Key benchmark indices continued to trade with deep losses in early afternoon trade, mirroring sharp sell off in global stocks as results from the UK's referendum on its European Union membership, dubbed "Brexit", showed the country had voted to leave the trading bloc. At 12:23 IST, the barometer index, the S&P BSE Sensex, was down 1,070.60 points or 3.96% at 25,931.62. The Nifty 50 index was down 327.05 points or 3.95% at 7,943.40. The Nifty was trading below the psychologically important 8,000 mark after slipping below that level in morning trade. The Sensex first fell below the psychologically important 27,000 and then below the next psychologically important 26,000 level.
Trading in European stock index futures indicated that the FTSE 100 index could slump 10.38%, Germany's DAX index could slump almost 10% and France's CAC 40 index could slump 11.8% at the opening bell. Trading in US index futures indicated that the Dow Jones Industrial Average could slump 598 points at the opening bell today, 24 June 2016.
Investors fear that Britain's exit from the EU could destabilize the trade bloc. Britain has been a member of the trading bloc since 1973. Voting in the referendum was concluded in a single day yesterday, 23 June 2016.
The Sensex fell 1,070.74 points, or 3.97% at the day's low of 25,931.48 in early afternoon trade, its lowest level since 25 May 2016. The index fell 634.74 points, or 2.35% at the day's high of 26,367.48 in early trade. The Nifty fell 331.85 points, or 4.01% at the day's low of 7,938.60 in morning trade, its lowest level since 25 May 2016. The index fell 212 points, or 2.56% at the day's high of 8,058.45 in early trade.
The broad market depicted weakness. There were more than eight losers against every gainer on BSE. 2,029 shares fell and 229 shares rose. A total of 101 shares were unchanged. The BSE Mid-Cap index was currently down 3.42%. The BSE Small-Cap index was currently down 3.78%. The decline in both these indices was lower than the Sensex's decline in percentage terms.
In overseas stock markets, Asian shares tumbled as results from the UK's referendum on its European Union membership, dubbed "Brexit", showed the country had voted to leave the trading bloc. In Japan, the Nikkei 225 Average settled 7.92% lower. The safe-haven yen surged against the dollar. A stronger yen hurts the competitiveness of Japanese exporters. The Japanese currency is perceived as a haven in times of global financial and global economic worries.
Trading in US index futures indicated a sharp setback for US stocks at the opening bell after Britain voted to leave the European Union in a historic referendum. Trading in index futures indicated that the Dow Jones Industrial Average could slump 598 points at the opening bell today, 24 June 2016.
Closer home, Finance Minister Arun Jaitley said in a statement that the Indian economy is well prepared to deal with the short and medium term consequences of Brexit. India is strongly committed to macro-economic framework with its focus on maintaining stability, Jaitley said. The finance minister said that India's macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline and declining inflation. He further said that India's immediate and medium-term firewalls are solid in the form of a healthy foreign exchange reserves position.
Jaitley said that the Indian government, the Reserve Bank of India and other Indian regulators are well prepared and are working closely together to deal with any short term volatility. He said that the government will steadfastly pursue its ambitious reform agendaincluding early passage of the goods and services tax(GST)that will help India realize its medium term growth potential of 8-9%.
Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said in a phone interview to a television channel that he did not expect significant selling from foreign investors in India due to Britain's vote to leave the European Union because of better economic fundamentals and upcoming government reforms. In a statement posted on the RBI's website, Rajan said that the Indian economy has good fundamentals, low short term external debt and sizeable foreign exchange reserves. These should stand the country in good stead in the days to come. The RBI Governor said that the central bank is continuously maintaining a close vigil on the market developments, both domestically and internationally, and will take all necessary steps, including liquidity support (both dollar and INR), to ensure orderly conditions in financial markets.
Capital goods shares edged lower. Jindal Saw (down 6.54%), Punj Lloyd (down 5.3%), Suzlon Energy (down 5.26%), Alstom T&D India (down 5.25%), Bharat Heavy Electricals (down 5.1%), Crompton Greaves (down 4.89%), Praj Industries (down 4.69%), Bharat Electronics (down 4.34%), Reliance Defence and Engineering (down 4.16%), BEML (down 4.02%), Havells India (down 3.71%), Siemens (down 3.46%), ABB India (down 2.94%), Lakshmi Machine Works (down 2.71%), ALSTOM India (down 2.32%), AIA Engineering (down 2.31%), SKF India (down 1.62%) and Thermax (down 1.08%), edged lower.
Engineering & construction major L&T was down 5.28% to Rs 1,418.25. The stock hit a high of Rs 1,469.35 and a low of Rs 1,401.40 so far during the day.
IT stocks witnessed selling pressure as results from the UK's referendum on its European Union membership, dubbed "Brexit", showed the country had voted to leave the trading bloc. Tech Mahindra (down 5.71%), Oracle Financial Services Software (down 3.77%), MindTree (down 3.76%), HCL Technologies (down 3.72%), TCS (down 3.4%), Persistent Systems (down 2.79%), Hexaware Technologies (down 2.53%), Wipro (down 2.29%) and Infosys (down 2.28%), edged lower. MphasiS was up 0.70%. The UK is the second biggest IT outsourcing market after the United States.
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