Market settles almost unchanged
Key benchmark indices settled almost unchanged in a rangebound trade for the week ended 17 June 2016 as worries about a potential exit by the UK from the European Union in a referendum due next week and domestic data showing rise in wholesale and consumer price inflation offset reports indicating sooner than expected implementation of the Goods and Services Tax (GST), the biggest tax reform. The Bank of Japan and the US Federal Reserve deciding to keep interest rates unchanged also marred sentiment. The Sensex settled with small losses while the Nifty 50 index settled a tick higher for the week. The Sensex fell in three out of five sessions of the week.
The Sensex fell 9.84 points or 0.03% to settle at 26,625.91. The Nifty rose 0.15 points to settle at 8,170.20. The BSE Mid-Cap index declined 0.15%. The fall in this index was higher than the Sensex's decline in percentage terms. The BSE Small-Cap index rose 0.63%, outperforming the Sensex.
Trading for the week started on a subdued note. Weakness in global stocks and anemic domestic industrial production data for April 2016 triggered a slide on key benchmark indices on Monday, 13 June 2016. The Sensex lost 238.98 points or 0.9% to settle at 26,396.77.
Key benchmark indices settled a tad lower after hovering within a narrow range near the flat line throughout the session on Tuesday, 14 June 2016. The Sensex shed 1.06 points to settle at 26,395.71.
Positive global stocks and reports indicating sooner than expected implementation of the Goods and Services Tax (GST), the biggest tax reform helped key benchmark indices log strong gains on Wednesday, 15 June 2016. The Sensex gained 330.63 points or 1.25% to settle at 26,726.34.
Weak global cues triggered a fresh selling on the domestic bourses on Thursday, 16 June 2016. The Sensex lost 200.88 points or 0.75% to settle at 26,525.46.
Key benchmark indices logged modest gains on last trading session of the week on positive global stocks on Friday, 17 June 2016. The Sensex rose 100.45 points or 0.38% to settle at 26,625.91.
From the 30-share Sensex pack, 16 stocks rose and 14 fell in the week ended 17 June 2016.
Index heavyweight and cigarette major ITC rose 1.88%.
Most pharma stocks gained. Lupin (up 1.9%), Sun Pharmaceutical Industries (up 0.16%), and Cipla (up 1.95%) gained. Dr Reddy's Laboratories fell 1.93%.
The BSE Pharma index fell 0.44%, underperforming the Sensex.
Index heavyweight and engineering and construction major L&T shed 0.6%. L&T on 17 June 2016 announced that its wholly owned subsidiary L&T Hydrocarbon Engineering Limited (LTHE) has won orders worth Rs 1170 crore across its various business segments.
Shares of PSU coal mining major Coal India rose 2.02%.
Index heavyweight and housing finance major HDFC shed 0.24%. The company announced that the board of directors of HDFC Standard Life Insurance Company (HDFC Life), a material non listed subsidiary of the company, at its meeting held on 17 June 2016, approved entering into a confidentiality, exclusivity and standstill agreement to evaluate a proposal for a potential combination through a merger of Max Life Insurance Company and Max Financial Services with HDFC Life by way of a scheme of arrangement. The announcement was made on 17 June 2016.
Bank stocks were mixed. HDFC Bank rose 0.69%. Axis Bank (down 2.7%) and ICICI Bank (down 5.66%) dropped.
State Bank of India (SBI) gained 3.49% after media reports that the government has given its go ahead for merger of 5 associate banks with SBI. On 17 May 2016, SBI had announced that it was seeking in principle sanction of the Government of India (GoI) to enter into negotiation with its 5 subsidiary banks viz. State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore to acquire their businesses including assets and liabilities. At that time SBI also said that its board of directors will take a final call after evaluating all the relevant considerations. SBI also said at that time that it was considering acquisition of the newly-created Bharatiya Mahila Bank.
The BSE Bankex dropped 0.89%, underperforming the Sensex.
Auto stocks declined. Bajaj Auto (down 0.7%), Maruti Suzuki India (down 0.19%), Mahindra & Mahindra (M&M) (down 2.36%), and Hero MotoCorp (down 1.71%) dropped. Tata Motors rose 1.31%.
The BSE Auto index lost 0.38%, underperforming the Sensex.
Wipro rose 1.33%. The company announced the launch of its analytics solution, Data Discovery Platform. The solution provides pertinent business insights across the value chain of an industry through the predefined “apps”. The platform will enable businesses to embark on an analytics journey with value added services of process simplification and business transformation. The announcement was on 15 June 2016.
