Key benchmark indices extended losses in afternoon trade as weakness in global stocks weighed on sentiment post rate hike by the Federal Reserve. At 13:20 IST, the barometer index, the S&P BSE Sensex, was down 55.79 points or 0.18% at 31,100.12. The Nifty 50 index was down 32.40 points or 0.34% at 9,585.75.
Domestic stocks drifted lower in early trade tracking negative Asian stocks. Stocks recovered in morning trade and hovered near the flat line. However, key indices once again resumed fall in mid-morning trade and extended losses in afternoon trade after lower opening in European stocks.
The market breadth, indicating the overall health of the market, was positive. On the BSE, 1,281 shares rose and 1,192 shares fell. A total of 146 shares were unchanged.
Most metal & mining stocks gained. Bhushan Steel (up 2.39%), Hindustan Copper (up 2.65%), Hindustan Zinc (up 0.14%), Jindal Steel & Power (up 1.59%), Tata Steel (up 0.23%), Steel Authority of India (Sail) (up 0.98%), National Aluminum Company (up 0.08%) and NMDC (up 1.07%) gained. JSW Steel (down 0.2%), Vedanta (down 0.19%), and Hindalco Industries (down 0.95%) declined.
Jindal Saw rose 3% after the company said it reduced stake in foreign subsidiary Jindal Tubular to 19%. The announcement was made after market hours yesterday, 14 June 2017. Jindal Saw had a wholly-owned step down foreign subsidiary, namely, Jindal Tubular USA LLC (JTUL), which had acquired a pipe manufacturing plant in Mississippi, USA under Chapter XI.
JTUL had a bank debt for more than $140 million and had been incurring continuous losses since the year of acquisition, resulting into a negative net worth. Since the loan and losses were being consolidated with the financials of Jindal Saw, banks and financial institutions prevented the company to provide any cash support further. Therefore, in order to conserve the resources of the company and to seek the rating up-gradation, the ownership in JTUL was brought down to 19% by transferring the remaining equity to prevent further financial erosion of the company.
Most auto stocks declined. Mahindra & Mahindra (M&M) (down 1.07%), Maruti Suzuki India (down 0.64%), Eicher Motors (down 1.55%), Hero MotoCorp (down 0.05%), Bajaj Auto (down 0.13%) and TVS Motor Company (down 0.54%) declined. Ashok Leyland (up 0.16%) and Tata Motors (up 0.53%) gained.
Plastiblends India rose 3.13% after the company announced that it has fixed Tuesday, 4 July 2017 as the record date to eligible shareholders for issuance of bonus equity shares in the ratio 1:1 i.e. one bonus share for every one held. The announcement was made after market hours yesterday, 14 June 2017.
Overseas, European stocks dropped and Asian shares declined as investors took profits, after a muted reaction in US markets to the Federal Reserve's rate rise and plan to start shrinking its balance sheet. In US, the Dow industrials closed at a record for a second straight session yesterday, 14 June 2017 but other benchmarks finished lower as the Federal Reserve hiked the fed-funds futures rate.
China's central bank left interest rates for open market operations unchanged. The rate for seven-day reverse repos remained at 2.45%, the 14-day tenor at 2.6% and the 28-day tenor at 2.75%, the PBOC said in a statement. China's benchmark one-year lending and deposit rates have remained unchanged since October 2015.
Meanwhile, risk sentiment was hit by fear of more US political turmoil after media report indicated that US President Donald Trump is being investigated by a special counsel for possible obstruction of justice. Investigators are investigating alleged Russian interference in the 2016 US presidential election and possible collusion with the Trump campaign. Trump's legal team denounced the report.
The Federal Reserve hiked the fed-funds rate by a quarter-point to between 1% and 1.25%, as expected, after its two-day policy meeting yesterday, 14 June 2017 and indicated that it start shrinking its $4.5 trillion portfolio of bonds and other assets this year. Fed Chair Janet Yellen said the process could start relatively soon, while projections of Federal Reserve Board members also showed they expect one more rate hike by the end of year.
US consumer prices unexpectedly fell in May. The Labor Department said its Consumer Price Index dipped 0.1% last month after rising 0.2% in April.
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