Market drops as UK votes to leave European Union
Key benchmark indices dropped in the week ended Friday, 24 June 2016 as gains triggered by government's announcement of a further liberalization of foreign direct investment (FDI) rules in some sectors were washed away by the UK voting to leave the European Union in a historic referendum dubbed "Brexit". Key indices edged lower in three out of five trading sessions during the week. The Sensex regained the psychologically important 26,000 level after falling below that level in intraday trade on Friday, 24 June 2016. The Nifty also regained the psychologically important 8,000 mark after falling below that level in intraday trade on Friday, 24 June 2016.
In the week ended Friday, 24 June 2016, the 30-share S&P BSE Sensex fell 228.20 points or 0.86% to settle at 26,397.71. The Nifty 50 index fell 81.60 points or 1% to settle at 8,088.60.
The BSE Mid-Cap index slipped 45.65 points or 0.4% to settle at 11,313.41. The fall in the index was lower than the Sensex's decline in percentage terms. The BSE Small-Cap index declined 156.53 points or 1.37% to settle at 11,278.63. The fall in the index was higher than the Sensex's decline in percentage terms.
Trading for the week started on a strong note. The government's announcement of a further liberalization of foreign direct investment (FDI) rules in some sectors and gains in global stocks aided the upmove on the domestic bourses at the onset of the week on Monday, 20 June 2016. The Sensex rose 241.01 points or 0.91% to settle at 26,866.92, its highest closing level since 8 June 2016.
The two key benchmark indices snapped a two-day winning streak in what was a lacklustre trading session on Tuesday, 21 June 2016. The Sensex fell 54.14 points or 0.2% to settle at 26,812.78, its lowest closing level since 17 June 2016.
Key benchmark indices logged small decline in volatile trading session on Wednesday, 22 June 2016. The Sensex fell 47.13 points or 0.18% to settle at 26,765.65, its lowest closing level since 17 June 2016.
Gains in European stocks triggered by a pair of opinion polls predicting that British voters will vote for Britain to remain in the European Union in a landmark referendum aided the upmove on the domestic bourses on Thursday, 23 June 2016. The Sensex gained 236.57 points or 0.88% to settle at 27,002.22, its highest closing level since 8 June 2016.
Key benchamark indices dropped sharply as global stocks suffered severe setback after a British referendum showed that UK has voted to leave the European Union. The Sensex fell 604.51 points or 2.24% to settle at 26,397.71, its lowest closing level since 14 June 2016.
Among the 30-share Sensex pack, 23 stocks declined and the rest of them gained in the week ended Friday, 24 June 2016.
L&T (down 3.02%), GAIL (India) (down 2.54%) and Adani Ports and Special Economic Zone (down 2.39%) edged lower from the Sensex pack.
Bajaj Auto (up 4.36%), Mahindra & Mahindra (up 2.6%) and Hero MotoCorp (up 1.36%) edged higher from the Sensex pack.
Tata Motors fell 3.07%. Results from the UK's referendum on its European Union membership showed the country had voted to leave the trading bloc. Tata Motors derives majority of its revenue from its British luxury car unit Jaguar Land Rover (JLR). JLR is the largest automotive manufacturer in Britain. It is one of the UK's largest exporters and generates over 80% of its revenue from exports.
Meanwhile, Tata Motors-owned Jaguar Land Rover (JLR) on Thursday, 23 June 2016, reportedly began recalling more than 11,000 vehicles in China due to faulty crankshaft sensors. The recall affects 6,067 imported Land Rover Discovery 4 SUVs manufactured between April 2012 and October 2012. Apart from that, 5,214 imported Range Rover models produced between April 2012 and October 2012; and one New Range Rover car made on 9 May 2012 will be recalled.
Faulty crankshaft position sensors may cause the engine to stall when driving. Some of the cars may even fail to start, reports added. The firm owned by Tata Motors will check all the affected vehicles and replace defective parts free of charge.
