We had mentioned in Wednesday’s closing report that Nifty, Sensex were overbought and that they are being supported by a benign macro-environment. The major indices of the Indian stock markets suffered a correction on Thursday with losses upto 0.74% over Wednesday’s close. The trends of the major indices in the course of Thursday’s trading are given in the table below:
Profit booking and upcoming global event risks depressed the Indian equity markets on Thursday. Selling pressure was witnessed in banking, healthcare and capital goods stocks. On the NSE, at the close of trading, there were 489 advances, 936 declines and 49 unchanged. The BSE market breadth was also tilted in favour of the bears -- with 1,596 declines and 1,088 advances and 184 unchanged.
Initially, on Thursday, the benchmark indices opened on a positive note, in sync with their Asian peers, especially the Japanese markets. Besides, the equity markets were pushed up by higher global crude oil prices, firm rupee, healthy progress of monsoon season and recovery in the European indices. However, the equity markets soon ceded their gains on the back of sector-specific profit booking. In addition, reduced chances of further monetary policy easing by the European Central Bank (ECB) in its upcoming monetary policy review dampened investors' sentiments. Further, the ongoing logjam in parliament hampered the upward trajectory in the stock markets.
According to market analysts, barring the media, auto and realty, all major sectoral indices traded in the red. Most IT and banking sector stocks traded with bearish sentiments on profit booking. Also, pharma and auto stocks also faced resistance at higher levels due to profit booking.
The growth in debt levels over the decade-mainly driven by private debts makes emerging market economies vulnerable to external shocks, global credit rating agency Moody's Investors Service has said in a report. According to the report titled 'The Evolution of Emerging Markets External Debt: Private Sector Debt Drives Broad-Based Build-Up of Emerging Markets External Vulnerability Risks', the debt growth was highest in the Asia-Pacific region. The largest increase was reported in external borrowings in China, India, Indonesia, Taiwan and Malaysia, Moody's said. Driven by growth in private debt in China, India and Indonesia, debt levels in the Asia-Pacific region have grown at an average rate of 13.5%, the report said. According to Moody's, the average external debt to gross domestic product ratio for Asia as a whole has recently increased from 31% in 2008 to 47% in 2015 -- well below the 78% of Emerging Europe, but comparable to the 48% in Latin America and the 43% in the Middles East and Africa region. Total emerging and frontier market external debt -- defined as debt owed by residents of a country to non-residents -- has almost tripled from $3 trillion in 2005 to $8.2 trillion at the end of 2015. Debt is now growing faster than GDP and faster than foreign exchange reserves for many of these countries, said Moody's. In this context, the stock markets in India are likely to suffer a sharp correction when foreign institutional investors withdraw some of their funds from emerging markets like India. Moody’s sums it up by saying, “The potential for capital flows to slow, should US interest rates continue to rise, would also exacerbate the debt situation in emerging economies.”
Zinc-lead producer Hindustan Zinc on Wednesday said it has posted a 47% decrease in its net profit to Rs1,037 crore in the quarter ended June 30 as compared to Rs1,940 crore in the corresponding quarter last year. Revenues during the quarter were Rs2,501 crore, which is 30% lower from a year ago. The decrease was on account of lower volumes, the company said in a statement. In accordance with mined metal availability and accretion to inventory, refined zinc production during the quarter decreased by 46% year-on-year (y-o-y) and 34% from the previous quarter. Integrated lead production during the quarter was lower by 11% y-o-y and 36% sequentially for the same reason while silver metal production was up by 20% y-o-y. Rise in silver production was on account of higher volumes from Sindesar Khurd mine, though lower by 27% compared to previous quarter due to accretion to inventory and lower volumes from Rampura Agucha mine. The company’s shares closed at Rs193.20, down 0.44% on the BSE.
Fast moving consumer goods (FMCG) company Dabur India on Wednesday announced its entry into the fizzy drinks market with the launch of Réal VOLO -- a range of fruit juice-based aerated drinks. "Our Réal VOLO range contains 20%-25% fruit juice content making the fun of fizz healthier with the goodness of fruits," said Mayank Kumar, head, Fruit Juices and Beverages, Dabur India. The company said the range -- which does not have any added preservatives -- is available in 250 ml cans priced at Rs40 each. Dabur shares closed at Rs304.10, up 0.12% on the BSE.
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: