FMCG stocks in demand
Soon after extending gains in afternoon trade, key benchmark indices trimmed gains. At 13:15 IST, the barometer index, the S&P BSE Sensex, was up 34.49 points or 0.13% at 26,432.20. The gains for the Nifty 50 index were higher in percentage terms than those for the Sensex. The Nifty was currently up 16.85 points or 0.21% at 8,105.45.
The Sensex rose 95.80 points or 0.36% at the day's high of 26,493.51 in afternoon trade, its highest level since 23 June 2016. The index lost 98.84 points or 0.37% at the day's low of 26,298.87 in morning trade. The Nifty rose 32.05 points or 0.4% at the day's high of 8,120.65 in afternoon trade, its highest level since 23 June 2016. The index lost 49.25 points or 0.6% at the day's low of 8,039.35 in morning trade.
The broad market depicted strength. There were more than two gainers against every loser on BSE. 1,767 shares rose and 639 shares declined. A total of 147 shares were unchanged. The BSE Mid-Cap index was currently up 0.87%. The broad based BSE Small-Cap index was currently up 1.6%. Both these indices outperformed the Sensex.
In overseas stock markets, key indices in UK, Germany and France extended steep losses registered during the previous trading session on Friday, 24 June 2016, triggered by the UK voting to leave the European Union (EU) in a referendum on 23 June 2016 dubbed "Brexit". In UK, the FTSE 100 index was currently down 0.56%. Investors fear that Britain's exit from the EU could trigger slowdown in UK and European economies. Investors fear that Brexit could stoke the anti-establishment mood in Europe and even talk of disintegration of the union.
UK's finance minister, George Osborne, said in a statement today, 27 June 2016, that Britain has discussed co-ordinated response with the finance ministers and central bank governors of the G7 after the outcome of the referendum. He further said that he has been in contact with his fellow European finance ministers, central bank governors, the managing director of the IMF, the US Treasury Secretary and the Speaker of Congress, and the CEOs of some of Britain's major financial institutions so as to collectively keep a close eye on the developments. He said that only the UK can trigger Article 50, and that in his judgement the country should only do that when there is a clear view about what new arrangement the UK is seeking with its European neighbours. Osborne said that it is inevitable that Britain's economy will have to adjust to the outcome of the Brexit referendum. It is already evident that as a result of the decision, some firms are continuing to pause their decisions to invest, or to hire people.
A statement from the European Commission after a meeting at Brussels, Belgium between Martin Schulz, President of the European Parliament, Donald Tusk, President of the European Council and Mark Rutte, Holder of the Presidency of the Council of the European Union (EU) on 24 June 2016 stated that the union of the remaining 27 member states of the EU will continue after British people voted in favour of United Kingdom leaving the EU. The EU stands ready to launch negotiations swiftly with the UK regarding the terms and conditions of UK's withdrawal from the EU. The statement further mentioned that the EU now expects the UK government to give effect to this decision of the British people as soon as possible. Any delay would unnecessarily prolong uncertainty. The EU hopes that the UK becomes a close partner of the EU in the future.
The Governor of UK's central bank Bank of England Mark Carney said in a statement on 24 June 2016 that there will be a period of uncertainty and adjustment after people of the UK voted for the UK to leave the European Union. It will take some time for the UK to establish new relationships with Europe and the rest of the world. Some market and economic volatility can be expected as this process unfolds. Carney said that the Bank of England stands ready to provide more than 250b billion of additional funds through its normal facilities to support the functioning of markets. The Bank of England also stands ready to provide substantial liquidity in foreign currency, if required. A few months ago, the Bank of England judged that the risks around the referendum were the most significant, near-term domestic risks to financial stability. To mitigate them, the Bank of England has put in place extensive contingency plans, Carney said.
Asian stocks were mixed. Japanese stocks edged higher after warnings from Japanese officials that they may intervene in currency markets to stabilize the yen. The Nikkei 225 Average ended 2.39% higher. The safe-haven yen surged against the dollar on 24 June 2016 after the UK voted to leave the European Union in a referendum on 23 June 2016. A stronger yen hurts the competitiveness of Japanese exporters.
