Nightmarish session on D-street ends with over 2% cut

Stock markets in India ended the week on a disappointing note with the benchmark equity indices collapsing over two percent and slipping below crucial levels. The frontline indices got off to a gap down opening and tumbled to day’s lows in late morning session, but witnessed a strong recovery through the session. Sentiment suffered a jolt following a meltdown in global equities after referendum result indicated Britain would leave the European Union, triggering all-round selling, dragging down the key indices from their crucial levels. Shares of Indian companies having operations and exports to the European Union like pharma  and information technology along with auto component manufacturers were among the most impacted. Depreciation in rupee against the dollar also dented sentiments. Indian rupee was trading at 67.92 per dollar at the time of equity markets closing as compared to 67.25 per dollar level on Thursday. However, market participants got some comfort with Reserve Bank of India’s (RBI) Governor Raghuram Rajan’s statement that RBI would provide liquidity to allow orderly adjustment in the local market following Britain's exit (Brexit) from European Union creating ripples across global markets, while he expects India's strong fundamentals would help it to remain largely immune from the shock. The governor added that India's limited short term liability to the international markets leads to moderate participation, and therefore the impact would be limited. He also said that a good monsoon can lift sentiment and activity should pick up. Some support also came with Finance Minister Arun Jaitley’s statement that India’s macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation.

Global cues remained somber as majority of the Asian equity indices finished in the red-zone with Japanese benchmarks, Nikkei 225 taking a cut of around 8% on results of the historic referendum, sending sterling on a record plunge. While the European counter parts too traded with a negative bias and German Stock Index DAX shed around seven percent, being the biggest laggard in the space. Furthermore, the screen trading for US index futures also indicated that the Dow could open on a pessimistic note. The volatility started in currencies and spread to markets from Asian to European, where shares gave up gains from the open. Meanwhile, many believes that  such a body blow to global confidence could well prevent the Federal Reserve from raising interest rates as planned this year, and might even provoke a new round of emergency policy easing from all the major central banks.

Back home, the NSE’s 50-share broadly followed index Nifty, got pummeled by over two percent to settle above the psychological 8,000 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex tumbled over six hundred points to finish below the crucial 26,400 mark. The broader markets though, managed to close with relatively smaller cuts, performing better than their larger peers. On the BSE sectoral space, the high beta Realty index remained the top laggard in the space and settled with over three and half a percent laceration followed by the Metal and Capital Goods pockets which went home with over three percent cuts. While counters like Banking and Auto too suffered severe pounding. Though there were no sectoral gainers in the space, some stocks like Asian Paints, Bajaj Auto, Gail and Mahindra & Mahindra climbed higher on short-covering after the brutal sell-off in early trade. The market breadth remained pessimistic as there were 693 shares on the gaining side against 1829 shares on the losing side while 158 shares remained unchanged.

Finally, the BSE Sensex was down by 604.51 points or 2.24% to 26397.71, while the CNX Nifty declined 181.85 points or 2.20% to 8,088.60.

The BSE Sensex touched a high and a low 26435.85 and 25911.33, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 1.07%, while Small cap index was lower by 1.46%.

The top losing sectoral indices on the BSE were Realty down by 3.74%, Metal down by 3.59%, Capital Goods down by 3.30%, Bankex down by 2.69% and Auto down by 2.63%, while there were no gainers on the BSE sectoral indices.

The top gainers on the Sensex were Bajaj Auto up by 1.05%, Asian Paints up by 0.48%, GAIL India up by 0.33%, Sun Pharma Inds. up by 0.27% and Mahindra & Mahindra up by 0.19%. On the flip side, Tata Motors down by 7.99%, Tata Steel down by 6.37%, Larsen & Toubro down by 4.26%, ICICI Bank down by 4.07% and ONGC down by 3.79% were the top losers.

Meanwhile, Prime Minister Narendra Modi will launch the work on the Smart City projects in proposed 20 smart cities, selected in the first round of 'Smart City Challenge Competition’ across the country on June 25, 2016. These 20 cities have proposed a total investment of Rs 48,000 crore in area development and pan-city solutions.

On the day of execution of the scheme, the Prime Minister will launch 14 projects under the Smart City Plan of Pune, besides another 69 such projects will be launched the same day through video conference in the remaining 19 smart cities, entailing a total investment of about Rs.1,770 crore.  Marking the first anniversary of the announcement of the government's flagship programme, Modi will launch the 'Smart City Mission' projects from Pune's 5,000-capacity Shiv Chatrapati Sports Complex. The function will be attended by Union Minister M Venkaiah Naidu, Maharashtra Governor C Vidyasagara Rao and Chief Minister Devendra Fadnavis, among others.

The projects to be launched in Pune and other cities include solid waste management under Swachh Bharat Mission, water supply projects, sewage treatment plants and development of open and green spaces under Atal Mission for Rejuvenation and Urban Transformation. It also includes housing projects for urban poor under Pradhan Mantri Awas Yojana and area development and technology based pan-city solutions under Smart Cities Mission.

The prime minister will also inaugurate “Make Your City SMART” contest aimed at involving citizens in various activities, including designing roads, junctions and parks. Suggestions and designs suggested by citizens will be duly incorporated by respective smart cities and winners of this contest will be given rewards in the range of Rs.10,000 to Rs 1 lakh. Modi will also inaugurate a Smart Net Portal, which enables the cities under different urban missions to share ideas during the implementation of various missions.     

The CNX Nifty traded in a range of 8,100.70 and 7,927.05. There were 6 stocks advancing against 45 decliners on the index.

The top gainers on Nifty were GAIL India up by 0.65%, Asian Paints up by 0.60%, Mahindra & Mahindra up by 0.60%, Bajaj Auto up by 0.39% and Cipla up by 0.16%. On the flip side, Tata Motors down by 8.25%, Tata Motors - DVR down by 7.50%, Tata Steel down by 6.59%, Hindalco down by 5.73% and L&T down by 4.82% were the top losers.European markets were trading with deep cuts; Germany’s DAX tumbled 626.04 points or 6.1% to 9,630.99, France’s CAC dropped 330.12 points or 7.39% to 4,135.78 and UK’s FTSE 100 was down by 292.46 points or 4.61% to 6,045.64.

Asian equity markets ended deep in red on Friday, as recent optimism that the UK will remain a part of the European Union proved futile. Risk assets were scorched and safe-haven assets such as treasuries, yen and gold came back into the limelight as Britain's historic European Union referendum suggested a stronger than expected performance by the 'Leave' campaign. British Prime Minister David Cameron, who frantically campaigned for a 'stay' in the union, resigned saying the will of the people must be respected. Japanese shares fell as the EU referendum results sent the yen soaring above 100 to its highest level in 21/2 years. Meanwhile, Chinese shares showed limited reaction to the carnage in stock markets across Asia due to tighter control on capital outflows.