Benchmarks continue weak trade on Brexit shock

Indian equity benchmarks erased some losses and continued their weak trade in the late afternoon session on account of selling in frontline blue chip counters as Britain voted to leave the European Union, fuelling a wave of global uncertainty. Fears are also growing that other EU members will push for referendums, posing the biggest threat to the future of grouping since its inception almost 60 years ago. Economic Affairs Secretary Shaktikanta Das however downplayed the fears and stated that Britain’s decision to move out of the 28-member European Union (EU) won’t significantly impact India’s trade. The secretary stated that both import and export are not going to be impacted significantly and will be very marginal. Reserve Bank Governor Raghuram Rajan stated that central bank is continuously maintaining a close vigil on the market developments, both domestically and internationally, and will take all necessary steps, including liquidity support (both dollar and rupee), to ensure orderly conditions in financial markets. Traders were seen selling in Realty, Metal and Capital Goods sector stocks.

On the global front, the Asian markets were trading in red while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,100 and 26,400 levels respectively. The market breadth on BSE was negative in the ratio of 378:1996 while 127 scrips remained unchanged.

The BSE Sensex is currently trading at 26311.54, down by 690.68 points or 2.56% after trading in a range of 25911.33 and 26367.48. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.75%, while Small cap index down by 2.19%.

The losing sectoral indices on the BSE were Realty down by 4.36%, Metal down by 4.03%, Capital Goods down by 3.50%, Bankex down by 3.22% and Auto down by 2.84%.

The top gainers on the Sensex were Mahindra & Mahindra up by 0.85%, GAIL India up by 0.75%, Bajaj Auto up by 0.65% and Asian Paints up by 0.31%.

On the flip side, Tata Motors down by 7.58%, Tata Steel down by 6.83%, ICICI Bank down by 4.24%, Larsen & Toubro down by 4.10% and Axis Bank down by 3.85% were the top losers.

Meanwhile, amid concern over rising airfares, Civil Aviation Minister Ashok Gajapathi Raju has said that capping would not be the solution to deal with surge in airfares, as it would also push the floor prices. He added that these are problems which do not lend itself to a simplistic solution.

The minister further citied an analysis done last year, which showed that only around 1.7 per cent of the tickets sold were in the higher fare bucket. He added that Caps and floors are very interesting, but we should not land up in a situation that pushes up the price of over 90 per cent of passengers to benefit around 1.7 per cent of the passengers'.

Raju had earlier too ruled out the possibility of capping airfares in the backdrop of passenger complaints of arbitrary tariff hikes, saying competition among the airlines will take care of the problem. Recently, government cleared a long awaited new civil aviation policy and proposed a Rs. 2,500 cap for an hour's flight on such routes to ensure affordability and a cap of Rs 1200 airfare for 30 minutes flight, saying that  the centre will refund 80 per cent of the losses incurred by airlines due to such caps.

The CNX Nifty is currently trading at 8057.00, down by 213.45 points or 2.58% after trading in a range of 7927.05 and 8062.80. There were 5 stocks advancing against 46 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 1.14%, Bajaj Auto up by 0.72%, GAIL India up by 0.59%, Bharti Infratel up by 0.57% and Asian Paints up by 0.29%.

On the flip side, Tata Motors down by 7.79%, Tata Motors - DVR down by 7.54%, Tata Steel down by 6.78%, Aurobindo Pharma down by 5.19% and Hindalco down by 5.17% were the top losers.

The Asian markets were trading in red; Nikkei 225 decreased 1286.33 points or 7.92% to 14,952.02, Hang Seng decreased 609.21 points or 2.92% to 20,259.13, Taiwan Weighted decreased 199.69 points or 2.3% to 8,476.99, Jakarta Composite decreased 69.66 points or 1.43% to 4,804.65, KOSPI Index decreased 61.47 points or 3.09% to 1,925.24, Shanghai Composite decreased 37.67 points or 1.3% to 2,854.29 and FTSE Bursa Malaysia KLCI decreased 16.56 points or 1.01% to 1,623.42.

The European markets were trading in red; UK’s FTSE 100 decreased 272.33 points or 4.3% to 6,065.77, Germany’s DAX decreased 606.82 points or 5.92% to 9,650.21 and France’s CAC decreased 339.3 points or 7.6% to 4,126.60.