Weakness continued on the bourses in mid-morning trade, with key benchmark indices trading with steep losses for the day. The broad market depicted weakness. There were nearly four losers against every gainer on BSE. The barometer index, the S&P BSE Sensex, was currently off 413.63 points or 1.5% at 27,194.19. The BSE Mid-Cap index was off 1.63%. The BSE Small-Cap index was off 1.7% at 11,482.44. The decline both these indices was higher than Sensex's decline in percentage terms. A rout in global equities sparked sell-off on the domestic bourses. Asian stocks tumbled as deepening concerns about China's growth sparked selling around the globe.
Shares of upstream oil exploration & production (E&P) firms dropped along with decline in crude oil prices. Shares of public sector oil marketing companies (PSU OMCs) dropped as the rupee edged lower against the dollar. Cement stocks declined.
Earlier, the Sensex hit its lowest level in more than nine weeks and the 50-unit CNX Nifty hit 7-1/2-week low in early trade.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 1007.26 crore yesterday, 20 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 567.87 crore yesterday, 20 August 2015, as per provisional data.
In overseas markets, China led losses for Asian markets after a flash purchasing managers' index showed Chinese manufacturing activity shrank for a sixth straight month in August. US stocks suffered their worst selloff in 2015 yesterday, 20 August 2015, as markets were buffeted by worries about a slowdown in global growth.
At 11:15 IST, the S&P BSE Sensex was down 413.63 points or 1.5% at 27,194.19. The index fell 476.38 points at the day's low of 27,131.44 in early trade, its lowest level since 18 June 2015. The index fell 165 points at the day's high of 27,442.82 in early trade.
The CNX Nifty was down 127.80 points or 1.53% at 8,244.95. The index hit a low of 8,225.05 in intraday trade, its lowest level since 29 June 2015. The index hit a high of 8,305.40 in intraday trade.
The BSE Mid-Cap index was down 184.05 points or 1.63% at 11,133.83. The BSE Small-Cap index was down 198.37 points or 1.7% at 11,482.44. The decline both these indices was higher than Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was quite weak. There were nearly four losers against every gainer on BSE, 1,800 shares declined and 455 shares rose. A total of 60 shares were unchanged.
Cement stocks declined. UltraTech Cement (down 2.54%), ACC (down 1.37%) and Shree Cement (down 0.4%) edged lower. Ambuja Cements (up 0.71%) edged higher.
Grasim Industries was off 1.83%. Grasim has exposure to cement sector through its holding in UltraTech Cement.
Tata Motors was off 3.8% at Rs 329.10. Tata Motors' British luxury car unit Jaguar Land Rover (JLR) in a press release issued yesterday, 20 August 2015, announced that at the time of explosions in Tianjin in China, approximately 5,800 vehicles of JLR that had recently been shipped to China were stored at various locations at Tianjin port. JLR believes that many of these vehicles may have been damaged. However, access to facilities near the site of the explosion remains restricted and therefore it is presently unable to quantify the number of units affected due to the explosion, JLR said. JLR said it will continue to monitor the situation and work to minimise the impact on its customers and the business. Tata Motors made the announcement during market hours today, 21 August 2015.
Shares of upstream oil exploration & production (E&P) firms dropped along with decline in crude oil prices. Reliance Industries (down 2.02%), Cairn India (down 1.09%), Oil India (down 1.56%) and ONGC (down 1.13%) edged lower. Lower crude oil prices will result in lower realization from crude sales for oil exploration firms.
Shares of public sector oil marketing companies (PSU OMCs) dropped as the rupee edged lower against the dollar. BPCL (down 1.96%), HPCL (down 0.97%) and Indian Oil Corporation (down 0.86%) edged lower. Decline in crude oil prices will reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports. The government has already decontrolled pricing of petrol and diesel.
In the global commodities markets, Brent crude oil futures edged lower after weak Chinese manufacturing data. Brent for October settlement was currently off 59 cents at $46.03 a barrel. The contract had declined 54 cents or 1.14% to settle at $46.62 a barrel during the previous trading session.
India imports about 80% of its crude requirements and a decline in crude prices eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports. State-run oil marketing companies have been cutting petrol and diesel prices on the back of falling international prices. Lower diesel prices will reduce transportation costs which in turn will reduce fuel price inflation. Diesel is a key transportation fuel.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was currently hovering at 65.885, compared with close of 65.55 during the previous trading session.
Meanwhile, investors continue to watch the progress of the monsoon rains which will have a bearing on food prices and rural income. India's weather office, the India Meteorological Department (IMD), said in a daily report issued yesterday, 20 August 2015, that for the country as a whole, cumulative rainfall during this year's monsoon season was 9% below the Long Period Average (LPA) until 20 August 2015. Region wise, the rainfall was 20% below the LPA in South Peninsula, 10% below the LPA in Central India, 7% below the LPA in East & Northeast India and 1% below the LPA in Northwest India until 20 August 2015.
Separately, the IMD in its weekly report said that as per its extended range forecast till 8 September 2015, above normal rainfall activity is likely over northeast and adjoining east India on many days till beginning of September. Normal rainfall activity likely over south peninsula during the period from 20 to 24 August and 4 to 8 September 2015, the IMD said. Below normal rainfall activity is likely over plains of northwest and central India, the IMD said.
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, China led losses for Asian markets today, 21 August 2015, after a flash purchasing managers' index showed Chinese manufacturing activity shrank for a sixth straight month in August. In mainland China, the Shanghai Composite was off 2.52%. In Hong Kong, the Hang Seng was off 2.63%.
The Caixin/Markit flash purchasing managers' index today, 21 August 2015, showed Chinese manufacturing activity shrank for a sixth straight month in August, falling to 47.1 from July's final reading of 47.8 and remaining below the threshold of 50 that separates expansion from contraction. August's reading was the lowest since March 2009.
In other Asian markets, key indices in Japan, Taiwan, South Korea, Singapore and Indonesia were off 1.69% to 2.88%.
US stocks suffered their worst selloff in 2015 yesterday, 20 August 2015, as markets were buffeted by worries about a slowdown in global growth. The number of Americans filing new applications for unemployment benefits unexpectedly rose last week. Initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 277,000 for the week ended 15 August 2015, the Labor Department said yesterday, 20 August 2015.
US existing home sales climbed in July to their prerecession pace. Existing-home sales rose 2% last month from June to a seasonally adjusted rate of 5.59 million, the National Association of Realtors said yesterday, 20 August 2015.
In Europe, Greece's Prime Minister Alexis Tsipras has announced that he is resigning and has called an early election. Tsipras, who was only elected in January, said he had a moral duty to go to the polls now that a third bailout had been secured with European creditors
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