Weak market breadth

Stocks were trading on a weak note in mid-morning trade on selling pressure in index pivotals. At 11:21 IST, the barometer index, the S&P BSE Sensex, was down 154.52 points or 0.39% at 39,929.02. The Nifty 50 index was down 65 points or 0.54% at 11,956.65. Cement stocks declined.

Investors are awaiting the Reserve Bank of India (RBI's) decision on interest rates. The RBI's Monetary Policy Committee (MPC) meeting is scheduled from 3 to 6 June 2019. The MPC of the RBI will today, 6 June 2019 announce its resolution under the Second Bi-monthly Monetary Policy Statement for 2019-20.

Key indices were trading with small losses in early trade as trading resumed after a local holiday. Domestic stock market were closed yesterday, 5 June 2019, on account of Id-Ul-Fitr (Ramzan Id). Key indices extended decline triggered in early trade on selling pressure in index pivotals. The Sensex fell below the psychological 40,000 level while the Nifty declined below the psychological 12,000 level.

The S&P BSE Mid-Cap index was down 0.64%. The S&P BSE Small-Cap index was down 0.5%. Both these indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On the BSE, 798 shares rose and 1316 shares fell. A total of 136 shares were unchanged. Breadth was strong in early trade.

Cement stocks declined. Ambuja Cements (down 2.11%), ACC (down 2.57%), UltraTech Cement (down 2.66%) and Shree Cement (down 2.88%) edged lower.

Grasim Industries was off 3.68%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.

Dewan Housing Finance Corporation (DHFL) dropped 12.7% after ICRA, CRISIL, CARE Ratings and Brickwork Ratings downgraded credit ratings on commercial papers of DHFL to 'D' owing to liquidity concerns. The announcement was made on Wednesday, 5 June 2019

DHFL clarified to the bourses on 5 June 2019, that the action by the rating agencies is extremely surprising as the company has been making & continues to make substantial efforts in ensuring no defaults on any bonds, repayment of its financial obligations. These actions are unwarranted and the company is seeking clarification on the rationale that predicts DHFL's inability to service payouts on the due dates. Such speculative rating rationale is not adequate.

Since September 2018, DHFL has repaid close to Rs 40,000 crore of financial obligation. To ensure adequate liquidity to meet the repayments, DHFL also sold its strategic retail assets including Aadhar, Avanse and DHFL Pramerica Asset Managers. The company is committed towards ensuring repayment of all its obligations as well as on-boarding the strategic partner for its business, DHFL added.

Eros International Media hit a lower circuit limit of 20% at Rs 53.10. The Credit Analysis & Research (CARE) has slashed its ratings on Eros International Media's long-term bank facilities (term loan) and (cash credit) to 'D' from CARE BBB-. The rating agency also cut Eros' short-term bank facilities to 'D' from 'A3'. The announcement was made on Wednesday, 5 June 2019.

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