Bear operators are calling the shots on the bourses. The barometer index, the S&P BSE Sensex, lost 562.88 points or 2.18% to settle at 25,201.90. The 50-unit CNX Nifty slumped 167.95 points or 2.15% to settle at 7,655.05. The steep slide on the domestic bourses materialized as world stocks fell on global growth worries. Stocks from banking, metal and power sector led losses for the key benchmark indices. The Sensex hit its lowest closing level in more than 13 months and the Nifty hit its lowest closing level in more than a year.
The weakness on the bourses was broad based. On BSE, more than three shares fell for each stock that rose. 2,116 shares declined and 574 shares rose. A total of 89 shares were unchanged.
Index heavyweights HDFC, Infosys, Reliance Industries and L&T declined. Bank stocks fell after a credit rating agency said in a research note that the Reserve Bank of India's (RBI) draft guidelines on computation of base rate, if implemented in its current form, will adversely impact profitability of Indian banks. Auto stocks also edged lower.
The Sensex lost 562.88 points or 2.18% to settle at 25,201.90, its lowest closing level since 14 July 2014. The index declined plunged 645.72 points at the day's low of 25,119.06 in intraday trade. The index rose 10.6 points at the day's high of 25,775.38 in intraday trade.
The CNX Nifty slumped 167.95 points or 2.15% to settle at 7,655.05, its lowest closing level since 11 August 2014. The index hit a low of 7,626.85 in intraday trade. The index hit a high of 7,804.90 in intraday trade.
The BSE Mid-Cap index shed 1.9%. The decline in the index was lower than Sensex's decline in percentage terms. The BSE Small-Cap index fell 2.47%. The decline in the index was higher than Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 2682 crore, higher than turnover of Rs 2362.85 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Healthcare index (down 2.42%), BSE IT index (down 2.34%), BSE Auto index (down 2.3%), BSE Bankex index (down 2.65%), BSE Metal index (down 2.26%), BSE Power index (down 3.03%) and BSE Realty index (down 3.32%) underperformed the Sensex. The S&P BSE FMCG index (down 1.25%), BSE Capital Goods index (down 2.01%), BSE Consumer Durables index (down 0.81%), BSE Oil & Gas index (down 1.41%) and BSE Teck index (down 1.89%) outperformed the Sensex.
Bank stocks fell after a credit rating agency said in a research note that the Reserve Bank of India's (RBI) draft guidelines on computation of base rate, if implemented in its current form, will adversely impact profitability of Indian banks. Among PSU banks, Syndicate Bank (down 5.34%), IDBI Bank (down 4.72%), Andhra Bank (down 3.82%), Bank of India (down 3.56%), Canara Bank (down 3.55%), State Bank of India (down 3.25%), Union Bank of India (down 2.85%), United Bank of India (down 2.32%) and Punjab National Bank (down 0.42%) edged lower.
Among private sector banks, Yes Bank (down 3.71%), Axis Bank (down 3.61%), ICICI Bank (down 3.37%), Kotak Mahindra Bank (down 3.27%), IndusInd Bank (down 1.78%) and HDFC Bank (down 1.46%) edged lower.
Credit rating agency CRISIL said in a research note issued yesterday, 3 September 2015, that the profitability of Indian banks will have one-time hit of around Rs 20000 crore in the year ended 31 March 2017, which would be equal to 15% of the total estimated profit of the banking system for that year. It may be recalled that the RBI recently issued draft guidelines on the marginal-cost-of-funds-based methodology for computation of the base rate of commercial banks. According to the rating agency, yields of banks that lend mostly on a floating rate basis will be significantly impacted in an environment of falling interest rates. Banks with low levels of current and saving accounts and with relatively longer tenure term deposits will also be majorly affected, according to the rating agency. The RBI has said that it intends to implement marginal-cost-of-funds-based methodology for computation of the base rate of commercial banks from 1 April 2016.
Shares of power generation and power distribution firms tumbled. Tata Power (down 5.59%), Reliance Power (down 5.06%), Adani Power (down 4.78%), JSW Energy (down 3.59%), Reliance Infrastructure (down 4.41%), Torrent Power (down 4.06%), NTPC (down 2.84%), NHPC (down 1.82%), GVK Power & Infrastructure (down 1%) and Power Grid Corporation of India (down 3.29%) edged lower.
Metal and mining stocks declined. Vedanta (down 4.84%), Tata Steel (down 4.66%), NMDC (down 4.09%), Jindal Steel & Power (down 4.98%), Hindalco Industries (down 4.34%), JSW Steel (down 3.05%), Steel Authority of India (down 3.18%), National Aluminium Company (down 1.51%) and Hindustan Zinc (down 1.01%) edged lower.
Auto stocks dropped. Tata Motors (down 3.15%), Mahindra & Mahindra (down 2.81%), Ashok Leyland (down 2.74%), Maruti Suzuki India (down 1.86%), Bajaj Auto (down 1.74%), Hero MotoCorp (down 1.61%) and Eicher Motors (down 1.19%) edged lower. TVS Motor Company (up 0.88%) edged higher.
Pharma stocks declined. Wockhardt (down 5.11%), Strides Arcolab (down 4.78%), Ipca Laboratories (down 4.32%), Dr Reddy's Laboratories (down 3.6%), Divi's Laboratories (down 3.2%), Sun Pharmaceutical Industries (down 3.03%) and GlaxoSmithkline Pharmaceuticals (down 0.28%) edged lower.
Cipla lost 1.13% at Rs 649.40. Cipla during market hours today, 4 September 2015, announced acquisition of two US-based pharma companies for total cash consideration of $550 million. The cash consideration payable for acquisition of InvaGen Pharmaceuticals Inc. is $500 million and the cash consideration payable for the acquisition of Exelan Pharmaceuticals Inc. is $50 million. Cipla said that the acquisition of these two US based companies will give the company scale in the US generics market through a wide range of product portfolio in CNS, CVS, anti-infective, diabetes and other value added generics. The revenue of these two companies combined stood at $225 million for trailing twelve months ended 30 June 2015.
Lupin dropped 0.21% at Rs 1,859.25. Lupin's US subsidiary Lupin Pharmaceuticals, Inc. (Lupin) has launched a generic antidepressant medicine Duloxetine 40 mg Delayed-Release (DR) Capsule in the United States. Lupin's Duloxetine 40 mg delayed-release (DR) capsule is the first and only generic Duloxetine formulation to become available in 40 mg dosage strength in the US. The annual market size of the branded and generic versions of antidepressant Cymbalta 20 mg, 30 mg and 60 mg capsule strengths is approximately $1.05 billion in the US, as per IMS MAT June 2015 data.
Glenmark Pharmaceuticals declined 3.63% at Rs 1,028.05. The company's US subsidiary Glenmark Pharmaceuticals Inc., USA (Glenmark) has been granted final approval by the United States Food & Drug Administration (US FDA) for Voriconazole Tablets, 50 mg and 200 mg, the therapeutic equivalent of Vfend Tablets, 50 mg and 200 mg of PF Prism C.V. (Prism). Glenmark Pharmaceuticals made the announcement before market hours today, 4 September 2015. According to IMS Health sales data for the 12 month period ended July 2015, the Vfend market achieved annual sales of approximately $91.4 million in the US.
Meanwhile, Glenmark Pharmaceuticals' wholly owned Swiss subsidiary, Glenmark Pharmaceuticals S.A. has announced that GBR 830, a novel monoclonal antibody has completed clinical phase 1 dosing.
Index heavyweight and housing finance firm HDFC dropped 2.39% at Rs 1,144.
Index heavyweight and IT major Infosys fell 2.44% at Rs 1,073.80.
Index heavyweight and crude oil refiner Reliance Industries (RIL) declined 2.13% at Rs 835.60.
Index heavyweight and engineering & construction major L&T shed 2.06% at Rs 1,533.85.
In overseas markets, European shares fell sharply on global growth worries. Trading in US index futures indicated that Dow may slide 195.50 points at the opening bell today, 4 September 2015. Earlier during the global day, Asian stocks edged lower on caution ahead of the influential monthly US job data for August 2015. The job data could be a key factor for the US Federal Reserve on its decision whether to raise interest rates from current near zero at its two-day monetary policy meeting which begins on 16 September 2015.
Closer home, the Sensex has fallen 1,081.19 points or 4.11% in this month so far (till 4 September 2015). The Sensex has fallen 2,297.52 points or 8.35% in this calendar year so far (till 4 September 2015). The Sensex is off 4,822.84 points or 16.06% from a record high of 30,024.74 hit on 4 March 2015.
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