Banking stocks led losses as key benchmark indices slumped after Minister for Earth Sciences Dr Harsh Vardhan said the India Meteorological Department (IMD) has prepared the 2nd stage long range forecast of monsoon which indicates that rainfall for the country as a whole is likely to be deficient this year. The barometer index, the S&P BSE Sensex, hit its lowest closing level in three weeks. The 50-unit CNX Nifty hit its lowest closing level in almost three weeks. The Sensex lost 660.61 points or 2.37% to settle at 27,188.38.
Ahead of an official announcement from the IMD, Dr Harsh Vardhan said that the IMD has downgraded this year's monsoon forecast to 88% of the long period average with a model error of plus/minus 4%, from April forecast of 93% of the long period average with a model error of plus/minus 5%. His comments came shortly after the Reserve Bank of India (RBI) Governor Dr. Raghuram G. Rajan said the RBI decided to front-load a rate cut at today's policy and wait for more certainty on both the monsoon outturn as well as the effects of government responses if it turns out to be weak. The RBI cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015. The RBI's announcement came at 11:00 IST.
Click here to connect with us on WhatsApp
In its second stage Long Range Forecast (LRF) for Southwest Monsoon 2015 issued after trading hours today, 2 June 2015, the IMD said the rainfall over the country as a whole for the 2015 southwest monsoon season is likely to be deficient. The annual monsoon is critical for the country's agriculture. Scarce seasonal rains can adversely affect agriculture production and push prices up in India, because a considerable part of the country's farmland is dependent on the rains for irrigation.
Today's decline on the domestic bourses was broad based, with more than two losers against every gainer on BSE. The BSE Mid-Cap index shed 2.22%. The BSE Small-Cap index declined 2.06%. A number of stocks which are the constituents of the BSE Small-Cap index fell 2% to about 17%.
Shares of two-wheeler makers and tractor major Mahindra & Mahindra edged lower after the downgrade in monsoon forecast. Bank stocks edged lower after the Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015, matching market expectations. Real estate and automobiles stocks edged lower after the Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015, matching market expectations. Index heavyweights ITC, HDFC, Infosys, L&T and Reliance Industries edged lower.
Foreign portfolio investors bought shares worth a net Rs 137.83 crore from the secondary equity markets yesterday, 1 June 2015, as per data from the depositories. Domestic institutional investors (DIIs) bought shares worth a net Rs 49.34 crore yesterday, 1 June 2015, as per provisional data released by the stock exchanges.
In overseas markets, European stocks edged lower amid ongoing uncertainty over Greece's debt situation. Asian stocks edged lower after an encouraging reading on US manufacturing activity in May increased the likelihood that the US Federal Reserve will raise interest rates this year. US stocks ended with modest gains yesterday, 1 June 2015, recovering part of last week's losses in a session marked by cautious trading as investors reacted to mixed economic data.
The S&P BSE Sensex shed 660.61 points or 2.37% to settle at 27,188.38, its lowest closing level since 12 May 2015. The index lost 702.31 points at the day's low of 27,146.68 in late trade. The index rose 53.54 points at the day's high of 27,902.53 in early trade.
The 50-unit CNX Nifty declined 196.95 points or 2.34% to settle at 8,236.45, its lowest closing level since 14 May 2015. The index hit a low of 8,226.05 in intraday trade. The index hit a high of 8,445.35 in intraday trade.
The BSE Mid-Cap index shed 237.92 points or 2.22% to settle at 10,474.51. The BSE Small-Cap index declined 232.60 points or 2.06% to settle at 11,047.18. The fall in both these indices was lower than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was quite weak, with more than two losers against every gainer on BSE. 1,875 shares fell and 804 shares rose. A total of 104 shares were unchanged.
The total turnover on BSE amounted to Rs 3076 crore, higher than turnover of Rs 2699.25 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE FMCG index (down 2.83%), BSE Bankex index (down 3.46%) and BSE Realty index (down 3.83%) underperformed the Sensex. The S&P BSE Healthcare index (down 1.58%), BSE IT index (down 1.42%), BSE Auto index (down 2.08%), BSE Capital Goods index (down 1.74%), BSE Consumer Durables index (down 1.61%), BSE Metal index (down 2.11%), BSE Oil & Gas index (down 0.99%), BSE Power index (down 1.29%) and BSE Teck index (down 1.23%) outperformed the Sensex.
Index heavyweight and cigarette major ITC shed 3.95% at Rs 318.90. The stock hit a high of Rs 329.70 and a low of Rs 317.60 in intraday trade.
Another index heavyweight and housing finance major HDFC shed 3.55% at Rs 1,202.50. The stock hit a high of Rs 1,249.80 and a low of Rs 1,196.30 in intraday trade.
