Weakness continued on the bourses in morning trade, with key benchmark indices trading with heavy losses. The barometer index, the S&P BSE Sensex, continued to hover below the psychological 27,000 mark after falling below that level in early trade. The 50-unit CNX Nifty regained the psychological 8,000 mark after falling below that level in early trade. The Sensex was currently off 873.21 points or 3.19% at 26,492.86. The broad market depicted weakness. There were more than eight losers against every gainer on BSE. The BSE Mid-Cap index was off 3.33%. The BSE Small-Cap index was off 3.71%. The decline in both these indices was higher than the Sensex's decline in percentage terms.
The sharp setback on the Indian bourses was triggered by a rout in global equities. Chinese stocks led a sell-off in Asian markets on concerns about slowdown in China's economic growth. The sharp setback in Chinese stocks materialized after US stocks tumbled during the previous trading session on Friday, 21 August 2015, as fears about China's economy and global growth spurred heavy selling. Trading in US index futures indicated that that the US stocks will tumble again at the opening bell today, 24 August 2015.
Realty shares slumped. Capital goods shares fell across the board.
Earlier, the Sensex hit 10-week low and the Nifty hit its lowest level in almost 10 weeks as these two key benchmark indices slumped at the onset of the trading session on a rout in global stocks.
There was heavy selling of Indian stocks by foreign portfolio investors (FPIs) during the previous trading session on Friday, 21 August 2015. FPIs sold shares worth net Rs 2340.60 crore on Friday, 21 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1524.10 crore on Friday, 21 August 2015, as per provisional data released by the stock exchanges.
The market may remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month August 2015 series to September 2015 series. The near month August 2015 derivatives contracts are set to expire on Thursday, 27 August 2015.
At 10:15 IST, the S&P BSE Sensex was down 873.21 points or 3.19% at 26,492.86. The index fell 635.67 points at the day's high of 26730.40 at the onset of trading session. The index fell 1,006.54 points at the day's low of 26,359.53 at the onset of trading session, its lowest level since 15 June 2015.
The CNX Nifty was down 273.60 points or 3.30% at 8,026.35. The index hit a high of 8,060.05 in intraday trade. The index hit a low of 7,990.90 in intraday trade, its lowest level since 16 June 2015.
The BSE Mid-Cap index was down 373.71 points or 3.33% at 10,842.94. The BSE Small-Cap index was down 430.22 points or 3.71% at 11,180.22. The decline in both these indices was higher than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was extremely weak. There were more than eight losers for every gainer on BSE. 1,826 shares fell and 225 shares rose. A total of 33 shares were unchanged.
Realty shares slumped. Housing Development and Infrastructure (HDIL) (down 6.63%), DLF (down 6.53%), Prestige Estates Projects (down 6.37%), Indiabulls Real Estate (down 5.3%), Oberoi Realty (down 5.11%), Peninsula Land (down 4.97%), D B Realty (down 4.76%), Unitech (down 4.68%), Phoenix Mills (down 4.5%), Sobha (down 4.38%), Sunteck Realty (down 4.04%), Parsvnath Developers (down 3.92%), Anant Raj (down 3.37%) and Godrej Properties (down 3.24%), edged lower.
Capital goods shares fell across the board. Jindal Saw (down 5.64%), Siemens (down 5.29%), Punj Lloyd (down 5.12%), Bharat Heavy Electricals (down 4.52%), Praj Industries (down 4.41%), BEML (down 4.2%), Suzlon Energy (down 4.09%), ABB India (down 4.02%), Crompton Greaves (down 4.02%), Alstom T&D India (down 3.65%), SKF India (down 3.3%), Bharat Electronics (down 2.94%), Thermax (down 2.83%), AIA Engineering (down 2.18%), Lakshmi Machine Works (down 1.89%), ALSTOM India (down 1.76%), Pipavav Defence and Offshore Engineering Company (down 1.53%) and Havells India (down 0.79%), edged lower.
