Key benchmark indices dropped sharply on first trading day of the week on weak global cues. After gyrating in small range between positive and negative zone for most part of the day, key indices saw a sell-off in last hour of trade. The barometer index, the S&P BSE Sensex, fell 246.66 points or 0.95% at 25,616.84. The 50-unit CNX Nifty fell 72.80 points or 0.93% at 7,795.70. The Sensex and Nifty, both hit their lowest closing level in more than two weeks.
In overseas markets, European and Asian stock markets edged lower with trading sentiment hurt by another weak data release from China. Markets in Hong Kong, Taiwan and South Korea were closed for holiday. Economic data showed that China's industrial profits fell 8.8% in August from a year ago, extending July's 2.9% fall as the slowing economy hit enterprises' profitability. US markets ended on a mixed note on Friday, 25 September 2015 due to a sharp sell-off in biotech and healthcare stocks. Prospects for the US economy generally appear solid, Federal Reserve Chairwoman Janet Yellen said in her speech late Thursday, 24 September 2015 after US markets had closed. She argued in favor of hiking interest rates this year, giving more clarity to Fed watchers.
The Sensex fell 246.66 points or 0.95% to settle at 25,616.84, its lowest closing level since 11 September 2015. The Sensex rose 73.39 points at the day's high of 25,936.89 in mid-afternoon trade. The Sensex fell 269.94 points at the day's low of 25,593.56 in late trade.
The Nifty fell 72.80 points or 0.93% to settle at 7,795.70, its lowest closing level since 11 September 2015. The Nifty rose 25.45 points at the day's high of 7,893.95 in mid-afternoon trade. The Nifty fell 80.55 points at the day's low of 7,787.95 in late trade.
The BSE Mid-Cap index fell 0.23%. The BSE Small-Cap index fell 0.24%. 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 turned negative from positive in late trade. On BSE, shares 1,590 declined and 1,136 shares rose. A total of 131 shares were unchanged.
The total turnover on BSE amounted to Rs 2584 crore, slightly higher than turnover of Rs 2567.09 crore registered during the previous trading session on Thursday, 24 September 2015
Among the sectoral indices on BSE, the S&P BSE Power index (down 0.58%), the S&P BSE Bankex (down 0.52%), the S&P BSE Oil & Gas index (down 0.3%), the S&P BSE FMCG index (down 0.26%), the S&P BSE Healthcare index (up 0.12%), the S&P BSE Realty index (up 1.03%) and the S&P BSE Consumer Durables index (up 2.87%), outperformed the Sensex. The S&P BSE Metal index (down 2.6%), the S&P BSE Auto index (down 1.74%), the S&P BSE Capital Goods index (down 1.72%), the S&P BSE Teck index (down 1.37%) and the S&P BSE IT index (down 1.26%), underperformed the Sensex.
Metal and mining stocks declined on weak Chinese economic data. Vedanta (down 4.4%), Hindustan Zinc (down 3.74%), Tata Steel (down 2.76%), Jindal Steel & Power (down 2.59%), Steel Authority of India (down 2.55%), Bhushan Steel (down 2.05%), Hindustan Copper (down 2.01%), JSW Steel (down 1.62%), Hindalco Industries (down 1.26%) and National Aluminium Company (Nalco) (down 1.23%), edged lower. China is the world's largest consumer of steel, copper and aluminum.
NMDC slipped 1.58% to Rs 93.60. Adani Ports and Special Economic Zone (APSEZ) rose 2.02%. APSEZ replaced NMDC as a constituent in the 50-unit CNX Nifty index with effect from today, 28 September 2015.
Auto stocks declined. Eicher Motors (down 2.61%), Escorts (down 2.46%), TVS Motor Company (down 1.76%), Hero MotoCorp (down 1.41%), Maruti Suzuki (India) (down 0.99%), Ashok Leyland (down 0.6%), Bajaj Auto (down 0.21%) and Mahindra & Mahindra (M&M) (down 0.12%), edged lower.