Software major Infosys shed 1.8% at Rs 2,008.80. The stock hit a high of Rs 2,054.80 and a low of Rs 2,005.10 in intraday trade.
Another index heavyweight Reliance Industries was down 0.29% at Rs 898.70. The stock hit a high of Rs 918.50 and a low of Rs 891.15 in intraday trade.
FMCG stocks witnessed selling pressure after downgrade in monsoon forecast. Marico (down 5.35%), Jyothy Laboratories (down 4.06%), Tata Global Beverages (down 3.07%), Hindustan Unilever (down 3.06%), Britannia Industries (down 2.44%), Bajaj Corp (down 2.2%), Godrej Consumer Products (down 1.8%), Dabur India (down 1.9%), Colgate-Palmolive (India) (down 1.67%), Procter & Gamble Hygiene and Health Care (down 0.56%) edged lower. GlaxoSmithkline Consumer Healthcare (up 1.62%) edged higher.
A deficient monsoon could adversely impact rural incomes. FMCG companies derive substantial revenue from rural India.
Nestle India was up 1.62% to Rs 6,780. Nestle India announced after market hours yesterday, 1 June 2015, that consumers are concerned by reports that the authorities in Uttar Pradesh have found elevated levels of lead in a sample pack of Maggi noodles. Nestle India said that the company is fully cooperating with the authorities who are conducting further tests and the company is awaiting their results.
Nestle India has submitted samples of Maggi noodles from almost 600 product batches to an external laboratory for independent analysis. These samples represent around 125 million packets. All the results of these internal and external tests show that lead levels are well within the limits specified by food regulations and that Maggi noodles are safe to eat. The company is sharing these results with the authorities, Nestle India said.
The company regularly monitors all its raw material for lead, including testing by accredited laboratories which have consistently shown levels in Maggi Noodles to be within permissible limits. Nestle India said that the company remains committed to continuing to improve the quality of agricultural raw materials across the food chain working with farmers, suppliers, authorities and the food industry to ensure food safety. The quality and safety of products are the top priorities for the company, Nestle India said in a statement.
Bank stocks edged lower after the Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015, matching market expectations.
Among private sector banks, Axis Bank (down 4.2%), IndusInd Bank (down 4.34%), Yes Bank (down 3.72%), ICICI Bank (down 3.7%), HDFC Bank (down 2.65%) and Kotak Mahindra Bank (down 2.45%) edged lower.
The RBI said that commercial banks have started passing through some of the past rate cuts into their lending rates. The growth in bank credit remains subdued. The central bank said that banks should pass through the sequence of rate cuts into lending rates.
Among PSU banks, Union Bank of India (down 8.08%), Oriental Bank of Commerce (down 7.18%), Andhra Bank (down 5.52%), Canara Bank (down 4.66%), IDBI Bank (down 4.51%), State Bank of India (down 4.28%), Syndicate Bank (down 4.03%), Bank of India (down 3.74%), Indian Overseas Bank (down 3.75%), Bank of Baroda (down 3.06%), United Bank of India (down 2.96%), Central Bank of India (down 1.33%) and Punjab National Bank (down 1.53%) edged lower.
The RBI suggested that a targeted infusion of bank capital into scheduled public sector commercial banks is required so that adequate credit flows to the productive sectors of the economy as investment picks up.
Allahabad Bank fell 6.95% to Rs 99.15. Allahabad Bank during market hours today, 2 June 2015, announced that the bank has decided to cut its base rate and benchmark prime lending rate (BPLR) by 30 basis points each, effective from 8 June 2015. Consequently, the base rate will be reduced to 9.95% from existing 10.25% and BPLR of the bank will be reduced to 14.2% from existing 14.5% with effect from 8 June 2015.
Realty stocks edged lower after the Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015, matching market expectations. Prestiges Estates (down 8.11%), Indiabulls Real Estate (down 6.53%), Housing Development & Infrastructure (down 4.23%), DLF (down 4.31%), Godrej Properties (down 5.08%), Unitech (down 3.66%), Sobha (down 4.25%), Anant Raj (down 2.05%) and Mahindra Lifespace Developers (down 1.18%) edged lower. Oberoi Realty (up 0.15%) edged higher.
Purchases of both residential and commercial property are largely driven by finance.
Shares of tractor major Mahindra & Mahindra edged lower after the downgrade in monsoon forecast. The stock lost 2.56% at Rs 1,223.30. Scanty rains could adversely affect tractor sales.
Auto stocks edged lower after the Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015, matching market expectations. Eicher Motors (down 3.44%) and Maruti Suzuki India (down 1.31%) edged lower.
Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Shares of two-wheeler makers edged lower after the downgrade in monsoon forecast. A deficient monsoon could adversely impact rural incomes which in turn could adversely impact sales of two wheelers in rural India.
Bajaj Auto fell 2.88% to Rs 2,269.10 after total sales fell 2% to 3.45 lakh units in May 2015 over May 2014. The announcement was made during market hours today, 2 June 2015. Bajaj Auto's motorcycle sales dropped 4% to 3.01 lakh units in May 2015 over May 2014. Commercial vehicles sales rose 13% to 43,576 units in May 2015 over May 2014. Exports rose 2% to 1.58 lakh units in May 2015 over May 2014.
Hero MotoCorp fell 3.76% to Rs 2,607.85 after the company said its total two-wheeler sales fell 5.41% to 5.69 lakh units in May 2015 over May 2014. The announcement was made after trading hours yesterday, 1 June 2015.
TVS Motor Company's (TVS Motor) fell 4.28% to Rs 225.90. The company's total sales rose 6% to 2.20 lakh units in May 2015 over May 2014. The announcement was made after market hours yesterday, 1 June 2015.
Tata Motors fell 1.05% to Rs 467.20. Tata Motors' total commercial and passenger vehicles sales including exports rose 5% to 39,496 units in May 2015 over May 2014. Domestic sales of Tata commercial and passenger vehicles for May 2015 were at 34,818 units, unchanged from May 2014. Sales of Tata Motors passenger vehicles rose 21% to 11,138 units in May 2015 over May 2014. The growth trend was driven by the cars segment, specifically the new launches of Zest and Bolt and with positive early response to the new GenX Nano, Tata Motors said after trading hours yesterday, 1 June 2015. The sales of the passenger cars rose 32% to 9,176 units in May 2015 over May 2014. The UV sales fell 15% to 1,962 units in May 2015 over May 2014. In the commercial vehicles, M&HCV sales rose 17% to 10,788 units in May 2015 over May 2014. The light & small commercial vehicle sales dropped 19% to 12,892 units in May 2015 over May 2014, reflecting the industry decline. These impacted the overall commercial vehicles sales for the company in the domestic market which dropped 6% to 23,680 units in May 2015 over May 2014. Exports rose 47% to 4,678 units in May 2015 over May 2014.
The Sensex has fallen 311.04 points or 1.13% in this calendar year so far (till 2 June 2015). From a 52-week low of 24,626.97 on 3 June 2014, the Sensex has risen 2,561.41 points or 10.4%. The Sensex is off 2,836.36 points or 9.44% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, Minister for Earth Sciences Dr Harsh Vardhan today, 2 June 2015, said the India Meteorological Department (IMD) has prepared the 2nd stage long range forecast of monsoon which indicates that rainfall for the country as a whole is likely to be deficient this year. He made these comments at the time of dedicating the country's high performance computing (HPC) facility named "Bhaskara" at the National Centre for Medium Range Forecasting (NCMRWF) in Noida. The minister's comments came ahead of an official announcement from the IMD. While pointing out that global agencies have predicted that drought conditions might grip especially the western states Dr Harsh Vardhan said that the government is seized of the situation and is putting in place adequate measures.
In its second stage Long Range Forecast (LRF) for Southwest Monsoon 2015 issued after trading hours today, 2 June 2015, the IMD said the rainfall over the country as a whole for the 2015 southwest monsoon season is likely to be deficient. Quantitatively, the season rainfall for the country as a whole is likely to be 88% of the long period average (LPA) with a model error of plus/minus 4%. In April 2015, the IMD had forecast this year's monsoon rainfall to be 93% of the long period average with a model error of plus/minus 5%.
From April 2015 weak El Nino conditions are established over equatorial Pacific Ocean. Atmospheric conditions like weakened trade winds, negative Southern Oscillation Index (SOI) values etc. generally associated with El Nino conditions are also observed, the IMD said. The latest forecast from IMD-IITM coupled model indicates El Nino conditions are likely to strengthen further and reach to moderate strength during the monsoon season. There is about 90% probability of El Nino conditions to continue during the southwest monsoon season, the IMD said.
The season rainfall is likely to be 85% of LPA over North-West India, 90% of LPA over Central India, 92% of LPA over South Peninsula, and 90% of LPA over North-East India, all with a model error of plus/minus 8%, the IMD said today, 2 June 2015. The monthly rainfall over the country as whole is likely to be 92% of its LPA during July and 90% of LPA during August both with a model error of plus/minus 9%.
The annual monsoon is critical for the country's agriculture. Scarce seasonal rains can adversely affect agriculture production and push prices up in India, because a considerable part of the country's farmland is dependent on the rains for irrigation.