Tata Steel fell 3.99%. Results from the UK's referendum on its European Union membership showed the country had voted to leave the trading bloc. Tata Steel is Europe's second largest steel producer, with steelmaking in the UK and Netherlands, and manufacturing plants across Europe. Tata Steel Europe has initiated the process to sell its UK business viz. Tata Steel UK. Tata Steel Europe has invited seven short listed potential investors to submit binding bids for Tata Steel UK.
Index heavyweight and cigarette major ITC lost 1.33% to Rs 353.40.
Index heavyweight and IT major Infosys rose 1.37% to Rs 1,194.50.
TCS dropped 1.26%. The company announced a partnership to deliver next generation cloud-based derivative post trade processing service on the Calypso platform to Sernova Financial, an innovative provider of turn-key post-trade services. The partnership combines Sernova Financial's capital markets expertise, Calypso platform's capability and TCS' bouquet of capital markets solutions along with IT-Operations synergies as well as Business Process as a Service (BPaaS) models. The announcement was made during market hours on Monday, 20 June 2016.
Bank stocks edged lower. HDFC Bank (down 0.64%), Axis Bank (down 3.1%), ICICI Bank (down 3.06%) and State Bank of India (down 1.01%) fell.
Reserve Bank of India Governor Raghuram Rajan said on Wednesday, 22 June 2016, that the cleaning up of bank balance sheets and the restoration of credit growth are vital and related elements in the growth agenda. The government and the Reserve Bank of India are helping public sector banks in this difficult but critical task, Rajan said at an interactive meet between industry and trade arranged by industry body ASSOCHAM in Bangalore. The government's effort in speeding up the debt recovery process and creating a new Bankruptcy system are two important steps towards improving the resolution process, he said. Rajan also said that improving governance of public sector banks and infusing bank capital will pay large dividends in the short run. Rajan said that banks are getting into the spirit of cleanup and are pursuing reluctant promoters to take the necessary steps to rehabilitate projects. The RBI Governor said that fundamentals of the borrower not being good and the ability of the lender to collect being weak were the two sources of current distress in the banking system.
Pharma stocks saw mixed trend. Dr Reddy's Laboratories gained 4.82%. Cipla fell 1.86%.
Sun Pharmaceutical Industries rose 1.47% to Rs 753.75. The company announced after market hours on Thursday, 23 June 2016, that its board approved buyback of the company's equity shares. The company will buy back up to 75 lakh shares at a price of Rs 900 each through the tender offer route. The company said that the buyback is being undertaken to return surplus funds to the equity shareholders and thereby, enhancing the overall returns to share holders. The record date for the buyback is 15 July 2016. The promoters of the company have indicated their intention to participate in the proposed buyback in such a manner that their aggregate shareholding percentage in the company will not fall below their current aggregate percentage shareholding. Under Securities and Exchange Board of India (Sebi) guidelines, 15% of the buyback offer is reserved for small investors holding shares worth not more than Rs 2 lakh as on the record date.
Lupin shed 0.11%. The company announced after market hours on Wednesday, 22 June 2016, that it has received final approval from the United States Food and Drug Administration (FDA) to market a generic version of Amneal Pharmaceuticals' Activella Tablets. The drug is indicated in a woman with a uterus for treatment of moderate to severe vasomotor symptoms due to menopause and prevention of postmenopausal osteoporosis. It is also indicated in a woman with a uterus for treatment of moderate to severe symptoms of vulvar and vaginal atrophy due to menopause. Activella had annual US sales of $95.6 million, as per IMS MAT March 2016 data.
Finance Minister Arun Jaitley said in a statement on Friday, 24 June 2016 that the Indian economy is well prepared to deal with the short and medium term consequences of Brexit. India is strongly committed to macro-economic framework with its focus on maintaining stability, Jaitley said. The finance minister said that India's macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline and declining inflation. He further said that India's immediate and medium-term firewalls are solid in the form of a healthy foreign exchange reserves position.
Jaitley said that the Indian government, the Reserve Bank of India and other Indian regulators are well prepared and are working closely together to deal with any short term volatility. He said that the government will steadfastly pursue its ambitious reform agenda—including early passage of the goods and services tax(GST)—that will help India realize its medium term growth potential of 8-9%.
