After recouping a lion's portion of intraday losses, key benchmark indices drifted lower once again in afternoon trade. At 13:20 IST, the barometer index, the S&P BSE Sensex, was down 128.69 points or 0.5% at 25,644.92. The Nifty 50 index was currently down 39.65 points or 0.5% at 7,851.10. Prospects of higher interest rates in the United States weighed on the domestic bourses after the latest data showed that US consumer prices rose in April at their fastest pace in three years. Additionally, hawkish comments from US Federal Reserve officials yesterday, 17 May 2016, increased expectations that the US central bank will pick up the pace of rate rises during the current calendar year.
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.
The Sensex fell 76.03 points or 0.39% at the day's high of 25,697.58 in afternoon trade. The barometer index 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 Nifty fell 23.75 points or 0.3% at the day's high of 7,867 in afternoon trade. The index 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
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 1.28% lower. In Hong Kong, the Hang Seng index was currently down 1.59%. 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, 1,242 shares fell and 1,101 shares rose. A total of 154 shares were unchanged. The BSE Mid-Cap index was currently off 0.23%. The fall in this index was lower than Sensex's decline in percentage terms. The BSE Small-Cap index was currently up 0.15%, outperforming the Sensex.
Realty stocks were mixed. DLF (up 0.2%), D B Realty (up 0.1%), Sobha (up 0.01%), NBCC (up 0.94%), and Housing Development & Infrastructure (HDIL) (up 0.8%), edged higher. Indiabulls Real Estate (down 0.45%), Unitech (down 1.23%), Godrej Properties (down 0.3%), and Oberoi Realty (down 1.2%) declined.
IT stocks declined. Infosys (down 0.99%), Tech Mahindra (down 0.1%) and Wipro (down 0.77%) edged lower. HCL Technologies rose 1%.
TCS shed 1.47%. TCS announced after market hours yesterday, 17 May 2016, that IDBI Bank's financial services arm IDBI Capital Market Services has gone operational with the securities trading and processing solution from TCS BaNCS for its online brokerage business.
Punjab National Bank gained after the bank announced Q4 results. The stock rose 0.95%. 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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