Market declines on weak global cues

IT, banking sector stocks, shares of public sector companies and index heavyweights ITC and Reliance Industries led losses for key benchmark indices triggered by weakness in global stocks. The barometer index, the S&P BSE Sensex, lost 236.06 points or 0.93% at 25,200.91, as per the provisional closing data. The losses for the Nifty 50 index were lower than those for the Sensex in percentage terms. The Nifty fell 58.90 points or 0.75% at 7,747, as per the provisional closing data. World stocks fell after weak Chinese manufacturing data for April 2016. European stocks were hit additionally by strength in the euro against the dollar.

The Sensex hit 3-week low when it fell 244.03 points or 0.95% at the day's low of 25,192.94 in late trade. The barometer index rose 268.99 points or 1.05% at the day's high of 25,705.96 in early trade, its highest level since 29 April 2016. The Nifty, too, hit 3-week low when it fell 70.75 points or 0.9% at the day's low of 7,735.15 in mid-afternoon trade. The index rose 84.35 points or 1.08% at the day's high of 7,890.25 in early trade, its highest level since 28 April 2016.

In overseas stock markets, European shares edged lower as the euro hit a roughly nine-month high against the dollar. Euro strength makes goods from European exporters more expensive to buy for holders of other currencies. Trading in US stock index futures pointed to losses for US stocks at the opening bell. Trading in US index futures indicated that the Dow Jones Industrial Average could slide 109.50 points at the opening bell today, 3 May 2016. Meanwhile, the San Francisco Federal Reserve President John Williams reiterated yesterday, 2 May 2016, his view that the US economy is ready for higher interest rates, but flagged the risk of broad-based declines in asset prices as a result.

Earlier during the global day, Asian stocks ended on a mixed note. Chinese stocks saw a divergent trend after the latest data showed deceleration in China's manufacturing activity in April 2016. In mainland China, the Shanghai Composite ended 1.85% higher. In Hong Kong, the Hang Seng index closed 1.85% lower. The Caixin China general manufacturing purchasing managers' index fell to 49.4 in April 2016 from 49.7 in March 2016. A reading below 50 indicates economic contraction. China's official manufacturing PMI, a competing gauge, came in at 50.1 in April 2016 compared with 50.2 in March 2016, according to data released by the National Bureau of Statistics on 1 May 2016. Meanwhile, Chinese leaders have called for strengthening the supervision of stock market and protecting investor interests, according to reports.

Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,484 shares declined and 1,155 shares rose. A total of 151 shares were unchanged. The BSE Mid-Cap index was provisionally down 0.85%. The BSE Small-Cap index was provisionally down 0.28%. The losses for both these indices were lower than the Sensex's decline in percentage terms.

The total turnover on BSE amounted to Rs 2718 crore, higher than turnover of Rs 2425.66 crore registered during the previous trading session.

Index heavyweight and cigarette major ITC was down 1.26% at Rs 316.85. The stock hit a high of Rs 323.25 and a low of Rs 314.50 in intraday trade.

Index heavyweight Reliance Industries (RIL) declined 1.08% at Rs 975.60. The stock hit a high of Rs 994.70 and a low of Rs 972.60 in intraday trade.

IT stocks edged lower on strong rupee. Persistent Systems (down 0.96%), Oracle Financial Services Software (down 1.72%), TCS (down 1.87%), HCL Technologies (down 1.68%), Wipro (down 0.96%) and Tech Mahindra (down 2.25%) edged lower. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

Index heavyweight and software major Infosys fell 1.64% at Rs 1,180.90. The stock hit a high of Rs 1,212.05 and a low of Rs 1,174.30 in intraday trade.

In the foreign exchange market, the partially convertible rupee was currently hovering at 66.37, compared with closing of 66.445 during the previous trading session.

Shares of Dr Reddy's Laboratories fell 1.69% at Rs 2,961.10, with the stock extending previous trading session's slide. The stock had declined 2.65% to settle at Rs 3,012.10 yesterday, 2 May 2016.

Tata Steel rose 0.35% at Rs 348 on reports that the global metals group Liberty House will today, 3 May 2016, submit an indicative bid to buy Tata Steel's UK assets. Tata Steel has put Tata Steel, UK on the block due to the deteriorating financial performance of the UK subsidiary.

On the macro front, data released by the government after market hours yesterday, 2 May 2016, showed that the core sector registered a strong growth of 6.4% in March 2016 over March 2015. The eight core industries comprising of coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity have nearly 38% weightage in the index of industrial production (IIP). The core sector registered a growth of 2.7% in the year ended 31 March 2016 over the year ended 31 March 2015.

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