Reserve Bank of India (RBI) Governor Raghuram Rajan said in a statement that the central bank is continuously maintaining a close vigil on the market developments, both domestically and internationally, and will take all necessary steps, including liquidity support (both dollar and INR), to ensure orderly conditions in financial markets. Rajan said India's economy has good fundamentals, low short term external debt and sizeable foreign exchange reserves. These should stand the country in good stead in the days to come.
The Indian government on Monday, 20 June 2016, announced liberalization of foreign direct investment (FDI) rules in aviation, pharmaceutical, defence, trading in food products and single brand retail trading. The government said in a statement that with the latest liberalization of the FDI regime in the country, most of the sectors would be under automatic approval route, except a small negative list. With these changes, India is now the most open economy in the world for FDI, it said.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan surprised financial markets by announcing on Saturday, 18 June 2016, that he will not seek a second term as the RBI chief and will be returning to academia when his term as RBI Governor ends on 4 September 2016. While announcing his decision in a letter to the RBI staff on Saturday, 18 June 2016, not to seek a second term as RBI Governor, Rajan said he has accomplished all of what was laid out on the first day of his term as agenda for action. He, however, added that two subsequent developments are yet to be completed. Inflation is in the target zone, but the monetary policy committee that will set policy has yet to be formed. Moreover, the bank clean up initiated under the Asset Quality Review, having already brought more credibility to bank balance sheets, is still ongoing.
Rajan also said that India has made adequate preparations for the repayment of Foreign Currency Non-Resident (B) deposits and their outflow, managed properly, should largely be a non-event. Rajan has been credited with stabilizing the rupee against the dollar, bringing down inflation and cleaning the bad-loan mess in the Indian banking system.
The outcome of a British referendum on Friday, 24 June 2016 showed that the UK has voted to leave the European Union (EU) in a historic referendum dubbed "Brexit". UK's Prime Minister David Cameron said he will resign, after Britain voted to leave the European Union in a hotly fought referendum. During a speech after the Brexit results were announced, the prime minister said the break-up negotiations with Europe need to take place under a new leader. The new prime minister will take over in October, he said. UK's central bank Bank of England (BoE) said in a statement that it is monitoring developments closely. The BoE said it has undertaken extensive contingency planning and is working closely with the UK Treasury, other domestic authorities and overseas central banks. The BoE said it will take all necessary steps to meet its responsibilities for monetary and financial stability.
In the week ended Friday, 24 June 2016, the 30-share S&P BSE Sensex fell 228.20 points or 0.86% to settle at 26,397.71. The Nifty 50 index fell 81.60 points or 1% to settle at 8,088.60.
The BSE Mid-Cap index slipped 45.65 points or 0.4% to settle at 11,313.41. The fall in the index was lower than the Sensex's decline in percentage terms. The BSE Small-Cap index declined 156.53 points or 1.37% to settle at 11,278.63. The fall in the index was higher than the Sensex's decline in percentage terms.
Trading for the week started on a strong note. The government's announcement of a further liberalization of foreign direct investment (FDI) rules in some sectors and gains in global stocks aided the upmove on the domestic bourses at the onset of the week on Monday, 20 June 2016. The Sensex rose 241.01 points or 0.91% to settle at 26,866.92, its highest closing level since 8 June 2016.
The two key benchmark indices snapped a two-day winning streak in what was a lacklustre trading session on Tuesday, 21 June 2016. The Sensex fell 54.14 points or 0.2% to settle at 26,812.78, its lowest closing level since 17 June 2016.
Key benchmark indices logged small decline in volatile trading session on Wednesday, 22 June 2016. The Sensex fell 47.13 points or 0.18% to settle at 26,765.65, its lowest closing level since 17 June 2016.
Gains in European stocks triggered by a pair of opinion polls predicting that British voters will vote for Britain to remain in the European Union in a landmark referendum aided the upmove on the domestic bourses on Thursday, 23 June 2016. The Sensex gained 236.57 points or 0.88% to settle at 27,002.22, its highest closing level since 8 June 2016.
Key benchamark indices dropped sharply as global stocks suffered severe setback after a British referendum showed that UK has voted to leave the European Union. The Sensex fell 604.51 points or 2.24% to settle at 26,397.71, its lowest closing level since 14 June 2016.
