Investors are in a selling frenzy all over the world
We had mentioned in Wednesday’s closing report that Nifty, Sensex were oversold and that if the US market heads higher, Indian markets may follow suit. However, US stocks closed weak on Wednesday and the major Indian indices in the stock markets crashed by more than 3%. The trends in the major indices in the Indian stock markets on Thursday are given in the table below:
Poor corporate results, combined with falling European indices led to a selling frenzy pushing Nifty below 7000 and Sensex below 23,000. The selling pressure was accelerated by absence of any fresh positive trigger and below expected third quarter (Q3) results by the likes of banking major -- State Bank of India (SBI). The decline of crude oil prices below $30 a barrel (one barrel is equal to 159 litres) kept sentiments subdued. Investors' doubts over the central government's ability to perk up investments dragged the markets lower. In addition, a weak rupee unnerved investors. It opened lower at 67.95 to a US dollar from its previous close of 67.84 to a greenback.
The weakness in rupee indicates massive flight of foreign funds from the equity markets. Investors' confidence was further eroded by the comments made by US Fed chairman Janet Yellen to the US House Financial Services Committee on late Wednesday. During her semi-annual monetary policy testimony to the committee, Yellen said that the US is unlikely to go in for a stimulus and that the rate hike cycle may continue, depending on the data. The Dow Jones Industrial Average fell 99.64 points, or 0.62%, to 15,914.74. The S&P 500 edged down 0.35 point, or 0.02%, to 1,851.86. The Nasdaq Composite Index rose 14.83 points, or 0.35%, to 4,283.59. "With gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in coming years and that labour market indicators will continue to strengthen," Yellen said in a testimony before the Committee on Financial Services of the US House of Representatives on Wednesday. But she acknowledged that financial conditions have become less supportive of growth, "with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar. These developments, if they prove persistent, could weigh on the outlook for economic activity and the labour market," Yellen said. Yellen's testimony failed to offer any signal on whether the central bank will change the interest rate on its next policy meeting on March 15-16. She only repeated that the actual path of the interest rate will depend on incoming data. Overseas, European equities rebounded Wednesday. German benchmark DAX index at Frankfurt Stock Exchange jumped 1.55%, while British benchmark FTSE 100 Index rose 0.71%.
Leading pharmaceutical firm Cipla Ltd on Wednesday said its standalone net profit for the quarter ending December 31, 2015 slumped by 11.02% at Rs265.98 crore against Rs298.95 crore in the same period last fiscal while consolidated profits were higher. According to the unaudited quarterly results posted on the Bombay Stock Exchange (BSE), Cipla earned a total income of Rs2,677.72 crore in the quarter under review compared to Rs2,466.23 crore in the corresponding quarter of 2014-15. The company incurred total expenses of Rs2,460.80 crore in the quarter as against Rs2,082.22 crore in the year ago quarter. On a consolidated basis, Cipla clocked a net profit of Rs343.20 crore against Rs327.85 crore while total income rose to Rs3,106.55 crore in the reviewed quarter from Rs2,765.46 crore in the last quarter.
Around 35,000 jewellery shops in Tamil Nadu and Puducherry downed their shutters on Thursday in protest against the central government's stipulation to provide PAN card on purchases over Rs200,000, said a senior official of All India Gems and Jewellery Trade Federation (GJF). "The PAN card rule came into effect from January 1, 2016 onwards and since than nearly 35% of the business has gone down," N. Anantha Padmanabhan, zonal chairman (southern region) told IANS on Wednesday. While jewellers across the country downed their shutters on Wednesday, the protest in Tamil Nadu and Puducherry has been fixed for Thursday. "We do not understand the rationale for bringing down the PAN card submission limit to Rs200,000 from Rs500,000 for jewellery whereas increasing the limit for real estate transactions from Rs500,000 to Rs10,00,000," he said, noting it is "common knowledge that unaccounted money is housed in real estate than in jewellery". Padmanabhan said the trade is not against PAN card submission but against the Rs200,000 limit.
"We have no issue if PAN card submission is made compulsory for purchase of gold coins or bars. But in the case of jewellery, nearly 70% of the purchases are made by the villagers," he said. In India, only around 20 crore people have been issued with PAN cards whereas jewellery is bought by almost all the Indians, he said. Many in villagers do not have a PAN card but gold jewellery is a must in the case of weddings or festivals in Indian families, Padmanabhan argued. According to him, the government can implement the PAN card stipulation in stages.
Cement major Ambuja Cements on Wednesday posted a decline of 66.53% in its stand-alone net profit which stood at Rs.109.96 crore for the quarter ended December 31, 2015. The company had earned a net profit of Rs.328.59 crore for the quarter ended December 31, 2014. According to the company, its total income decreased by 1.06% to Rs.2,379.22 crore from Rs.2,404.85 crore for the quarter ended December 31, 2014. Further, the company's board of directors recommended a final dividend payment of Rs.1.20 per equity share. The total dividend for the year 2015 including the interim dividend of Rs.1.60 per share now stands at Rs.2.80 per share. The company had paid a total dividend of Rs.5 per share in 2014. The company’s shares closed at Rs193.55, down 0.74% on the BSE.
The top gainers and top losers of the major Indian indices are given in the table below:
The closing values of the major Asian indices are given in the table below: