Brexit hangover lingers; Nifty ends below 8100 mark

Indian stock markets commenced the new week on a lackadaisical note as the benchmark equity indices hardly budged from their previous closing levels on Monday.  The key indices oscillated in an extremely tight range through the session as market participants remained on the sidelines lacking conviction amid the persistent worries over global financial stability. While the so-called Brexit was discussed intensely across the world in the run up to the poll, the actual decision by Britain to leave came as a surprise. Global markets were caught off guard and plummeted Friday. However, the sentiments took support from positive developments of monsoon that bounced back emphatically and is on track for a strong run in the weeks ahead.  Increased rainfall has already accelerated crop planting, which expanded 48% to 125 lakh hectare in the past week. Planting of rice more than doubled in a week while area under pulses has trebled, signaling higher output of lentils, which should ease food inflation. Some support also came with Finance Minister Arun Jaitley’s statement that the impact of the Brexit vote on India would not be significant, as the underlying fundamentals of the economy were robust. Jaitley however, noted that Indian companies with significant operations in the UK would have to tailor their businesses accordingly to deal with the fallout. Meanwhile, sharp selling witnessed in IT exporters on concerns over demand uncertainty from Europe and volatility in the British pound post the Brexit. However, FMCG shares gained on hopes of higher rural volume growth after the IMD said that the monsoon rains will retreat later than normal.

On the global front, Asian markets ended mixed on Monday as market participants struggled to digest the uncertainty triggered by Britain’s decision to exit the European Union.  Further, Chinese shares ended higher after Premier Li Keqiang said the government has policies prepared to help it weather bigger economic challenges ahead, while Japanese shares gained after government officials warned again over the yen's rise and signaled an intervention in currency markets was possible.  Meanwhile, European stock markets fell on Monday, weighed down by uncertainty over Britain's decision to leave the European Union.

Back home, the local benchmark indices opened on a somber note, as investors were largely influenced by the daunting sentiments prevailing in Asian markets.  Thereafter, the frontline indices oscillated in an extremely tight range through the session as market participants remained on the sidelines lacking conviction amid the persistent worries over global financial stability. Finally the NSE’s 50-share broadly followed index Nifty, settled with single digit gains below the crucial 8,100 support level while Bombay Stock Exchange’s Sensitive Index Sense added merely five points and closed above the psychological 26,400 mark. Moreover, broader markets showed some resilience by outclassing their larger peers by a big margin as investors carried forward their value hunting in beaten down shares from the midcap and small cap space. On the BSE sectoral space, Capital Goods counter remained the top gainer in the space with over one and half a percent gains followed by the Realty and FMCG indices which ended with gains of over a percent. On the other hand, the IT index slipped by around two percent followed by Tech counters which too settled with over one and half a percent losses. The market breadth remained optimistic as there were 1820 shares on the gaining side against 788 shares on the losing side, while 179 shares remained unchanged.

Finally, the BSE Sensex surged 5.25 points or 0.02% to 26402.96, while the CNX Nifty rose 6.10 points or 0.08% to 8,094.70.

The BSE Sensex touched a high and a low 26493.51 and 26262.72, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.80%, while Small cap index was up by 1.52%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.62%, Realty up by 1.29%, FMCG up by 1.25%, Oil & Gas up by 1.07% and Consumer Durables up by 1.03%, while IT down by 1.86%, TECK down by 1.66% and Auto down by 0.25% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 3.04%, SBI up by 2.77%, Sun Pharma up by 2.67%, Cipla up by 2.62% and Larsen & Toubro up by 2.36%. On the flip side, TCS down by 2.93%, Infosys down by 2.37%, Asian Paints down by 1.48%, Wipro down by 1.23% and Bharti Airtel down by 1.07% were the top losers.

Meanwhile, India is identifying basket of projects worth $2-3 billion that could be funded by the Asian Infrastructure Investment Bank (AIIB) in the areas of urban development, including smart cities, urban transport, energy, inland waterways and water supply. Finance Minister Arun Jaitley said that India has a huge unmet demand for investment in infrastructure and is preparing a basket of projects for AIIB funding.

Meanwhile, Jaitley has made the offer to open a regional office of China-led lender AIIB branch a regional office in New Delhi (India) to effectively cater to potentially large portfolio and speed up the process of project development, monitoring and implementation. Stating the importance of AIIB, Jaitley said that AIIB presents a much-needed additional financing window dedicated to infrastructure projects and meeting the financing gap that may be beyond the capacity of the individual countries and the existing MDBs (Multilateral Development Banks).

The Beijing-based AIIB was established last year with an authorized capital of $100 billion in which India and 56 other countries joined as founding members. China is the largest shareholder with 26.06 per cent voting shares followed by India with 7.5 per cent, Russia 5.93 per cent and Germany with 4.5 per cent. AIIB is headed by former Assistant Chinese Finance Minister, Jin Liqun, while India’s DJ Pandian is its Vice President and Chief Investment Officer.

The CNX Nifty traded in a range of 8,120.65 and 8,039.35. There were 27 stocks advancing against 24 decliners on the index.

The top gainers on Nifty were Bank of Baroda up by 3.19%, Ultratech Cement up by 3.15%, Aurobindo Pharma up by 3.15%, Dr. Reddys Lab up by 3% and Cipla up by 2.95%. On the flip side, TCS down by 3 %, Infosys down by 2.47%, Zee Entertainment down by 1.97%, Indusind Bank down by 1.45% and Asian Paints down by 1.44% were the top losers.

European markets were trading in red; Germany’s DAX declined 99.27 points or 1.04% to 9,457.89, UK’s FTSE 100 decreased 62.22 points or 1.01% to 6,076.47 and France’s CAC was down by 34.1 points or 0.83% to 4,072.63.

Asian stocks ended mixed on Monday as investors looked to snap up bargains after Friday's dramatic selloff sparked by Britain's surprise decision to leave the European Union. Some sanity returned to the markets after thirty central banks across the world vowed to work closer together to maintain stability in financial markets in the aftermath of the Brexit vote. Chinese shares ended higher after Premier Li Keqiang said the government has policies prepared to help it weather bigger economic challenges ahead. Japanese shares regained some lost ground after government officials warned again over the yen's rise and signaled an intervention in currency markets was possible.