Post Session: Quick Review

Monday turned out to be a disappointing session of trade for Indian equity benchmarks where frontline gauges ended the session with a cut of over a percentage point. After a gap down start markets extended their southward journey, as traders across the world remained worried about Britain’s exit from European Union, with some terming it as a biggest crisis for the financial markets since the collapse of Lehman Brothers. The indices even went on to test important psychological 25,300 (Sensex) and 8,050 (Nifty) levels, but the key gauges got some support near those intraday low levels to end off day’s low, as they recovered some of their losses from thereon with investors opting for some fundamentally strong stocks. Market participants opted to cut their positions in risky assets on account of weak industrial production data, as the IIP contracted by 0.8% in April, the first decline in three months, on the back of sharp fall in capital goods production and manufacturing activity. Traders also remained on sidelines ahead of key macroeconomic data i.e. consumer price index (CPI) to be released later in the day and inflation based on the wholesale price index (WPI) for May to be released on Tuesday.

Weak global cues too dampened sentiments with European counters making a sluggish start with CAC, DAX and FTSE trading with a cut of around a percent over a possible British exit from the European Union. Asian markets ended in red ahead of the US Fed meet due to begin tomorrow and BOJ meet later during this week amid jitters over the forthcoming referendum on whether the UK would remain in the European Union scheduled on June 23.

Back home, selling was both brutal and wide-based as none of the sectoral indices on BSE, baring energy and healthcare, were spared. Counters, which featured in the list of worst performers, include realty, banking and capital goods. Depreciation in Indian rupee too dampened sentiments. The rupee was at 67.11 per dollar at the time of equity markets closing as compared to 66.76 per dollar level on Friday on sustained demand for the American currency from importers.

On the sectoral front, textile stocks edged lower on report that textiles exports for the 2015-16 fiscal stood at $40 billion, way short of the $47.5 billion target. The ministry has set an exports target of $48.5 billion for the current fiscal. Telecom stocks too felt selling pressure during trade, as the Telecom Regulatory Authority of India (Trai) put up a consultation paper that seeks to create policies on cloud computing, including lawful interception and whether to license service providers. Meanwhile, shares of industrial companies Larsen & Toubro, Bharat Heavy Electricals and Power Grid Corp of India fell after disappointing industrial production data.

The NSE’s 50-share broadly followed index -- Nifty -- declined by around sixty points to end below the psychological 8,150 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- dropped by around two hundred and forty points to finish below the psychological 26,400 mark. Broader markets too traded under pressure and ended the session with a cut of around half a percent.

The market breadth remained in the favour of decliners, as there were 1,125 shares on the gaining side against 1,457 shares on the losing side while 162 shares remain unchanged. (Provisional)

The BSE Sensex ended at 26396.77, down by 238.98 points or 0.90% after trading in a range of 26262.27 and 26468.27. There were 10 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.50%, while Small cap index lost 0.45%. (Provisional)

The top losing sectoral indices on the BSE were Telecom down by 1.74%, Finance down by 1.38%, Realty down by 1.32%, Bankex down by 1.29%, Industrials down by 1.26, while Healthcare was up by 0.10% and Energy was up by 0.09% were the losers on the BSE sectoral front. (Provisional)

The top gainers on the Sensex were Dr. Reddys Lab up by 1.16%, Lupin up by 1.14%, Maruti Suzuki up by 0.67%, Sun Pharma Inds. up by 0.61% and Adani Ports &Special up by 0.59%. On the flip side, Tata Steel down by 3.54%, ICICI Bank down by 3.30%, Tata Motors down by 2.89%, Bharti Airtel down by 2.72% and BHEL down by 2.55% were the top losers. (Provisional)

Meanwhile, to make things easier for the importers and in a bid to push its Make in India initiative, the government is likely to announce a scheme to extend single port clearance, deferred duty payment and relief from routine checks for select importers. The new scheme will have a benefits matrix, extending most of the benefits, including assured clearance from ports, to direct manufacturers in India.

The Finance Ministry expanding the scope of two existing programmes for importers, the Accredited Clients Programme (ACP) and the Authorised Economic Operator (AEO) scheme will be combining them, which will extend direct port transfers and allow members to move their cargo as it arrives at a land or sea port to a warehouse without checks. An AEO programme offers members reduced examination and inspection, higher facilitation than ACP clients, and acceptance of pre-arrival import declarations. This move is aimed to cut time and cost for importers and boost domestic production.

Importers in the revamped AEO scheme and bringing in shipments by the 15th of a month will get to make payments by a particular date of the second fortnight. Similarly, those bringing in consignments during the second fortnight will have to make payments by a specified date at the beginning of the second month. Only members of the revamped scheme will be eligible for deferred payment benefits. It has been reported that the government will be dividing a month into two.

Also, in order to encourage medium and small enterprises to be a part of the scheme, the government will probably do away with the eligibility criterion of Rs 10 crore of imports in the earlier financial year. Further, under the revamped scheme, there will be no value thresholds and minimum documentation will be required. Though manufacturers will be given preference, traders will not be barred. The government is easing the minimum import norms, without making the scheme weak as in earlier scheme the entry norms were tough and not many was able to qualify.

The CNX Nifty ended at 8110.60, down by 59.45 points or 0.73% after trading in a range of 8063.90 and 8125.25. There were 21 stocks advancing against 30 stocks declining on the index. (Provisional)

The top gainers on Nifty were BPCL up by 2.21%, Zee Entertainment up by 1.09%, Lupin up by 1.05%, Bharti Infratel up by 1.00% and Ambuja Cement up by 0.87%. On the flip side, Idea Cellular down by 3.53%, ICICI Bank down by 3.50%, Tata Motors - DVR down by 3.49%, Tata Steel down by 3.38% and Tata Motors down by 2.78% were the top losers. (Provisional)

European markets were trading in red; Germany’s DAX declined 151.59 points or 1.54% to 9,683.03, France’s CAC decreased 73.33 points or 1.7% to 4,233.39 and UK’s FTSE 100 was down by 34.19 points or 0.56% to 6,081.57.

Asian equity markets ended lower on Monday as falling oil prices, disappointing Chinese data and weak cues from offshore markets dampened investor sentiment ahead of the Fed and BOJ meetings and the upcoming Brexit referendum later this month. Speculation is rising over whether Britain will choose to remain in the 28-nation European Union in a June 23 referendum. A poll in London's last week showed that 55 percent of British citizens want to leave the European Union. Meanwhile, the Bank of Japan's rate decision is due on Thursday and it is likely that the central bank will ease its policy mainly by increasing its ETF purchases, against the backdrop of a broadly weak dollar and falling expectations for Fed rate hikes. China and Hong Kong shares ended lower, as mixed data from China overshadowed recent optimism that MSCI could add mainland Chinese stocks to its benchmark Emerging Markets Index. Industrial output in China grew 6.0 percent in May from a year earlier, the National Bureau of Statistics said - matching expectations and unchanged from the previous month. Retail sales grew by a slightly less than expected 10 percent in the month and growth in fixed-asset investment slipped below 10 percent for the first time since 2000 in January-May, painting a mixed picture of the world's second-largest economy. Japanese shares hit five-week lows to extend losses for a third straight day, as Brexit woes lifted the yen to a fresh one-month high against the dollar and a three-year high against the euro.