Market registers small decline

Concerns about further interest rate increases in the United States triggered small losses on the domestic bourses. The barometer index, the S&P BSE Sensex, fell 55.32 points or 0.21% at 25,718.29, as per the provisional closing data. The Nifty 50 index fell 20.60 points or 0.26% at 7,870.15, as per the provisional closing data. After registering losses of more than 1% in early afternoon trade, the two key benchmark indices staged a strong rebound later with the recovery gathering steam at the fag end of the trading session.

The Sensex dropped 270.21 points or 1.04% at the day's low of 25,503.40 in early afternoon trade, its lowest level since 16 May 2016. The barometer index fell 26.61 points or 0.1% at the day's high of 25,747 in late trade. The Nifty lost 80 points or 1.01% at the day's low of 7,810.75 in early afternoon trade, its lowest level since 16 May 2016. The index fell 8.70 points or 0.11% at the day's high of 7,882.05 in late trade.

The latest data showed that US consumer prices rose in April at their fastest pace in three years. The inflation data along with hawkish comments from US Federal Reserve officials raised expectations that the US central bank will pick up the pace of interest rate increases during the current calendar year. The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 14-15 June 2016. Investors in emerging markets, including India are worried that higher interest rates in the US will drain liquidity from emerging markets and redirect it to developed economies.

In overseas stock markets, European stocks declined as comments from US Federal Reserve officials suggested a rate hike in the US could come sooner than expected. In Asia, Chinese stocks edged lower after Zhang Dejiang, the No. 3 official in the Chinese central government, made no mention today, 18 May 2016, of a stock trading link between Hong Kong and Shenzhen. In mainland China, the Shanghai Composite index settled 1.27% lower. In Hong Kong, the Hang Seng index settled 1.45% lower. Before his arrival for a conference in Hong Kong, speculation was rife that Dejiang could announce the launch of a long-anticipated stock trading link between Hong Kong and Shenzhen.

US stocks dropped yesterday, 17 May 2016, after Federal Reserve officials implied that interest rates could be raised as early as next month. Atlanta Fed President Dennis Lockhart and San Francisco Fed President John Williams, both, yesterday, 17 May 2016, said the Fed's decision on whether to raise rates at the June 14-15 meeting hinges on the data. Lockhart said that June certainly could be a meeting at which action could be taken. Dallas Fed President Robert Kaplan, seen as a hawk, said he will push for an interest rate hike in June or July.

The consumer-price index increased a seasonally adjusted 0.4% in April from the prior month after rising 0.1% in March. That was the largest one-month increase since February 2013. A measure of underlying price pressures, which excludes the often-volatile categories of food and energy, rose 0.2% last month after ticking up 0.1% in March. Core prices were up 2.1% from a year earlier, a fifth consecutive month of annual growth above 2%the longest such streak in four years.

Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,314 shares fell and 1,242 shares rose. A total of 181 shares were unchanged. The BSE Mid-Cap index was provisionally off 0.01%. The fall in this index was lower than the Sensex's decline in percentage terms. The BSE Small-Cap index was provisionally up 0.22%, outperforming the Sensex.

The total turnover on BSE amounted to Rs 2603 crore, lower than turnover of Rs 2673.07 crore registered during the previous trading session.

Index heavyweight and banking major HDFC Bank fell 1.18% to Rs 1,140. The stock hit high of Rs 1,153.95 and low of Rs 1,132.25 in intraday trade.

Shares of small car major Maruti Suzuki India edged lower in volatile trade on media reports that UK-based vehicle testing agency Global New Car Assessment Programme (Global NCAP) yesterday, 17 May 2016, awarded zero star safety rating to the company's 'Celerio' and 'Eeco' car models following a crash test. The stock slipped 0.79% to Rs 3,917.85. The stock hit high of Rs 3,935.10 and low of Rs 3,808 in intraday trade.

Meanwhile, Maruti during market hours said that the company has revamped its Alto 800 car model. Among other changes, the new versions of the model offer 9% higher fuel efficiency compared to the earlier versions. The two CNG versions offer 10% higher fuel efficiency compared to the earlier versions. The prices for the 10 different versions of the revamped Alto 800 range from Rs 2.49 lakh to Rs 3.76 lakh ex-showroom, Delhi.

State Bank of India (SBI) edged higher in volatile trade after the state-run bank said it is considering merger of five associate banks with itself. The stock rose 1.89% to Rs 180.40. The stock hit a high of Rs 180.55 and a low of Rs 173.65 in intraday trade. State Bank of Bikaner and Jaipur lost 3.26%. State Bank of Mysore jumped 10.15%. State Bank of Travancore advanced 1.73%. SBI after trading hours yesterday, 17 May 2016, announced that it is seeking in principle sanction of the Government of India (GoI) to enter into negotiation with its 5 subsidiary banks viz. State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore to acquire their businesses including assets and liabilities. The decision is purely exploratory at this stage and there is no certainty in relation to SBI completing the acquisitions, SBI said. SBI's board of directors will take a final call after evaluating all the relevant considerations. SBI also said that it is considering acquisition of Bharatiya Mahila Bank.

Punjab National Bank gained after the bank announced Q4 results. The stock rose 3.39% to Rs 76.30. The stock was volatile. The stock hit a high of Rs 77.20 and a low of Rs 72.10 in intraday trade. The bank reported net loss of Rs 5367.14 crore in Q4 March 2016 compared with net profit of Rs 306.56 crore in Q4 March 2015. Total income declined 1.33% to Rs 13276.19 crore in Q4 March 2016 over Q4 March 2015. The result was announced during market hours today, 18 May 2016. The bank's gross non-performing assets (NPAs) stood at Rs 55818.33 crore as on 31 March 2016 as against Rs 34338.22 crore as on 31 December 2015 and Rs 25694.86 crore as on 31 March 2015. The ratio of gross NPAs to gross advances stood at 12.9% as on 31 March 2016 as against 8.47% as on 31 December 2015 and 6.55% as on 31 March 2015. The ratio of net NPAs to net advances stood at 8.61% as on 31 March 2016 as against 5.86% as on 31 December 2015 and 4.06% as on 31 March 2015. The bank's provisions and contingencies (excluding tax provisions) rose 173.46% to Rs 10485.23 crore in Q4 March 2016 over Q4 March 2015.

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