A bout of volatility was witnessed in mid-afternoon trade as key benchmark indices recovered from lower level soon after extending intraday losses. The barometer index, the S&P BSE Sensex, and 50-unit CNX Nifty witnessed a divergent trend. While the Sensex was currently trading with minuscule losses, the Nifty was trading slightly higher for the day. The Sensex trimmed losses after hitting its lowest level in more than four weeks. The 50-unit CNX Nifty bounced back after hitting 2-1/2-week low. The Sensex was currently off 10.09 points or 0.04% at 27,551.29. The Nifty was currently up 7.75 points or 0.09% at 8,368.75. The market breadth indicating the overall health of the market was positive. Meanwhile, in the global commodities markets, Brent crude oil futures edged lower on persistent worries about a global supply glut. The decline in crude oil prices augurs well for India.
Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month July 2015 series to August 2015 series. The near month July 2015 derivatives contracts expire on Thursday, 30 July 2015.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said yesterday, 27 July 2015, that inflation targets should not be changed every three years as that would mean changing goal posts as soon as the system starts to internalize it.
Foreign portfolio investors sold shares worth a net Rs 859.94 crore yesterday, 27 July 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 238.66 crore yesterday, 27 July 2015, as per provisional data released by the stock exchanges.
In overseas markets, European stocks edged higher, recovering from a selloff during the previous trading session triggered by a rout in Chinese stocks. Asian stocks were mixed. US stocks fell yesterday, 27 July 2015, after the steepest decline in Chinese stocks in eight years raised concerns that cooling growth in the world's No. 2 economy could hurt China's trading partners.
At 14:16 IST, the S&P BSE Sensex was down 10.09 points or 0.04% at 27,551.29. The index fell 144.99 points at the day's low of 27,416.39 in mid afternoon trade, its lowest level since 29 June 2015. The index jumped 115.27 points at the day's high of 27,676.65 in morning trade.
The Nifty was up 7.75 points or 0.09% at 8,368.75. The index hit a high of 8,397.40 in intraday trade. The index hit a low of 8,321.75 in intraday trade, its lowest level since 10 July 2015.
The market breadth indicating the overall health of the market was positive. On BSE, 1,341 shares rose and 1,261 shares fell. A total of 133 shares were unchanged.
Hero MotoCorp was down 3.04% to Rs 2,526.50. The company announced during trading hours today, 28 July 2015, that HMCL NA, Inc. and HMCL Americas, Inc. (both wholly owned subsidiaries of Hero MotoCorp) have entered into a settlement agreement with the receiver appointed by the Circuit Court, Wisconsin, USA in the matter of Chapter 128 Receivership filed by the Erik Buell Racing, Inc. and Erik Buell LLC (EBR). As per the settlement agreement, HMCL Americas Inc. has agreed to acquire the ownership of certain tangible and intangible assets of EBR free and clear of all encumbrances, for a consideration of $2.8 million. HMCL and the receiver have also agreed to resolve all disputes and fully give mutual releases in terms of the settlement agreement for all subject matters which is in any way related to EBR.
The settlement agreement is, inter cilia, contingent upon the approval by the Circuit Court; and the approval of the board of directors of Hero MotoCorp, authorizing its joinder as a direct party to the Settlement Agreement on or before 10 August 2015. The performance of the settlement agreement will help Hero MotoCorp's in-house research and development teams to accelerate development of certain consulting projects, including the projects EBR was executing for the company at the time of filing of the Chapter 128 Receivership.
EBR Inc., in which MotoCorp has an equity investment, and EBR Inc.'s subsidiary EBR LLC had ceased their operations with effect from 15 April 2015 and had filed for the Chapter 128 Receivership before the Circuit Court. The notice of motion with regards to the settlement agreement will be filed in the Circuit Court in the next few days, Hero MotoCorp said.
Pharmaceutical shares were mixed. Glenmark Pharmaceuticals (down 3.25%), Piramal Enterprises (down 2.31%), Wockhardt (down 1.06%), GlaxoSmithKline Pharmaceuticals (down 0.55%), Sun Pharmaceutical Industries (down 0.5%), Dr. Reddy's Laboratories (down 0.43%) and Cipla (down 0.06%), edged lower. IPCA Laboratories (up 0.39%), Cadila Healthcare (up 0.59%), Divi's Laboratories (up 0.69%), Lupin (up 0.83%) and Strides Arcolab (up 1.19%), edged higher.
Torrent Pharmaceuticals was up 2.10% to Rs 1,426.30. The company's consolidated net profit rose 75% to Rs 449 crore on 75% growth in revenue to Rs 1947 crore in Q1 June 2015 over Q1 June 2014. The result was announced after market hours yesterday, 27 July 2015. The company's EBITDA (earnings before interest, taxation, depreciation and amortization) rose 156% to Rs 974 crore in Q1 June 2015 over Q1 June 2014. Torrent Pharmaceuticals attributed the exceptional growth in revenue and net profit in Q1 June 2015 to launch of a new product in US market, which currently has limited competition. The continuation of this is dependent on competitive market conditions, the company said in a statement.
Aurobindo Pharma was off 1.64% to Rs 727 as shares allotted by the company to the existing shareholders as bonus shares will be admitted for trading on the bourses today, 28 July 2015. A total of 29.19 crore shares allotted as bonus shares in the ratio of 1:1 on record date will be admitted for trading on the bourses.
