A sudden slide took the two key benchmark indices into the red from green in mid-afternoon trade. At 14:15 IST, the barometer index, the S&P BSE Sensex, was down 56.18 points or 0.21% at 26,341.53. The Nifty was currently down 19.35 points or 0.24% at 8,069.25. Weakness in main European markets pulled Indian stocks lower. Key equity benchmark indices in UK, Germany and France extended steep losses registered during the previous trading session on Friday, 24 June 2016, 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.
The Sensex lost 134.99 points or 0.51% at the day's low of 26,262.72 in mid-afternoon trade. The barometer index rose 95.80 points or 0.36% at the day's high of 26,493.51 in afternoon trade, its highest level since 23 June 2016. The Nifty lost 49.25 points or 0.6% at the day's low of 8,039.35 in morning trade. The index rose 32.05 points or 0.4% at the day's high of 8,120.65 in afternoon trade, its highest level since 23 June 2016.
The broad market depicted strength. There were more than two gainers against every loser on BSE. 1,712 shares rose and 752 shares declined. A total of 159 shares were unchanged. The BSE Mid-Cap index was currently up 0.57%. The broad based BSE Small-Cap index was currently up 1.23%. Both these indices outperformed the Sensex.
In overseas stock markets, key equity benchmark indices in UK, Germany and France extended steep losses registered during the previous trading session on Friday, 24 June 2016, triggered by the UK voting to leave the European Union (EU) in a referendum on 23 June 2016 dubbed "Brexit". In UK, the FTSE 100 index was currently down 1.31%. 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.
The unexpected referendum result sent shock waves through the UK parliament, leaving the two biggest political parties in turmoil. Leader of the opposition Labour Party Jeremy Corbyn over the weekend sacked a key member of his cabinet seen as plotting a coup against him. That dismissal was followed by the resignations of 11 other key party members in a protest against Corbyn's leadership. More resignations followed today, 27 June 2016. Soon after the Brexit referendum outcome, British Prime Minister David Cameron said on 24 June 2016 that he will resign as the country's prime minister.
UK's finance minister, George Osborne, said in a statement today, 27 June 2016, that Britain has discussed co-ordinated response with the finance ministers and central bank governors of the G7 after the outcome of the referendum. He further said that he has been in contact with his fellow European finance ministers, central bank governors, the managing director of the IMF, the US Treasury Secretary and the Speaker of Congress, and the CEOs of some of Britain's major financial institutions so as to collectively keep a close eye on the developments. He said that only the UK can trigger Article 50, and that in his judgement the country should only do that when there is a clear view about what new arrangement the UK is seeking with its European neighbours. Osborne said that it is inevitable that Britain's economy will have to adjust to the outcome of the Brexit referendum. It is already evident that as a result of the decision, some firms are continuing to pause their decisions to invest, or to hire people.
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.
Meanwhile, Euroskeptic parties on the rise in other member states such as Denmark, Sweden, Holland and Italy are now calling for their own referendum, which could see the union face more uncertainty in coming years. 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.
Asian stocks were mixed. Japanese stocks edged higher after warnings from Japanese officials that they may intervene in currency markets to stabilize the yen. The Nikkei 225 Average ended 2.39% higher. 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.
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.
Stocks of public sector banks were in demand. Indian Bank (up 4.94%), Bank of India (up 3.06%), Canara Bank (up 2.67%), State Bank of India (up 2.34%), Bank of Baroda (up 2.08%), Union Bank of India (up 1.72%), Punjab National Bank (up 1.76%) and IDBI Bank (up 1.51%) edged higher.
Stock of private sector banks were mixed. Kotak Mahindra Bank (up 0.79%) and ICICI Bank (up 0.37%) edged higher. Yes Bank (down 0.45%) and IndusInd Bank (down 1.71%) edged lower.
Index heavyweight HDFC Bank was off 0.59% at Rs 1,154.95. The stock hit a high of Rs 1,169.90 and a low of Rs 1,153.80 so far during the day.
Axis Bank rose 0.66% at Rs 513.70 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.
Metal and mining stocks edged higher as copper prices rose in global commodities markets. Vedanta (up 2.97%), Jindal Steel & Power (up 2%), Hindalco Industries (up 1.79%), Steel Authority of India (up 0.94%), JSW Steel (up 0.33%), NMDC (up 0.22%), Hindustan Copper (up 0.3%) and National Aluminium Company (up 0.36%) edged higher. Hindustan Zinc (down 0.94%) edged lower.
High Grade Copper for September 2016 delivery was currently up 0.8% at $2.133 per pound on the COMEX.
Tata Steel 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 1% at Rs 309.40. 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.
Wipro fell 1.35% at Rs 548.45 after a large bulk deal of 34.01 lakh shares was executed on the scrip at Rs 554.20 per share in opening trade on the BSE today, 27 June 2016.
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.
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