US stocks plunged during the previous trading session on Friday, 24 June 2016, after UK citizens voted to end the country's membership in the European Uniona historic rejection of Europe's political order. The US Federal Reserve said in a statement on 24 June 2016 that it is carefully monitoring developments in global financial markets, in cooperation with other central banks, following the results of the UK referendum on membership in the European Union. The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the US economy.
Most FMCG shares edged higher. Britannia Industries (up 2.06%), Dabur India (up 1.86%), Tata Global Beverages (up 1.57%), Marico (up 1.43%), Godrej Consumer Products (up 0.95%), Hindustan Unilever (up 0.85%), Bajaj Corp (up 0.63%), Nestle India (up 0.21%) and Colgate Palmolive (India) (up 0.12%), edged higher. Procter & Gamble Hygiene & Health Care (down 0.34%), GlaxoSmithKline Consumer Healthcare (down 0.35%) and Jyothy Laboratories (down 0.54%), edged lower.
Capital goods shares were in demand. Punj Lloyd (up 2.50%), Jindal Saw (up 2.39%), ALSTOM India (up 2.20%), Suzlon Energy (up 2.09%), Reliance Defence and Engineering (up 2%), Lakshmi Machine Works (up 1.93%), BEML (up 1.42%), Praj Industries (up 1.27%), SKF India (up 1.21%), Bharat Heavy Electricals (up 1.01%), Bharat Electronics (up 1.01%), AIA Engineering (up 0.99%), Havells India (up 0.95%), ABB India (up 0.79%), Crompton Greaves (up 0.56%) and Siemens (up 0.51%), edged higher. Thermax (down 0.52%) and Alstom T&D India (down 1.67%), edged lower.
Engineering & construction major L&T rose 1.85% to Rs 1,460.15 after the company said its construction division has secured orders worth Rs 2416 crore across various business segments in this month so far. L&T said that the building and factories division won orders worth Rs 1165 crore, power transmission and distribution business bagged orders worth Rs 1120 crore in the domestic and international markets and its smart world and communication business won orders worth Rs 131 crore. The announcement was made during market hours today, 27 June 2016. The stock hit a high of Rs 1,461.85 and a low of Rs 1,430 so far during the day.
Bajaj Finserv surged 6.7% after media reports suggested that the company is likely to buy out its German partner, Allianz SE's stakes in both of their joint venture insurance companies, Bajaj Allianz Life Insurance Company and Bajaj Allianz General Insurance in a deal estimated at as much as Rs 10000 crore. Bajaj Finserv, the financial services arm of Bajaj Holdings and Investments, owns 74% and Allianz SE holds 26% in both the ventures. Bajaj Finserv managing director Sanjiv Bajaj was quoted as saying that discussions between Bajaj and Allianz are on. No final decision has been taken yet on whether Bajaj will buy Allianz's stake or a third party will come and acquire Allianz's holding in the two insurance joint venture, he said.
Suzlon Energy rose 2.39% after the company announced the completion and commissioning of the 4.20 megawatts (MW) maiden wind project for Ahmedabad Municipal Corporation (AMC). The announcement was made on Saturday, 25 June 2016.
Meanwhile, global credit rating agency Moody's Investors Service reportedly said in a note that the Indian government's recent decision to relax foreign direct (FDI) investment rules in sectors including defence, aviation, and retail is credit positive for its Baa3 sovereign rating on India because the move demonstrates a continuation of reform momentum and paves the way for private investment and a boost in productivity. The rating agency simultaneously warned that reforms have stalled in passing a revamped goods and services tax and land acquisition rules, according to media reports. Moody's reportedly expects that political division in India will keep the reform process uneven and slow-moving. Moody's currently rates India at Baa3, the lowest investment-grade rating, with a "positive" outlook.
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