Most FMCG stocks edged higher. Bajaj Corp (up 2.57%), Jyothy Laboratories (up 1.81%), Britannia Industries (up 1.53%), GlaxoSmithKline Consumer Healthcare (up 0.99%), Hindustan Unilever (up 0.66%), Procter & Gamble Hygiene & Health Care (up 0.64%), Dabur India (up 0.59%), Godrej Consumer Products (up 0.37%) and Tata Global Beverages (up 0.07%), edged higher. Colgate Palmolive (India) (down 0.19%), Nestle India (down 0.32%) and Marico (down 2.01%), edged lower.
Dish TV India fell 3.57% to Rs 113.55. The company reported a consolidated net profit of Rs 54.21 crore in Q1 June 2015 compared with net loss of Rs 14.97 crore in Q1 June 2014. Consolidated total income rose 20.66% to Rs 762.90 crore in Q1 June 2015 over Q1 June 2014. The result was announced during trading hours.
Meanwhile, in the global commodities markets, Brent crude oil futures edged lower on persistent worries about a global supply glut. Brent for September settlement was currently off 71 cents at $52.76 a barrel. The contract had fallen $1.15 a barrel or 2.11% to settle at $53.47 a barrel during the previous trading session.
India imports about 80% of its crude requirements and a decline in crude eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said yesterday, 27 July 2015, that inflation targets should not be changed every three years as that would mean changing goal posts as soon as the system starts to internalize it. The RBI governor's comments follow the release of a new draft of the proposed Indian Financial Code which suggested that inflation targets should be reset every three years following consultations between the government and the RBI. The draft also suggested setting up a seven-member monetary policy committee (MPC) which would have four members appointed by the government. An earlier proposal to give the RBI governor veto power over decisions of the MPC has also been removed.
At the inauguration of the Meghnad Desai Academy of Economics in Mumbai, the RBI governor reiterated that there was no trade off between inflation and growth. The best way to achieve sustained growth is to try and achieve low inflation, Rajan said, according to reports. Beyond that growth depends on other factors, such as business environment, government policy, taxation policy, Rajan said. From a central bank's perspective over the last 20 years, there's been a focus on bringing inflation credibly down over the medium term, Rajan said.
Rajan also said that using foreign exchange reserves for funding various projects may not be prudent. Rajan mentioned that the RBI had received a number of proposals to use forex reserves to fund various projects at low rates of interest. Commenting on the issue of bad loans in the banking system, Rajan said that there was enormous pressure on the RBI to not call stressed assets as non-performing assets (NPAs).
Meanwhile, India's weather office, the India Meteorological Department (IMD), said in its daily monsoon update issued yesterday, 27 July 2015, that the Southwest Monsoon was vigorous over Rajasthan and Gujarat state and was active over Gangetic West Bengal, Odisha and West Madhya Pradesh during the past 24 hours until 8:30 IST.
For the country as a whole, cumulative rainfall during this year's monsoon season was 4% below the Long Period Average (LPA) until 27 July 2015. Region wise, the rainfall was 15% below the LPA in South Peninsula, 7% below the LPA in East & Northeast India, 5% below the LPA in Central India and 11% above the LPA in Northwest India until 27 July 2015.
The quantum of and the spatial distribution of rainfall this month holds key; July accounts for about 33% of precipitation during the June-September monsoon season and is critical for crops. The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
In overseas markets, European stocks edged higher today, 28 July 2015, recovering from a selloff during the previous trading session triggered by a rout in Chinese stocks. Key indices in Germany, France and UK were up 0.37% to 0.45%.
In UK, the UK Office for National Statistics today, 28 July 2015, announced that UK's gross domestic product expanded 0.7% between April and June, an annualized rate of 2.8%. The figures are just a preliminary estimate, but they spell out that the economy has recovered from a slight slump in the first quarter--when quarterly growth was 0.4%--and is ready to gather pace during the remainder of the year.
Chinese shares edged lower in volatile trade today, 28 July 2015. In mainland China, the Shanghai Composite lost 1.68%. In Hong Kong, the Hang Seng index rose 0.62%. China's central bank People's Bank of China today, 28 July 2015, announced that it would inject 50 billion yuan ($8.05 billion) into money markets in its biggest liquidity boost since 7 July 2015. The central bank also said in a statement before the stock market opened that it would use "various monetary tools" to maintain "appropriate levels of liquidity", a signal that the further monetary easing could be in store. The Shanghai Composite Index fell 8.5% yesterday, 27 July 2015, marking its biggest one day drop in more than eight years.
In other Asian markets, key benchmark indices in South Korea and Taiwan were up 0.01% to 0.3%. Key benchmark indices in Japan, Singapore and Indonesia and were off 0.1% to 1.16%.
US stocks fell yesterday, 27 July 2015, after the steepest decline in Chinese stocks in eight years raised concerns that cooling growth in the world's No. 2 economy could hurt China's trading partners. Market reaction to better-than-expected durable-goods orders also was negative, as investors continued to view each data-point as a factor in the Federal Reserve's decision about the timing and pace of interest rate hikes.
Meanwhile, a two-day policy meeting of the Federal Reserve Open Market Committee (FOMC) begins today, 28 July 2015. The US central bank is widely expected to keep interest rates at a record low at the meeting, but expectations are rising that a rate hike could come later this year.
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