L&T fell 3.55%. L&T clarified after market hours on Friday, 21 August 2015, that L&TIDPL, a subsidiary of L&T, had incorporated a wholly-owned subsidiary called L&T Port Sutrapada to implement the project awarded by Gujarat Maritime Board (GMB) in February 2008 on a competitive bidding basis for setting up a greenfield sea port at Sutrapada on BOOT (build, own, operate, transfer) basis. While the company had geared itself for undertaking the project, GMB faced severe difficulties in allocating the required land for the project. In July 2010, GMB approved shifting of the location of the project site to Kachchigarh in Dwaraka district for development of the sea port. Hence, the subsidiary was re-christened as L&T Port Kachchigarh. However, pursuant to marine surveys carried out at Kachchigarh and detection of the presence of growing coral reefs in the vicinity, it was communicated to GMB that the company did not seek further extension to the Letter of Intent for carrying out the project. The Letter of Intent for the project expired in August 2013.
In the global commodities markets, Brent crude oil futures edged lower as concerns about a global supply glut added to worries over potentially weaker demand from China. Brent for October settlement was currently off 93 cents at $44.53 a barrel. The contract had fallen $1.16 a barrel or 2.49% to settle at $45.46 a barrel during the previous trading session.
India imports about 80% of its crude requirements and a decline in crude eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 66.36, compared with its close of 65.83 during the previous trading session.
Meanwhile, a committee headed by A.P. Shah, chairman of the Law Commission, has reportedly suggested sparing foreign portfolio investors (FPIs) from the levy of minimum alternate tax (MAT) for the period prior to 1 April 2015. If the government accepts the recommendations of the committee, it would provide a significant relief to foreign investors facing several years of levies on capital gains made by them. In the February 2015 Budget, the government had exempted FPIs from MAT starting 1 April 2015, but had not made the clarification retrospective. The tax row started after the income-tax department started demanding MAT from foreign investors on capital gains accruing to them from the sale of shares, citing an August 2012 order by the Authority for Advance Rulings (AAR) in the case of Castleton Investment that MAT is applicable to both domestic and foreign companies. MAT is a tax levied on profit-making entities that don't pay corporate income tax because of exemptions and incentives. FPIs have argued that MAT is applicable only to domestic companies that have a base in India. The government appointed the Shah panel to defuse the row that threatened India's image as an investment destination. The Shah committee submitted its report to the government last month. The tax department had earlier clarified that MAT will not apply to investment routed through countries with which India has a tax treaty.
India's weather office, the India Meteorological Department (IMD), said in a daily report issued yesterday, 23 August 2015, that for the country as a whole, cumulative rainfall during this year's monsoon season was 10% below the Long Period Average (LPA) until 23 August 2015. Region wise, the rainfall was 13% below the LPA in Central India, 6% below the LPA in East & Northeast India, 3% below the LPA in Northwest India and 1% below the LPA in South Peninsula until 23 August 2015.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
In overseas markets, Chinese stocks led a sell-off in Asian markets on concerns about slowdown in China's economic growth. In mainland China, the Shanghai Composite was off 8.45%. In Hong Kong, the Hang Seng index was off 4.64%. China has been a key engine for the global economy in recent years.
Meanwhile, the Chinese government yesterday, 23 August 2015, reportedly published finalized rules that allow pension funds managed by local governments to invest in pension funds. Under the new rules, these pension funds, with assets estimated at more than 2 trillion yuan, or about $322 billion, can invest up to 30% of their net assets in stocks, equity funds and balanced funds. They previously had been limited to bank deposits and Treasurys.
In other Asian markets, key benchmark indices in Indonesia, Japan, Singapore, South Korea and Taiwan were off 2.44% to 5.10%.
Trading in US index futures indicated that the Dow could slump 402 points at the opening bell today, 24 August 2015. US stocks tumbled on Friday, 21 August 2015, as fears about China's economy and global growth spurred heavy selling.
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