A range bound movement was witnessed as the two key benchmark indices traded near the flat line in mid-morning trade. At 11:15 IST, the barometer index, the S&P BSE Sensex, was down 16.97 points or 0.06% at 26,380.74. The Nifty 50 index was currently down 2.60 points or 0.03% at 8,086. The broad market depicted strength. There were more than three gainers against every loser on BSE. 1,593 shares rose and 516 shares declined. A total of 129 shares were unchanged. The BSE Mid-Cap index was currently up 0.74%. The broad based BSE Small-Cap index was currently up 1.29%. Both these indices outperformed the Sensex.
Meanwhile, global credit rating agency Moody's Investors Service reportedly said in a note that the Indian government's recent decision to relax foreign direct (FDI) investment rules in sectors including defence, aviation, and retail is credit positive for its Baa3 sovereign rating on India because the move demonstrates a continuation of reform momentum and paves the way for private investment and a boost in productivity. The rating agency simultaneously warned that reforms have stalled in passing a revamped goods and services tax and land acquisition rules, according to media reports. Moody's reportedly expects that political division in India will keep the reform process uneven and slow-moving. Moody's currently rates India at Baa3, the lowest investment-grade rating, with a "positive" outlook.
In overseas stock markets, Asian stocks extended losses registered during the previous trading session triggered by the UK voting to leave the European Union (EU) in a referendum on 23 June 2016 dubbed "Brexit". Investors fear that Britain's exit from the EU could trigger slowdown in UK and European economies. Investors fear that Brexit could stoke the anti-establishment mood in Europe and even talk of disintegration of the union. Japanese stocks bucked the weak trend in Asian markets after warnings from Japanese officials that they may intervene in currency markets to stabilize the yen. The Nikkei 225 Average was currently up 2.34%. The safe-haven yen surged against the dollar on 24 June 2016 after the UK voted to leave the European Union in a referendum on 23 June 2016. A stronger yen hurts the competitiveness of Japanese exporters.
A statement from the European Commission after a meeting at Brussels, Belgium between Martin Schulz, President of the European Parliament, Donald Tusk, President of the European Council and Mark Rutte, Holder of the Presidency of the Council of the European Union (EU) on 24 June 2016 stated that the union of the remaining 27 member states of the EU will continue after British people voted in favour of United Kingdom leaving the EU. The EU stands ready to launch negotiations swiftly with the UK regarding the terms and conditions of UK's withdrawal from the EU. The statement further mentioned that the EU now expects the UK government to give effect to this decision of the British people as soon as possible. Any delay would unnecessarily prolong uncertainty. The EU hopes that the UK becomes a close partner of the EU in the future.
The Governor of UK's central bank Bank of England Mark Carney said in a statement on 24 June 2016 that there will be a period of uncertainty and adjustment after people of the UK voted for the UK to leave the European Union. It will take some time for the UK to establish new relationships with Europe and the rest of the world. Some market and economic volatility can be expected as this process unfolds. Carney said that the Bank of England stands ready to provide more than 250b billion of additional funds through its normal facilities to support the functioning of markets. The Bank of England also stands ready to provide substantial liquidity in foreign currency, if required. A few months ago, the Bank of England judged that the risks around the referendum were the most significant, near-term domestic risks to financial stability. To mitigate them, the Bank of England has put in place extensive contingency plans, Carney said.
US stocks plunged during the previous trading session on Friday, 24 June 2016, after UK citizens voted to end the country's membership in the European Uniona historic rejection of Europe's political order. The US Federal Reserve said in a statement on 24 June 2016 that it is carefully monitoring developments in global financial markets, in cooperation with other central banks, following the results of the UK referendum on membership in the European Union. The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the US economy.
Pharma stocks edged higher on renewed buying. Aurobindo Pharma (up 2.5%), Dr Reddy's Laboratories (up 0.93%), Ipca Laboratories (up 1.76%), Strides Shasun (up 0.76%), Glenmark Pharmaceuticals (up 1%), Lupin (up 0.62%), Cadila Healthcare (up 0.72%), Wockhardt (up 0.41%), Sun Pharmaceutical Industries (up 0.29%), Alkem Laboratories (up 0.22%) and Cipla (up 0.16%) rose. GlaxoSmithkline Pharmaceuticals (down 0.04%) and Divi's Laboratories (down 0.9%) edged lower.
Auto stocks declined. Maruti Suzuki India (down 1.07%), Mahindra & Mahindra (down 0.38%), Bajaj Auto (down 0.46%), Eicher Motors (down 0.07%) and Hero MotoCorp (down 0.25%) edged lower. TVS Motor Company (up 0.77%) and Ashok Leyland (up 1.4%) rose.
Tata Motors extended steep losses registered during the previous trading session triggered by the UK voting to leave the European Union (EU) in a referendum on 23 June 2016. The stock was down 0.3% at Rs 447.65. The stock tumbled 8% to settle at Rs 449 on Friday, 24 June 2016. Tata Motors derives majority of its revenue from its British luxury car unit Jaguar Land Rover (JLR). JLR is the largest automotive manufacturer in Britain. It is one of the UK's largest exporters and generates over 80% of its revenue from exports.
The Tata Steel stock, too, extended losses registered during the previous trading session triggered by the UK voting to leave the European Union (EU) in a referendum on 23 June 2016. The stock was down 0.9% at Rs 309.70. The stock tumbled 6.37% to settle at Rs 312.50 on Friday, 24 June 2016. Tata Steel is Europe's second largest steel producer, with steelmaking in the UK and Netherlands, and manufacturing plants across Europe. Tata Steel Europe has initiated the process to sell its UK business viz. Tata Steel UK. Tata Steel Europe has invited seven short listed potential investors to submit binding bids for Tata Steel UK.
Axis Bank rose 1% at Rs 515.40 after a large bulk deal of 35.55 lakh shares was executed on the scrip at Rs 509.10 per share in opening trade on the BSE today, 27 June 2016.
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