Among the 30-share Sensex pack, 23 stocks declined and the rest of them gained in the week ended Friday, 24 June 2016.
L&T (down 3.02%), GAIL (India) (down 2.54%) and Adani Ports and Special Economic Zone (down 2.39%) edged lower from the Sensex pack.
Bajaj Auto (up 4.36%), Mahindra & Mahindra (up 2.6%) and Hero MotoCorp (up 1.36%) edged higher from the Sensex pack.
Tata Motors fell 3.07%. Results from the UK's referendum on its European Union membership showed the country had voted to leave the trading bloc. Tata Motors derives majority of its revenue from its British luxury car unit Jaguar Land Rover (JLR). JLR is the largest automotive manufacturer in Britain. It is one of the UK's largest exporters and generates over 80% of its revenue from exports.
Meanwhile, Tata Motors-owned Jaguar Land Rover (JLR) on Thursday, 23 June 2016, reportedly began recalling more than 11,000 vehicles in China due to faulty crankshaft sensors. The recall affects 6,067 imported Land Rover Discovery 4 SUVs manufactured between April 2012 and October 2012. Apart from that, 5,214 imported Range Rover models produced between April 2012 and October 2012; and one New Range Rover car made on 9 May 2012 will be recalled.
Faulty crankshaft position sensors may cause the engine to stall when driving. Some of the cars may even fail to start, reports added. The firm owned by Tata Motors will check all the affected vehicles and replace defective parts free of charge.
Tata Steel fell 3.99%. Results from the UK's referendum on its European Union membership showed the country had voted to leave the trading bloc. Tata Steel is Europe's second largest steel producer, with steelmaking in the UK and Netherlands, and manufacturing plants across Europe. Tata Steel Europe has initiated the process to sell its UK business viz. Tata Steel UK. Tata Steel Europe has invited seven short listed potential investors to submit binding bids for Tata Steel UK.
Index heavyweight and cigarette major ITC lost 1.33% to Rs 353.40.
Index heavyweight and IT major Infosys rose 1.37% to Rs 1,194.50.
TCS dropped 1.26%. The company announced a partnership to deliver next generation cloud-based derivative post trade processing service on the Calypso platform to Sernova Financial, an innovative provider of turn-key post-trade services. The partnership combines Sernova Financial's capital markets expertise, Calypso platform's capability and TCS' bouquet of capital markets solutions along with IT-Operations synergies as well as Business Process as a Service (BPaaS) models. The announcement was made during market hours on Monday, 20 June 2016.
Bank stocks edged lower. HDFC Bank (down 0.64%), Axis Bank (down 3.1%), ICICI Bank (down 3.06%) and State Bank of India (down 1.01%) fell.
Reserve Bank of India Governor Raghuram Rajan said on Wednesday, 22 June 2016, that the cleaning up of bank balance sheets and the restoration of credit growth are vital and related elements in the growth agenda. The government and the Reserve Bank of India are helping public sector banks in this difficult but critical task, Rajan said at an interactive meet between industry and trade arranged by industry body ASSOCHAM in Bangalore. The government's effort in speeding up the debt recovery process and creating a new Bankruptcy system are two important steps towards improving the resolution process, he said. Rajan also said that improving governance of public sector banks and infusing bank capital will pay large dividends in the short run. Rajan said that banks are getting into the spirit of cleanup and are pursuing reluctant promoters to take the necessary steps to rehabilitate projects. The RBI Governor said that fundamentals of the borrower not being good and the ability of the lender to collect being weak were the two sources of current distress in the banking system.
Pharma stocks saw mixed trend. Dr Reddy's Laboratories gained 4.82%. Cipla fell 1.86%.
Sun Pharmaceutical Industries rose 1.47% to Rs 753.75. The company announced after market hours on Thursday, 23 June 2016, that its board approved buyback of the company's equity shares. The company will buy back up to 75 lakh shares at a price of Rs 900 each through the tender offer route. The company said that the buyback is being undertaken to return surplus funds to the equity shareholders and thereby, enhancing the overall returns to share holders. The record date for the buyback is 15 July 2016. The promoters of the company have indicated their intention to participate in the proposed buyback in such a manner that their aggregate shareholding percentage in the company will not fall below their current aggregate percentage shareholding. Under Securities and Exchange Board of India (Sebi) guidelines, 15% of the buyback offer is reserved for small investors holding shares worth not more than Rs 2 lakh as on the record date.
Lupin shed 0.11%. The company announced after market hours on Wednesday, 22 June 2016, that it has received final approval from the United States Food and Drug Administration (FDA) to market a generic version of Amneal Pharmaceuticals' Activella Tablets. The drug is indicated in a woman with a uterus for treatment of moderate to severe vasomotor symptoms due to menopause and prevention of postmenopausal osteoporosis. It is also indicated in a woman with a uterus for treatment of moderate to severe symptoms of vulvar and vaginal atrophy due to menopause. Activella had annual US sales of $95.6 million, as per IMS MAT March 2016 data.
Finance Minister Arun Jaitley said in a statement on Friday, 24 June 2016 that the Indian economy is well prepared to deal with the short and medium term consequences of Brexit. India is strongly committed to macro-economic framework with its focus on maintaining stability, Jaitley said. The finance minister said that India's macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline and declining inflation. He further said that India's immediate and medium-term firewalls are solid in the form of a healthy foreign exchange reserves position.
Jaitley said that the Indian government, the Reserve Bank of India and other Indian regulators are well prepared and are working closely together to deal with any short term volatility. He said that the government will steadfastly pursue its ambitious reform agenda—including early passage of the goods and services tax(GST)—that will help India realize its medium term growth potential of 8-9%.
Reserve Bank of India (RBI) Governor Raghuram Rajan said in a statement that the central bank is continuously maintaining a close vigil on the market developments, both domestically and internationally, and will take all necessary steps, including liquidity support (both dollar and INR), to ensure orderly conditions in financial markets. Rajan said India's economy has good fundamentals, low short term external debt and sizeable foreign exchange reserves. These should stand the country in good stead in the days to come.
The Indian government on Monday, 20 June 2016, announced liberalization of foreign direct investment (FDI) rules in aviation, pharmaceutical, defence, trading in food products and single brand retail trading. The government said in a statement that with the latest liberalization of the FDI regime in the country, most of the sectors would be under automatic approval route, except a small negative list. With these changes, India is now the most open economy in the world for FDI, it said.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan surprised financial markets by announcing on Saturday, 18 June 2016, that he will not seek a second term as the RBI chief and will be returning to academia when his term as RBI Governor ends on 4 September 2016. While announcing his decision in a letter to the RBI staff on Saturday, 18 June 2016, not to seek a second term as RBI Governor, Rajan said he has accomplished all of what was laid out on the first day of his term as agenda for action. He, however, added that two subsequent developments are yet to be completed. Inflation is in the target zone, but the monetary policy committee that will set policy has yet to be formed. Moreover, the bank clean up initiated under the Asset Quality Review, having already brought more credibility to bank balance sheets, is still ongoing.
Rajan also said that India has made adequate preparations for the repayment of Foreign Currency Non-Resident (B) deposits and their outflow, managed properly, should largely be a non-event. Rajan has been credited with stabilizing the rupee against the dollar, bringing down inflation and cleaning the bad-loan mess in the Indian banking system.
The outcome of a British referendum on Friday, 24 June 2016 showed that the UK has voted to leave the European Union (EU) in a historic referendum dubbed "Brexit". UK's Prime Minister David Cameron said he will resign, after Britain voted to leave the European Union in a hotly fought referendum. During a speech after the Brexit results were announced, the prime minister said the break-up negotiations with Europe need to take place under a new leader. The new prime minister will take over in October, he said. UK's central bank Bank of England (BoE) said in a statement that it is monitoring developments closely. The BoE said it has undertaken extensive contingency planning and is working closely with the UK Treasury, other domestic authorities and overseas central banks. The BoE said it will take all necessary steps to meet its responsibilities for monetary and financial stability.
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