We had mentioned in Friday’s closing report that Nifty, Sensex were likely to move sideways. On Monday, the major indices of the Indian stock markets were range-bound and ended flat. Trading volumes were on the lower side indicating that investors preferred to wait for the trend to emerge. The trends of the major indices in the course of Monday’s trading are given in the table below:
Taking cues from their Asian peers, key Indian equity indices were trying to recover from the hangover of last week's Brexit vote. Selling pressure was witnessed in information technology stocks. The BSE market breadth was tilted in favour of the bulls -- with 1,813 advances and 795 declines. Initially on Monday, the key indices opened on a flat note -- marginally in the red -- as investors' sentiments remained weak on account of the volatility caused in the global markets due to Britain's vote to exit the EU. This had also resulted in a sharp drop in the rupee's value and dried up foreign fund inflows. However, the Indian markets gained some momentum shortly after to trade in the green as the Asian markets, especially the Nikkei, showed a considerable recovery by shrugging off the global selloff stimulated by the Brexit. The rupee, after a major fall of 71 paise on Friday, managed to wipe out its losses and helped the equity markets to support its weakened sentiments. The investors were seen to be cautious, ahead of the US trade data to be released later on Monday, and GDP and consumer confidence data to be released a day later. The Indian markets are also expected to remain cautious ahead of some major industrial data to be released later during the week.
The National Stock Exchange of India Ltd (NSE) on Monday said it plans to list on bourses as its board has expressed a desire to file the Draft Red Herring Prospectus (DRHP) latest by January 2017 for domestic listing and by April 2017 for overseas listing, "after addressing restructuring needs of the exchange and the regulatory requirements for listing," the exchange said in a statement. The exchange said that the board has re-constituted the current listing committee as an empowered sub-committee of the board to accelerate the listing procedures. The committee will take decisions within a stipulated time line. All these decisions were taken during the last meeting of board of directors on June 23," it said.
Coming back to news on world markets, the International Monetary Fund (IMF) has urged Britain and the European Union (EU) to reduce the risks in the wake of Britain's decision to exit the bloc. "At this point, policy-makers, both in the UK and in Europe, are holding that level of uncertainty in their hands and how they come out in the next few days is really going to drive the direction in which risk will go," IMF Managing Director Christine Lagarde told a forum on Sunday at the Aspen Ideas Festival in Colorado. Following a decision to exit the EU, Britain would need to negotiate the terms of its withdrawal and a new relationship with the EU. Lagarde said the IMF "will continue to encourage the parties involved to actually proceed with this transition in the most efficient, predictable way in order to reduce the level of uncertainty", which will determine the level of future risks. The IMF has continued to monitor the development closely and stood ready to support its member countries as needed, Lagarde added. In a statement released on Friday in the wake of Britain's referendum, the IMF chief urged Britain and the EU authorities to work collaboratively to "ensure a smooth transition to a new economic relationship between the UK and the EU", including by clarifying the procedures and broad objectives that will guide the process. The IMF had warned before the referendum that the British economy could shrink to 0.8% in 2017 if it leaves the EU.
The British pound has fallen sharply in trading in Asia on Monday, adding to Friday's record one-day decline. The pound was trading at $1.3365, down almost 3 per cent from Friday's close. Against the euro it was trading at 1.2147, down 1.4%, BBC reported. On Friday the pound had its biggest one-day fall against the dollar, at one stage sinking as low as $1.3236. Chancellor of the Exchequer, George Osborne will issue a statement before the start of trading in Britain in a bid to calm the markets. Osborne has not spoken publicly since the 'Leave' campaign won Thursday's referendum paving the way for Britain's exit from the European Union (EU). Authorities in Asia have been taking action to stabilise financial markets.
Clarity on Britain's plans to exit the European Union (Brexit), along with the progress of monsoon rains and derivatives expiry are expected to steer the Indian equity markets this week. Other major risks like a weak rupee, low foreign fund inflows and global uncertainty brought about by Brexit are expected to linger. Besides, investors are expected to keep an eye out on the Indian companies and sectors that have a high exposure to Europe and the UK such as the automobile, pharma and IT industries. Positive outcomes such as lower global crude oil prices and expectations on future stimulus measures by international central banks can perk up sentiments. Further, stock specific action can be expected in sectors like of consumer durables, consumer non-durables and automobile industries which are most impacted by a good monsoon.
In Monday’s trading some gains were seen in shares of public sector banks, Bank of India and Bank of Baroda.
The top gainers and top losers in the major indices of the Indian stock markets are given in the table below:
The closing values of the major Asian indices are given in the table below: