Volatility ruled the roost as key benchmark indices reversed intraday gains in early afternoon trade. The barometer index, the S&P BSE Sensex, once again fell below the psychological 26,000 mark. Earlier, the Sensex had regained the psychological 26,000 level after falling below that level in early trade. The Sensex was currently off 57.33 points or 0.22% at 25,975.05. The decline for the Sensex was higher in percentage terms than the decline for the 50-unit CNX Nifty. The Nifty was currently off 5.80 points or 0.07% at 7,874.90. The market breadth indicating the overall health of the market was positive.
High volatility for key equity benchmark indices in India materialized as Chinese stocks fell in choppy trade after the nation's central bank announced fresh measures after trading hours yesterday, 25 August 2015, to ease monetary policy to battle the country's deepening economic slowdown.
Power generation stocks rose across the board. IT stocks were mostly higher.
Foreign portfolio investors (FPIs) pressed substantial sales of Indian stocks yesterday, 25 August 2015. FPIs sold shares worth a net Rs 2080.01 crore yesterday, 25 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1963.09 crore yesterday, 25 August 2015, as per provisional data released by the stock exchanges.
Indian stocks 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 tomorrow, 27 August 2015.
At 12:16 IST, the S&P BSE Sensex was down 57.33 points or 0.22% at 25,975.05. The index rose 124.23 points at the day's high of 26,156.61 in morning trade. The index fell 344.69 points at the day's low of 25,687.69 in early trade.
The CNX Nifty was down 5.80 points or 0.07% at 7,874.90. The index hit a high of 7,930.05 in intraday trade. The index hit a low of 7,785.60 in intraday trade.
The BSE Mid-Cap index was down 4.62 points or 0.04% at 10,555.70. The decline in this index was lower than the Sensex's decline in percentage terms. The BSE Small-Cap index was up 49.20 points or 0.46% at 10,743.87, outperforming the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,280 shares rose and 1,044 shares fell. A total of 90 shares were unchanged.
Power generation stocks rose across the board. JSW Energy (up 4.79%), Reliance Infrastructure (up 4.72%), Tata Power (up 3.57%), GMR Infrastructure (up 2.85%), NHPC (up 2.14%), NTPC (up 2.05%), CESC (up 2.03%), Reliance Power (up 1.53%), Torrent Power (up 1.14%), Adani Power (up 0.70%) and Jaiprakash Power Ventures (up 0.35%), edged higher.
IT stocks were mostly higher. MindTree (up 4.91%), TCS (up 2.44%), Wipro (up 2.29%), CMC (up 1.87%), Persistent Systems (up 1.83%), HCL Technologies (up 1.81%) and Infosys (up 0.34%), edged higher. Tech Mahindra (down 0.16%), Oracle Financial Services Software (down 0.5%), MphasiS (down 1.43%) and Hexaware Technologies (down 1.67%), edged lower.
Meanwhile, according to a summary of the electronic consultation that the Reserve Bank of India (RBI) held with the Technical Advisory Committee on Monetary Policy in the run up to the monetary policy review on 4 August 2015, four out of seven external members of the committee recommended a cut in the repo rate at the 4 August policy review. Three of them suggested a reduction in repo rate by 25 basis points and one member suggested a 50 basis points reduction. Three members recommended a status quo in the repo rate, with one of them suggesting a reduction in the statutory liquidity ratio (SLR) by 50 basis points. The RBI kept the repo rate unchanged at the 4 August policy review.
Meanwhile, investors continue to watch the progress of the monsoon rains which will have a bearing on food prices and rural income. India's weather office, the India Meteorological Department (IMD), said in a daily report issued yesterday, 25 August 2015, that for the country as a whole, cumulative rainfall during this year's monsoon season was 11% below the Long Period Average (LPA) until 25 August 2015. Region wise, the rainfall was 20% below the LPA in South Peninsula, 14% below the LPA in Central India, 6% below the LPA in East & Northeast India and 5% below the LPA in Northwest India until 25 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 fell in choppy trade today, 26 August 2015, after the nation's central bank announced fresh measures after trading hours yesterday, 25 August 2015, to ease monetary policy to battle the country's deepening economic slowdown. In mainland China, the Shanghai Composite was off 1.3%. In Hong Kong, the Hang Seng index was off 0.85%. China's central bank, People's Bank of China (PBOC), yesterday, 25 August 2015, announced reduction in its one-year lending rate by 25 basis points (bps) to 4.6% effective from Wednesday, 26 August 2015. It also cut deposit rate by 25 bps to 1.75% effective from Wednesday, 26 August 2015, and cut banks' reserve requirement ratio by 50 bps effective 6 September 2015. The PBOC also removed its control over fixed bank deposits with more than one-year maturity. The announcement came after trading ended in Asian markets yesterday, 25 August 2015.
The central bank's announcement came after the Shanghai Composite Index fell 7.6% yesterday, 25 August 2015, following an 8.5% plunge on Monday, 24 August 2015. China's surprise move to devalue its currency by almost 2% two weeks ago has magnified worries that its economic slowdown is worse than official data shows.
In other Asian markets, Key benchmark indices in Taiwan, Singapore, Japan and South Korea were up by 0.52% to 3.20%. Indonesia's Jakarta Composite was down 0.68%.
Trading in US index futures indicated that the Dow could surge 137 points at the opening bell today, 26 August 2015. In a dramatic reversal to a morning rally, US stocks relinquished all of their opening gains to finish with losses yesterday, 25 August 2015, as selling accelerated during the last one hour or so of the trading session. The latest economic data showed that new-home sales bounced back in July, while a separate report showed consumer confidence rising more than projected in August. The Conference Board, a private research group, said that its index of consumer confidence rose to 101.5 in August, bouncing back after a steep decline in July.
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