GAIL (India) (up 4.7%), Adani Ports & Special Economic Zone (up 2.35%) and TCS (up 1.66%) gained. ONGC (down 3.42%), Tata Steel (down 2.82%) and Reliance Industries (RIL) (down 0.25%) declined.
Meanwhile, Goods and Services Tax (GST), the biggest tax reform of the country, is likely to be implemented sooner than expected, reports quoting Finance Minister Arun Jaitley indicated. After attending a meeting of finance ministers of 22 states in Kolkata on 14 June 2016, Jaitley reportedly said that all states except Tamil Nadu have agreed on the broader contours of GST. The meeting has agreed that issues of dual control and revenue neutral rate should be dealt by the Empowered Committee and not to cap the GST rate in the Bill.
On the macro front, data released by government on 14 June 2016 showed that the inflation based on wholesale price index (WPI) rose 0.79% in May, after rising 0.34% in April. Meanwhile, March WPI inflation has been revised lower to negative 0.45% from negative 0.85% as reported earlier. Build up inflation rate in the financial year so far was 2.34% compared to a build up rate of 1.08% in the corresponding period of the previous year.
Meanwhile, data released by the government on 13 June 2016 showed that the all-India general consumer prices index (CPI) inflation increased to 21-months high of 5.76% in May 2016, recording rise for second straight month. The CPI inflation had stood at 5.47% in April 2016. The corresponding provisional inflation rate for rural area was 6.45% and urban area 4.89% in May 2016 as against 6.17% and 4.68% in April 2016. However, the core CPI inflation declined to 4.49% in May 2016 from 4.71% in April 2016.
Data released on 10 June 2016 showed that India's industrial production (IIP) contracted by 0.8% in April 2016. Factory output measured in terms of the IIP had expanded by 3% in April 2015. The electricity generation surged at two-year high pace of 14.6%, while the mining output also moved up 1.4% in April 2016. However, the manufacturing sector production dipped 3.1% contributing to the decline in industrial output in April 2016. The IIP growth in March 2016 has been revised upwards to 0.3% in the first revision compared with 0.05% reported provisionally. Meanwhile, the growth in January 2016 has been revised downwards to -1.6% at the final revision from -1.5% at first revision and reported provisionally.
India's current account deficit (CAD) narrowed sharply to $0.3 billion (0.1% of GDP) in Q4 of 2015-16, significantly lower than $7.1 billion (1.3% of GDP) in Q3 of 2015-16 and marginally lower than $0.7 billion (0.1% of GDP) in Q4 of 2014-15. The contraction in CAD was primarily on account of a lower trade deficit ($24.8 billion) than in Q4 of last year ($31.6 billion) and $34 billion in the preceding quarter. The government announced on 16 June 2016.
India's merchandise exports fell 0.79% at $22.17 billion in May 2016 over May 2015. Imports fell 13.16% at $28.44 billion in May 2016 over May 2015. The trade deficit fell to $6.27 billion in May 2016 from $10.41 billion in May 2015. Non-petroleum exports rose 1.01% at $20.19 billion in May 2016 over May 2015. Oil imports fell 30.45% at $5.93 billion. Non-oil imports fell 7.06% at $22.50 billion. The commerce ministry released the trade data on provisional basis for May 2016 on 15 June 2016.
On global front, the Bank of Japan (BoJ) on 16 June 2016 kept monetary policy steady as was widely expected. At the end of a two-day monetary policy review, the BoJ said it will continue to conduct money market operations so the monetary base increases at an annual pace of 80 trillion yen ($760 billion) and maintain a negative interest rate of minus 0.1% to the policy-rate balances in current accounts held by financial institutions at the bank. The BoJ said in a statement that the economy continued its moderate recovery trend, citing steady improvement in business fixed investment, employment and housing investment.
The US Federal Reserve on 15 June 2016 left interest rates unchanged and backed off an aggressive stance on future rate hikes. The US Federal Reserve after a conclusion of two-day meeting on 15 June 2016, left interest rates unchanged and signaled it's likely to take an even slower approach on raising the cost of borrowing against a backdrop of slower US job creation and fresh worries about economic events abroad. The Fed trimmed its estimate of US growth in 2016 to 2% from 2.2%, but left its long-run forecast intact. The Fed also tempered its future expectations for the economy. The central bank indicated it will raise rates three times apiece in 2017 and 2018 instead of four. And in the long run, the FOMC predicts the Fed-funds rate would rise to 3% instead of 3.3%. Fed officials also expect the labor market to show more improvement, with the unemployment rate remaining below 5% for the next three years.
