the repo rate unchanged at 7.25% after a monetary policy review. The RBI 's monetary policy statement was announced at 11:00 IST. The market breadth indicating the overall health of the market was positive. The Sensex was currently off 115.99 points or 0.41% at 28,071.07.
Shares of oil exploration and production (E&P) companies fell after crude oil prices dropped sharply yesterday, 3 August 2015. Metal and mining stocks declined. Shares of biscuits major Britannia Industries rose after declaring good Q1 result.
Earlier, the Sensex and the 50-unit CNX Nifty, both, reversed direction after hitting 1-1/2-week high at the onset of the trading session.
In overseas markets, Asian stocks were mixed. US stocks edged lower yesterday, 3 August 2015, after weak economic data and a further slump in crude-oil prices.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 350.41 crore yesterday, 3 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 33.36 crore yesterday, 3 August 2015, as per provisional data released by the stock exchanges.
At 12:16 IST, the S&P BSE Sensex was down 115.99 points or 0.41% at 28,071.07. The index fell 223.35 points at the day's low of 27,963.71 in mid-morning trade, its lowest level since 31 July 2015. The index gained 77.66 points at the day's high of 28,264.72 at the onset of the trading session, its highest level since 24 July 2015.
The CNX Nifty was down 31.90 points or 0.37% at 8,511.15. The index hit a low of 8,486.05 in intraday trade, its lowest level since 31 July 2015. The index hit a high of 8,565.15 in intraday trade, its highest level since 24 July 2015.
The market breadth indicating the overall health of the market was positive. On BSE, 1,386 shares gained and 1,181 shares fell. A total of 114 shares were unchanged.
The BSE Mid-Cap index was up 51.45 points or 0.45% at 11,382.36. The BSE Small-Cap index was up 36.98 points or 0.31% at 11,978.18. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 2364 crore by 12:15 IST compared with turnover of Rs 1608 crore by 11:15 IST.
Shares of oil exploration and production (E&P) companies fell after crude oil prices dropped sharply yesterday, 3 August 2015. Cairn India (down 2.25%), ONGC (down 1.77%), Oil India (down 0.42%) and Reliance Industries (RIL) (down 0.81%) declined. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms.
Metal and mining stocks declined. Vedanta (down 0.71%), JSW Steel (down 0.66%), Tata Steel (down 0.06%), Hindustan Zinc (down 1.96%), Jindal Steel & Power (down 0.53%), NMDC (down 0.39%), Hindustan Copper (down 0.08%) edged lower. Steel Authority of India (Sail) (up 0.59%), National Aluminium Company (up 1.57%), Hindalco Industries (up 0.95%) rose.
Shares of biscuits major Britannia Industries rose 1.11% after consolidated net profit jumped 66.9% to Rs 190 crore on 13% growth in revenue to Rs 2003 crore in Q1 June 2015 over Q1 June 2014. The Q1 result was announced during market hours today, 4 August 2015.
Meanwhile, the Reserve Bank of India (RBI) kept its benchmark lending rate viz. the repo rate unchanged at 7.25% after a monetary policy review. The RBI also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liability (NDTL). RBI Governor Dr. Raghuram G. Rajan said that the RBI has retained the accommodative stance of monetary policy. As the RBI awaits greater transmission of its front-loaded repo rate cuts since January 2015, it will monitor developments for emerging room for more accommodation, Rajan said in the monetary policy statement. While the RBI has cut repo rate by 75 basis points since January 2015, the median base lending rates of banks has fallen by only around 30 basis points so far.
The RBI is concerned about the sustained hardening of inflation excluding food and fuel. Rajan said that risks to inflation are broadly balanced around the target of 6% for January 2016, according to the central bank. The RBI said that the full effects of the service tax increase, which took effect from June, will feed through over the rest of the year. Rajan said that RBI will keep a close watch on the movement of food prices. Some food prices, particularly of protein-rich items, pulses and oilseeds have risen sharply in recent months. This assumes significance in view of households' inflation expectations rising again. Several factors, however, could have a significant mitigating influence on inflation. These include the sharp fall in crude prices since June and the increase in planting of pulses and oilseeds and prospects of rainfall in August and September according to some forecasters. The RBI also appreciated the government's current pro-active supply management to contain shocks to food prices, especially of vegetables and its decision to keep increases in minimum support prices moderate.
The RBI has retained the projected GDP growth forecast unchanged at 7.6% for 2015-16. The RBI said that the outlook for growth is improving gradually. Favourable real income effects could accrue from weaker commodity prices, in particular crude oil, and a possible step-up in agricultural activity if monsoon conditions continue to improve, the RBI said. On the other hand, global growth projections for 2015 have generally been revised downwards and, therefore, the export contraction could become a prolonged drag on growth going forward. Notwithstanding some improvement in the state of stalled projects, supply constraints continue to be binding and new investment demand emanating from the private sector and the central government remains subdued.
Meanwhile, India's weather office, the India Meteorological Department (IMD), after trading hours yesterday, 3 August 2015, announced that the rainfall over the country as a whole during second half of southwest monsoon season (August to September) is likely to be below normal with a probability of 86%. Quantitatively, the rainfall over the country as a whole during the second half of the season (August to September) is likely to be 84% of long period average (LPA), with a model error of plus/minus 8%. From April to July 2015, El Nino conditions have strengthened from weak to moderate level. Latest forecast from ESSO-IMD-IITM coupled model indicates 72% probability of El Nino conditions to become strong during remaining part of the monsoon season. Over the Indian Ocean, there is 86% probability of current neutral Indian Ocean Dipole conditions to continue during the monsoon season.
The rainfall during August 2015 is likely to be 90% of LPA, with a model error of plus/minus 9% as was forecasted in June. The season rainfall (June to September) over the country as a whole is likely to be deficient. The season rainfall (June to September) over the country as a whole is likely to be 88% of LPA with a model error of plus/minus 4% as was forecasted in June, the IMD said.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
The India Meteorological Department said in a daily report issued yesterday, 3 August 2015, that the Southwest Monsoon was active over Arunachal Pradesh, Odisha, Jharkhand and Chhattisgarh during past 24 hours until 8:30 IST. For the country as a whole, cumulative rainfall during this year's monsoon season was 6% below the Long Period Average (LPA) until 3 August 2015. Region wise, the rainfall was 22% below the LPA in South Peninsula, 8% below the LPA in East & Northeast India, 7% below the LPA in Central India and 8% above the LPA in Northwest India until 3 August 2015.
Meanwhile, in the global commodities markets, Brent crude oil futures edged higher after a sharp slide overnight. Brent for September settlement was currently up 12 cents at $49.64 a barrel. The contract had dropped $2.69 a barrel or 5.15% to settle at $49.52 a barrel during the previous trading session.
India imports about 80% of its crude requirements and a decline in crude eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure
Asian stocks were mixed today, 4 August 2015. Key benchmark indices in Japan, Singapore, Indonesia and South Korea fell by 0.14% to 0.2%. In Taiwan, the Taiwan Weighted index was up 0.97%.
In mainland China, the Shanghai Composite rose 2.47%. In Hong Kong, the Hang Seng index rose 0.13%.
US markets dropped yesterday, 3 August 2015, following weak economic data and a further slump in crude-oil prices. In US economic news, the Commerce Department yesterday, 3 August 2015 said personal spending by US consumers rose 0.2% in June, while personal income grew by 0.4%. Another data showed that the Institute for Supply Management's index of national factory activity slipped to 52.7 in July, falling short of reading of 53.5 in June.
The influential monthly US nonfarm payroll report for July 2015 is due on Friday, 7 August 2015.
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