Volatility to the fore

Volatility was the order of the day, as key benchmark indices trimmed losses in early afternoon trade. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty trimmed losses after both these key benchmark indices hit their lowest level in more than a year. The Sensex failed to retain the psychological 26,000 level after piercing that mark in early trade. The Sensex was currently off 174.04 points or 0.68% at 25,567.52. The decline for the Sensex in percentage terms was higher than the decline for the 50-unit CNX Nifty. The Nifty was currently off 38.85 points or 0.5% at 7,770.15.

The broad market depicted weakness. There were more than 4 losers against every gainer on BSE. The BSE Small-Cap index was down 2.37%. The decline in this index was higher than the Sensex's decline in percentage terms. In overseas markets, Chinese stocks sank again as investors despaired at the lack of policy action from Beijing in response to recent data suggesting the downturn in the world's second-largest economy is deepening. Japanese stocks also witnessed a sharp slide.

Shares of pharmaceutical companies declined across the board. Shares of public sector banks also edged lower.

There was massive selling of Indian stocks by foreign portfolio investors (FPIs) yesterday, 24 August 2015, when carnage was witnessed on the domestic bourses amid a sell off in global markets triggered by a rout in Chinese equities. FPIs sold shares worth a net Rs 5275.40 crore yesterday, 24 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 4097.83 crore yesterday, 24 August 2015, as per provisional data released by the stock exchanges.

Indian stocks may remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month August 2015 series to September 2015 series. The near month August 2015 derivatives contracts are set to expire on Thursday, 27 August 2015.

At 12:17 IST, the S&P BSE Sensex was down 174.04 points or 0.68% at 25,567.52. The index fell 443.14 points at the day's low of 25,298.42 in early afternoon trade, its lowest level since 8 August 2014. The index jumped 383.27 points at the day's high of 26,124.83 at the onset of trading session.

The Nifty was down 38.85 points or 0.50% at 7,770.15. The index hit a low of 7,667.25 in intraday trade, its lowest level since 12 August 2014. The index hit a high of 7,925.40 in intraday trade.

The BSE Mid-Cap index was down 96.98 points or 0.94% at 10,257.76. The BSE Small-Cap index was down 251.14 points or 2.37% at 10,336.76. The decline in both these indices was higher than the Sensex's decline in percentage terms.

The market breadth indicating the overall health of the market was quite weak. There were more than 4 losers for every gainer on BSE. 2,028 shares fell and 435 shares rose. A total of 76 shares were unchanged.

Shares of pharmaceutical companies declined across the board. Strides Arcolab (down 12.82%), Wockhardt (down 7.72%), Aurobindo Pharma (down 6.87%), Divi's Laboratories (down 6.04%), IPCA Laboratories (down 5.39%), Cadila Healthcare (down 5.13%), Lupin (down 4.62%), Sun Pharmaceutical Industries (down 4.01%), Cipla (down 3.21%), GlaxoSmithKline Pharmaceuticals (down 2.94%), Glenmark Pharmaceuticals (down 2.65%), Dr. Reddy's Laboratories (down 1.79%) and Piramal Enterprises (down 0.86%), edged lower.

Public sector banks declined across the board. Central Bank of India (down 9.95%), IDBI Bank (down 7.17%), Syndicate Bank (down 6.93%), UCO Bank (down 5.33%), Canara Bank (down 4.93%), Dena Bank (down 4.19%), Andhra Bank (down 4.02%), Bank of India (down 3.92%), Punjab and Sind Bank (down 3.83%), Allahabad Bank (down 3.65%), United Bank of India (down 3.5%), Bank of Maharashtra (down 3.08%), Union Bank of India (down 3.03%), Bank of Baroda (down 2.96%), Indian Bank (down 2.23%), Corporation Bank (down 2.13%), Punjab National Bank (down 2.07%), State Bank of India (down 1.26%) and Vijaya Bank (down 0.28%), edged lower.

Meanwhile, Finance Minister Arun Jaitley yesterday, 24 August 2015, said that though the Indian economy is not impervious to global events, yet the growth in manufacturing and services sector, as reflected by the increase in indirect tax collections and a fair monsoon indicate that the economy is showing strong revival and growth.

India's weather office, the India Meteorological Department (IMD), said in a daily report issued yesterday, 24 August 2015, that for the country as a whole, cumulative rainfall during this year's monsoon season was 11% below the Long Period Average (LPA) until 24 August 2015. Region wise, the rainfall was 19% below the LPA in South Peninsula, 14% below the LPA in Central India, 6% below the LPA in East & Northeast India and 4% below the LPA in Northwest India until 24 August 2015.

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, Chinese stocks sank again as investors despaired at the lack of policy action from Beijing in response to recent data suggesting the downturn in the world's second-largest economy is deepening. In mainland China, the Shanghai Composite was off 7.10%. In Hong Kong, the Hang Seng index was down 0.58%. The Shanghai Composite index had plunged more than 8% in a single trading session yesterday, 24 August 2015, that sent shockwaves through global financial markets. After a year of heady gains, Chinese markets have been buffeted by increasing signs that economic growth is faltering in the world's second biggest economy.

Japanese stocks also witnessed a sharp slide. The Nikkei 225 Average lost 3.96%.

But Asian markets were in green. Key benchmark indices in Indonesia, Singapore, South Korea and Taiwan were up 0.89% to 3.58%.

Trading in US index futures indicated that the Dow could jump 296 points at the opening bell today, 25 August 2015. US stocks slid again yesterday, 24 August 2015, with the Dow Jones industrial average briefly plunging more than 1,000 points in a sell-off that sent a shiver of fear through investors. The Dow finished with a loss of 588 points, the eighth-worst single-day point decline and the second straight fall of more than 500.

Atlanta Fed President Dennis Lockhart yesterday, 24 August 2015, said that the Federal Reserve will likely to begin raising rates sometime this year.

In Europe, data released by the Destatis in Germany showed the economy continued to improve in the second quarter despite the Greek crisis. The gross domestic product (GDP) increased by 0.4% (after price, seasonal and calendar adjustment) in the second quarter of 2015 compared with the first quarter.

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