The onset of monsoon in Kerala has been delayed. The IMD yesterday, 1 June 2015, said that conditions are becoming favourable for the onset of southwest monsoon over Kerala around 5 June, four days after the scheduled onset date of 1 June.
Meanwhile, the Reserve Bank of India (RBI) cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review today, 2 June 2015. The RBI kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL).
The RBI has raised inflation forecast while trimming growth forecast for the current fiscal year. Inflation based on the consumer price index (CPI) is expected to be pulled down by base effects till August 2015 and will start rising thereafter to about 6% by January 2016, which is slightly higher than the RBI's projections in its April policy review. In its April policy review, the RBI had said that CPI inflation is expected to ease to around 4% by August 2015 and rise therefore to reach 5.8% by the end of the current financial year. The central bank has trimmed its forecast of GDP growth for the current fiscal year to 7.6%, with a downward bias. At its policy review on 7 April 2015, the RBI had forecast GDP growth at 7.8% for the current fiscal year assuming a normal monsoon this year.
India's merchandise export growth has weakened steadily since July 2014 and entered into contraction from January 2015 through April, with a recent shrinking of even volumes exported. Net exports are, therefore, unlikely to contribute as much to growth going forward as they did in the past financial year, according to the central bank. Consequently growth will depend more on a strengthening of domestic final demand.
RBI Governor Dr. Raghuram G. Rajan said in a statement that the RBI decided to front-load a rate cut at today's policy and wait for data that clarify uncertainty. With still weak investment and the need to reduce supply constraints over the medium term to stay on the proposed disinflationary path, a more appropriate stance is to front-load a rate cut today and then wait for data that clarify uncertainty, Rajan said. The agricultural activity was adversely affected by unseasonal rains and hailstorms in north India during March 2015, impinging on an estimated 94 lakh hectares of area sown under the Rabi crop. Successive estimates have been pointing to a worsening of the situation, with the damage to crops like pulses and oilseeds -- where buffer foodstocks are not available in the central pool -- posing an upside risk to food inflation. For the Kharif season, the outlook is clouded by the first estimates of the India Meteorological Department (IMD), predicting that the southwest monsoon will be 7% below the long period average. This has been exacerbated by the confirmation of the onset of El Nino by the Australian Bureau of Meteorology.
Among other risks to inflation, crude prices have been firming amidst considerable volatility and geo-political risks are ever present. The RBI also said that volatility in the external environment could impact inflation. Therefore, a conservative strategy would be to wait, especially for more certainty on both the monsoon outturn as well as the effects of government responses if it turns out to be weak.
India's foreign exchange reserves are currently placed at around $350 billion, providing a strong second line of defence to good macroeconomic policies if external markets turn significantly volatile.
Meanwhile, data released by the government after trading hours yesterday, 1 June 2015, showed that the output of eight core infrastructure sector, carrying 38% weight in the Index of Industrial Production, declined 0.4% in April 2015.
In global commodity markets, Brent crude oil futures edged higher today, 2 June 2015. Brent for July settlement was up 46 cents at $65.34 a barrel. The contract had lost 68 cents or 1.03% to settle at $64.88 a barrel during the previous trading session.
Oil cartel OPEC is expected to keep its production target of 30 million barrels of oil per day unchanged at a meeting scheduled in Vienna on Friday, 5 June 2015. The OPEC meeting is being closely watched for clues about the organization's next moves.
In overseas markets, European stocks edged lower today, 2 June 2015, amid ongoing uncertainty over Greece's debt situation. Key indices in Germany, UK and France were off 0.13% to 0.7%.
Investors continue to monitor developments in Greece's debt talks. The country has to repay 300 million euros ($329 million) to the International Monetary Fund (IMF) by Friday, 5 June 2015. Greece's lenders held an emergency mini-summit yesterday, 1 June 2015 and are preparing a draft text for an agreement, according to reports. According to reports, this will be the final offer to Greece from the lenders.
Greece is scheduled to repay a total of euro 1.6 billion ($1.76 billion) to the International Monetary Fund (IMF) over the period between June 5-19.
Asian stocks edged lower today, 2 June 2015, after an encouraging reading on US manufacturing activity in May increased the likelihood that the US Federal Reserve will raise interest rates this year. Key indices in Taiwan, Singapore, Japan, Hong Kong and South Korea were off 0.05% to 1.31%. China's Shanghai Composite was up 1.72%.
US stocks ended with modest gains yesterday, 1 June 2015, recovering part of last week's losses in a session marked by cautious trading as investors reacted to mixed economic data. Among macro data in US, a report from ISM showed the pace of manufacturing growth rose in May. Other data showed construction spending surged in April but consumer spending was unexpectedly flat in April.
Powered by Capital Market - Live News