The Sensex fell 9.84 points or 0.03% to settle at 26,625.91. The Nifty rose 0.15 points to settle at 8,170.20. The BSE Mid-Cap index declined 0.15%. The fall in this index was higher than the Sensex's decline in percentage terms. The BSE Small-Cap index rose 0.63%, outperforming the Sensex.
Trading for the week started on a subdued note. Weakness in global stocks and anemic domestic industrial production data for April 2016 triggered a slide on key benchmark indices on Monday, 13 June 2016. The Sensex lost 238.98 points or 0.9% to settle at 26,396.77.
Key benchmark indices settled a tad lower after hovering within a narrow range near the flat line throughout the session on Tuesday, 14 June 2016. The Sensex shed 1.06 points to settle at 26,395.71.
Positive global stocks and reports indicating sooner than expected implementation of the Goods and Services Tax (GST), the biggest tax reform helped key benchmark indices log strong gains on Wednesday, 15 June 2016. The Sensex gained 330.63 points or 1.25% to settle at 26,726.34.
Weak global cues triggered a fresh selling on the domestic bourses on Thursday, 16 June 2016. The Sensex lost 200.88 points or 0.75% to settle at 26,525.46.
Key benchmark indices logged modest gains on last trading session of the week on positive global stocks on Friday, 17 June 2016. The Sensex rose 100.45 points or 0.38% to settle at 26,625.91.
From the 30-share Sensex pack, 16 stocks rose and 14 fell in the week ended 17 June 2016.
Index heavyweight and cigarette major ITC rose 1.88%.
Most pharma stocks gained. Lupin (up 1.9%), Sun Pharmaceutical Industries (up 0.16%), and Cipla (up 1.95%) gained. Dr Reddy's Laboratories fell 1.93%.
The BSE Pharma index fell 0.44%, underperforming the Sensex.
Index heavyweight and engineering and construction major L&T shed 0.6%. L&T on 17 June 2016 announced that its wholly owned subsidiary L&T Hydrocarbon Engineering Limited (LTHE) has won orders worth Rs 1170 crore across its various business segments.
Shares of PSU coal mining major Coal India rose 2.02%.
Index heavyweight and housing finance major HDFC shed 0.24%. The company announced that the board of directors of HDFC Standard Life Insurance Company (HDFC Life), a material non listed subsidiary of the company, at its meeting held on 17 June 2016, approved entering into a confidentiality, exclusivity and standstill agreement to evaluate a proposal for a potential combination through a merger of Max Life Insurance Company and Max Financial Services with HDFC Life by way of a scheme of arrangement. The announcement was made on 17 June 2016.
Bank stocks were mixed. HDFC Bank rose 0.69%. Axis Bank (down 2.7%) and ICICI Bank (down 5.66%) dropped.
State Bank of India (SBI) gained 3.49% after media reports that the government has given its go ahead for merger of 5 associate banks with SBI. On 17 May 2016, SBI had announced that it was seeking in principle sanction of the Government of India (GoI) to enter into negotiation with its 5 subsidiary banks viz. State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore to acquire their businesses including assets and liabilities. At that time SBI also said that its board of directors will take a final call after evaluating all the relevant considerations. SBI also said at that time that it was considering acquisition of the newly-created Bharatiya Mahila Bank.
The BSE Bankex dropped 0.89%, underperforming the Sensex.
Auto stocks declined. Bajaj Auto (down 0.7%), Maruti Suzuki India (down 0.19%), Mahindra & Mahindra (M&M) (down 2.36%), and Hero MotoCorp (down 1.71%) dropped. Tata Motors rose 1.31%.
The BSE Auto index lost 0.38%, underperforming the Sensex.
Wipro rose 1.33%. The company announced the launch of its analytics solution, Data Discovery Platform. The solution provides pertinent business insights across the value chain of an industry through the predefined “apps”. The platform will enable businesses to embark on an analytics journey with value added services of process simplification and business transformation. The announcement was on 15 June 2016.
GAIL (India) (up 4.7%), Adani Ports & Special Economic Zone (up 2.35%) and TCS (up 1.66%) gained. ONGC (down 3.42%), Tata Steel (down 2.82%) and Reliance Industries (RIL) (down 0.25%) declined.
