A bout of volatility was witnessed as key benchmark indices trimmed gains after extending intraday gains in mid-afternoon trade. At 14:18 IST, the barometer index, the S&P BSE Sensex, was up 72.88 points or 0.29% at 25,304.01. The gains for the Nifty 50 index were lower than those for the Sensex in percentage terms. The Nifty was currently up 16.20 points or 0.21% at 7,747.25. Gains in European stocks aided the upmove on the domestic bourses.
The Sensex rose 106.08 points, or 0.42% at the day's high of 25,336.44 in mid-afternoon trade. The index fell 48.89 points, or 0.19% at the day's low of 25,181.47 in early trade, its lowest level since 6 May 2016. The Nifty rose 25.85 points, or 0.33% at the day's high of 7,756.90 in mid-afternoon trade. The index shed 15.25 points, or 0.19% at the day's low of 7,715.80 in early trade, its lowest level since 6 May 2016.
The broad market depicted weakness. There were almost two losers against every gainer on BSE. 1,562 hares fell and 746 shares rose. A total of 168 shares were unchanged. The BSE Mid-Cap index was currently down 0.65%. The BSE Small-Cap index was currently down 0.66%. Both these indices underperformed the Sensex.
In overseas stock markets, European stocks reversed initial losses after the Federal Statistical Office in Germany said German economic growth accelerated at the start of the year helped by robust domestic demand. Confirming its earlier assessment of Europe's largest economy, Destatis said that Germany's gross domestic product grew at a quarterly rate of 0.7% in the first three months of the year, which translated into an annualized rate of 2.7%. Growth in the quarter was more than double the rate of 0.3% recorded in the fourth quarter of 2015.
Asian stocks dropped as speculation mounted that the US Federal Reserve will raise interest rates as early as next month. Investors in emerging markets are worried that higher interest rates in the US will drain liquidity from emerging markets and redirect it to developed economies.
US stocks finished lower yesterday, 23 May 2016, as the prospect that interest rates might rise as soon as next month weighed on utilities shares. Philadelphia Fed President Patrick Harker said yesterday, 23 May 2016, that he could see two to three rate hikes in calendar year 2016 and that if the US economy shows sufficient strength, a June increase would be appropriate. St. Louis Fed President James Bullard said holding rates too low for too long could cause financial instability. San Francisco Fed President John Williams said on Sunday, 22 May 2016, that the presidential election in the US this year wouldn't prevent the central bank from raising interest rates and that a hike in interest rate in June remains likely.
The minutes from the US Federal Reserve's April policy meeting released last week showed that Fed policy setters discussed the possibility of a June rate increase if the economy continued to strengthen. The Federal Open Market Committee next undertakes monetary policy review on 14-15 June 2016. The US central bank had lifted rates in December 2015 for the first time in nearly a decade.
Pharma stocks declined. Glenmark Pharmaceuticals (down 0.01%), Aurobindo Pharma (down 1.48%), Dr Reddy's Laboratories (down 0.19%), Cadila Healthcare (down 1.95%), Lupin (down 0.18%), Divi's Laboratories (down 1.57%) and Sun Pharmaceutical Industries (down 1.06%) declined.
Cipla rose 0.45% ahead of its Q4 results today, 24 May 2016.
Novartis India surged 17.21% after the company said that its board of directors will also consider a proposal for buyback of the company's equity shares along with the Q4 March 2016 result on 26 May 2016. The announcement was made after market hours yesterday, 23 May 2016.
Airline stocks declined as a weak rupee heightened concerns about its impact on operating costs. SpiceJet (down 5.16%), Jet Airways (down 3.31%) and InterGlobe Aviation (down 0.34%) declined. A weak rupee impacts aviation sector adversely as almost a third of operational expenses of aviation firms are denominated in dollars. Among the payments made in dollars, include rentals of leased aircraft, maintenance, spare parts and salary paid out to foreign crew.
In the foreign exchange market, the partially convertible rupee was currently hovering at 67.725, compared with its close of 67.4925 during the previous trading session.
Goodricke Group lost 3.98% after the company reported net loss of Rs 63.20 crore in the quarter ended 31 March 2016, higher than net loss of Rs 23.91 crore in the quarter ended 31 March 2015. Net sales fell 4.4% to Rs 81.11 crore in the quarter ended 31 March 2016 over the quarter ended 31 March 2015. The result was announced after market hours yesterday, 23 May 2016.
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