Key benchmark indices moved into positive zone from negative zone in early afternoon trade. At 12:15 IST, the barometer index, the S&P BSE Sensex, was up 25.76 points or 0.1% at 26,423.47. The Nifty 50 index was currently up 11.25 points or 0.14% at 8,099.85. The Sensex rose 47.75 points or 0.18% at the day's high of 26,445.46 in early 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 19.05 points or 0.23% at the day's high of 8,107.65 in early 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 nearly three gainers against every loser on BSE. 1,686 shares rose and 575 shares declined. A total of 132 shares were unchanged. The BSE Mid-Cap index was currently up 0.85%. The broad based BSE Small-Cap index was currently up 1.42%. Both these indices outperformed the Sensex.
In overseas stock markets, Asian stocks witnessed a mixed trend. 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.
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.
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.
Stocks of public sector oil marketing companies (PSU OMCs) edged higher after steep fall in global crude oil prices on Friday, 24 June 2016. HPCL (up 4.79%), BPCL (up 3.06%) and Indian Oil Corporation (up 1.67%) gained. Decline in crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. The government has already decontrolled pricing of petrol and diesel.
Stocks of oil exploration and production (E&P) companies also moved higher. Oil India (up 1.31%), ONGC (up 0.57%) and Cairn India (up 0.15%) edged higher.
Index heavyweight Reliance Industries was up 0.58% at Rs 957. The stock hit a high of Rs 957.65 and a low of Rs 944 so far during the day.
Aviation stocks edged higher after steep fall in global crude oil prices on Friday, 24 June 2016. Jet Airways (India) (up 2.45%), SpiceJet (up 2.02%) and InterGlobe Aviation (up 1.54%) rose. Lower crude oil prices benefit aviation firms as jet fuel prices, which typically constitute about 50% of airlines' operating costs, are directly linked to international crude oil prices.
In the global commodities markets, Brent for August 2016 settlement was currently up 19 cents at $48.60 a barrel. The contract had declined $2.50 a barrel or 4.91% to settle at $48.41 a barrel during the previous trading session after the UK's vote to leave the European Union in a nationwide referendum triggered a selloff across markets.
Index heavyweight and cigarette major ITC was up 1.39% at Rs 358.30. The stock hit a high of Rs 358.30 and a low of Rs 354.60 so far during the day.
Brigade Enterprises gained 1.35% at Rs 157.60 after the company announced that its joint venture has launched a lifestyle club resort at township in Bengaluru. Brigade Enterprises said that BCV Developers Private Ltd., a joint venture between Brigade Enterprises, Classic Group and Valmark launched its latest lifestyle club 'Signature Club Resort' at Brigade Orchards, a 130 acre smart township in Devanahalli, Bengaluru. Signature Club Resort will be managed by Brigade Hospitality Services, a wholly owned subsidiary of Brigade Enterprises. The announcement was made before market hours today, 27 June 2016.
Tata Sponge Iron rose 3.85% at Rs 614 after the company said that it has received a letter of intent from Eastern Coalfields for allocation of 24,000 tonne per annum of coal at a notified price. Tata Sponge Iron said that the company is in receipt of letter of intent (LOI) from Eastern Coalfields (a subsidiary of Coal India) declaring the company as a successful bidder for allocation of 24,000 tonne per annum of coal at a notified price (winning premium is zero). The notified price shall be reviewed by Coal India on a half yearly basis, Tata Sponge Iron said. As per the LOI, the company would be required to execute the fuel supply agreement, valid for a period of five years from the date of execution of the agreement and is further extendable for another five years, the company said. The agreement shall have a lock-in period of two years. The tonnage will constitute less than 10% of the company's annual coal requirement, Tata Sponge said. The announcement was made after market hours on Friday, 24 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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