Tata Motors slumped 6.06% to Rs 285.25. The stock hit a low of Rs 283.80 in intraday trade, which is 52-week low for the counter. As per reports, the company has been removed from Credit Suisse Asia Ex-Japan focus list.
Bank stocks were mixed ahead of the Reserve Bank of India's (RBI) fourth bi-monthly monetary policy review for the year 2015-16 scheduled tomorrow, 29 September 2015.
Most private bank stocks declined. Kotak Mahindra Bank (down 1.81%), Axis Bank (down 1.34%), Federal Bank (down 0.77%), IndusInd Bank (down 0.51%), City Union Bank (down 0.33%) and HDFC Bank (down 0.23%), edged lower. Yes Bank rose 1.23%.
ICICI Bank ended flat at Rs 268.55.
PSU bank stocks were mixed. IDBI Bank (up 6.97%), Allahabad Bank (up 1.24%), United Bank of India (up 0.67%), Syndicate Bank (up 0.61%), Indian Bank (up 0.60%), Bank of India (up 0.52%), State Bank of India (up 0.17%), Punjab and Sind Bank (up 0.13%) and Union Bank of India (up 0.08%), edged higher. UCO Bank (down 0.21%), Corporation Bank (down 0.23%), Vijaya Bank (down 0.29%), Andhra Bank (down 0.3%), Bank of Maharashtra (down 0.58%), Punjab National Bank (down 0.59%), Central Bank of India (down 0.8%), Dena Bank (down 0.99%) and Bank of Baroda (down 1.42%), edged lower.
The RBI had kept its benchmark lending rate viz. the repo rate unchanged at 7.25% after a monetary policy review on 4 August 2015. RBI Governor Dr. Raghuram G. Rajan had at that time indicated in his written monetary policy statement that going ahead RBI will monitor developments for emerging room for further reduction in the policy rate. The RBI has cut the benchmark lending rate viz. the repo rate by 75 basis points since January 2015.
Meanwhile, the Reserve Bank of India (RBI) announced measures to enhance commercial banks' ability to recover loans to borrowing entities which are under stress primarily due to operational/managerial inefficiencies of the existing promoters. The RBI has allowed banks to upgrade the credit facilities extended to the borrowing entities whose ownership has been changed to 'Standard' category, subject to certain conditions. The RBI has also allowed banks to refinance the existing debt of the borrowing entity whose ownership has been changed without treating the exercise as restructuring of loan. However, banks will have to make provisions for any diminution in fair value of the existing debt on account of the refinance. The RBI has also allowed banks to reverse the provision made against the loans to the borrowing entity whose ownership has been changed once all the outstanding loan/facilities of the borrowing entities perform satisfactorily during the specified period as defined in the extant norms on restructuring of advances.
Separately, the RBI has allowed commercial banks to provide partial credit enhancement (PCE) to bonds issued by corporates/special purpose vehicles (SPVs) for funding all types of projects, subject to certain conditions. Initially, banks will be allowed to offer PCE only in the form of a non-funded irrevocable contingent line of credit. The RBI will in due course take a call on whether to allow PCE as a funded loan facility.
Key benchmark indices declined after rising in the past two consecutive sessions. The Sensex had risen 211.66 points or 0.83% in the preceding two trading sessions to 25,863.50 on 24 September 2015 from a recent low of 25,651.84 on 22 September 2015. The Sensex has lost 666.25 points or 2.53% in this month so far (till 28 September 2015). The Sensex has fallen 1,882.58 points or 6.85% in this calendar year so far (till 28 September 2015). From a 52-week low of 24,833.54 hit on 8 September 2015, the Sensex has risen 783.30 points or 3.15%. The Sensex is off 4,407.90 points or 14.68% from a record high of 30,024.74 hit on 4 March 2015.
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