Meanwhile, Goods and Services Tax (GST), the biggest tax reform of the country, is likely to be implemented sooner than expected, reports quoting Finance Minister Arun Jaitley indicated. After attending a meeting of finance ministers of 22 states in Kolkata on 14 June 2016, Jaitley reportedly said that all states except Tamil Nadu have agreed on the broader contours of GST. The meeting has agreed that issues of dual control and revenue neutral rate should be dealt by the Empowered Committee and not to cap the GST rate in the Bill.
On the macro front, data released by government on 14 June 2016 showed that the inflation based on wholesale price index (WPI) rose 0.79% in May, after rising 0.34% in April. Meanwhile, March WPI inflation has been revised lower to negative 0.45% from negative 0.85% as reported earlier. Build up inflation rate in the financial year so far was 2.34% compared to a build up rate of 1.08% in the corresponding period of the previous year.
Meanwhile, data released by the government on 13 June 2016 showed that the all-India general consumer prices index (CPI) inflation increased to 21-months high of 5.76% in May 2016, recording rise for second straight month. The CPI inflation had stood at 5.47% in April 2016. The corresponding provisional inflation rate for rural area was 6.45% and urban area 4.89% in May 2016 as against 6.17% and 4.68% in April 2016. However, the core CPI inflation declined to 4.49% in May 2016 from 4.71% in April 2016.
Data released on 10 June 2016 showed that India's industrial production (IIP) contracted by 0.8% in April 2016. Factory output measured in terms of the IIP had expanded by 3% in April 2015. The electricity generation surged at two-year high pace of 14.6%, while the mining output also moved up 1.4% in April 2016. However, the manufacturing sector production dipped 3.1% contributing to the decline in industrial output in April 2016. The IIP growth in March 2016 has been revised upwards to 0.3% in the first revision compared with 0.05% reported provisionally. Meanwhile, the growth in January 2016 has been revised downwards to -1.6% at the final revision from -1.5% at first revision and reported provisionally.
India's current account deficit (CAD) narrowed sharply to $0.3 billion (0.1% of GDP) in Q4 of 2015-16, significantly lower than $7.1 billion (1.3% of GDP) in Q3 of 2015-16 and marginally lower than $0.7 billion (0.1% of GDP) in Q4 of 2014-15. The contraction in CAD was primarily on account of a lower trade deficit ($24.8 billion) than in Q4 of last year ($31.6 billion) and $34 billion in the preceding quarter. The government announced on 16 June 2016.
India's merchandise exports fell 0.79% at $22.17 billion in May 2016 over May 2015. Imports fell 13.16% at $28.44 billion in May 2016 over May 2015. The trade deficit fell to $6.27 billion in May 2016 from $10.41 billion in May 2015. Non-petroleum exports rose 1.01% at $20.19 billion in May 2016 over May 2015. Oil imports fell 30.45% at $5.93 billion. Non-oil imports fell 7.06% at $22.50 billion. The commerce ministry released the trade data on provisional basis for May 2016 on 15 June 2016.
On global front, the Bank of Japan (BoJ) on 16 June 2016 kept monetary policy steady as was widely expected. At the end of a two-day monetary policy review, the BoJ said it will continue to conduct money market operations so the monetary base increases at an annual pace of 80 trillion yen ($760 billion) and maintain a negative interest rate of minus 0.1% to the policy-rate balances in current accounts held by financial institutions at the bank. The BoJ said in a statement that the economy continued its moderate recovery trend, citing steady improvement in business fixed investment, employment and housing investment.
The US Federal Reserve on 15 June 2016 left interest rates unchanged and backed off an aggressive stance on future rate hikes. The US Federal Reserve after a conclusion of two-day meeting on 15 June 2016, left interest rates unchanged and signaled it's likely to take an even slower approach on raising the cost of borrowing against a backdrop of slower US job creation and fresh worries about economic events abroad. The Fed trimmed its estimate of US growth in 2016 to 2% from 2.2%, but left its long-run forecast intact. The Fed also tempered its future expectations for the economy. The central bank indicated it will raise rates three times apiece in 2017 and 2018 instead of four. And in the long run, the FOMC predicts the Fed-funds rate would rise to 3% instead of 3.3%. Fed officials also expect the labor market to show more improvement, with the unemployment rate remaining below 5% for the next three years.
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