News Mid-Session

Trading turns volatile
14-Jun-18   13:27 Hrs IST

Trading turned volatile as key indices trimmed losses after hitting fresh intraday low in afternoon trade. At 13:24 IST, the barometer index, the S&P BSE Sensex, was down 179 points or 0.50% at 35,560.16. The Nifty 50 index was down 59.40 points or 0.55% at 10,797.30.

Investors' risk appetite took a hit after India's wholesale inflation rose to its highest level in 14 months in May. Sentiment was also weak due to negative global cues triggered by the US Federal Reserve raising interest rates and striking a hawkish tone in its latest policy statement.

Domestic stocks edged lower in early trade tracking negative Asian stocks after the US Federal Reserve struck a hawkish tone in its latest policy statement. Fresh selling in index pivotals pulled the key benchmark indices to intraday low in morning trade. Stocks continued to trade with weakness in mid-morning trade. Indices trimmed losses after hitting fresh intraday low in afternoon trade.

The S&P BSE Mid-Cap index was down 0.39%. The S&P BSE Small-Cap index was down 0.11%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was negative. On the BSE, 980 shares rose and 1460 shares fell. A total of 116 shares were unchanged.

Infosys (down 2.83%), State Bank of India (down 1.91%), Adani Ports and Special Economic Zone (down 1.73%), TCS (down 1.66%), ICICI Bank (down 1.58%) and ONGC (down 1.47%), were the major Sensex losers.

Sun Pharmaceutical Industries (up 2.12%), Dr. Reddy's Laboratories (up 0.88%), Yes Bank (up 0.77%), IndusInd Bank (up 0.33%) and Kotak Mahindra Bank (up 0.27%), were the major Sensex gainers.

HDFC Bank was up 0.29%. The Union Cabinet chaired by the Prime Minister Narendra Modi has approved the proposal for grant of permission to HDFC Bank to raise additional share capital of up to a maximum of Rs 24000 crore, including premium, over and above the previous approved limit of Rs 10000 crore, such that the composite foreign shareholding in the bank shall not exceed 74% of the enhanced paid-up equity share capital of the bank, the Ministry of Finance said in a statement yesterday, 13 June 2018.

The decision would ensure that the composite foreign shareholding in the bank inclusive of all types of foreign investments, both direct and indirect, will not exceed 74% of the enhanced paid-up equity share capital of the bank. It will be subject to Foreign Direct Investment Policy conditionalities and other sectoral regulations / guidelines. The proposed investment is expected to strengthen the capital adequacy ratio of the bank, the statement added.

On the macro front, the annual rate of inflation, based on monthly Wholesale Price Index (WPI), stood at 4.43% (provisional) for May 2018 (over May 2017) as compared to 3.18% (provisional) for the previous month and 2.26% during the corresponding month of the previous year. The data was unveiled during trading hours today, 14 June 2018.

India's current account deficit (CAD) widened in the fourth quarter of 2017-18 compared to a year ago, government data released after market hours yesterday, 13 June 2018 showed. India's CAD at US$ 13 billion (1.9% of GDP) in Q4 of 2017-18 increased from US$ 2.6 billion (0.4% of GDP) in Q4 of 2016 -17, but moderated marginally from US$ 13.7 billion (2.1% of GDP) in the preceding quarter. The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit (US$ 41.6 billion) brought about by a larger increase in merchandise imports relative to exports.

For the full year, the CAD increased to 1.9% of GDP in 2017-18 from 0.6% in 2016-17 on the back of a widening of the trade deficit. India's trade deficit increased to US$ 160 billion in 2017-18 from US$ 112.4 billion in 2016-17.

Traders and investors are closely awaiting a series of domestic and global events this week. On the global front, the European Central Bank (ECB) will hold its policy meeting today, 14 June 2018, in which policy makers are poised to hold formal talks on ending its bond-buying program. The Bank of Japan meets tomorrow, 15 June 2018 with no change to policy expected.

Overseas, European stocks dropped on Thursday as traders watched developments from central banks across the world.

Asian stocks followed US equities lower as the Federal Reserve struck a hawkish tone in its latest policy statement. US stock benchmarks ended near session lows yesterday, 13 June 2018, as the Federal Reserve completed its second increase to benchmark interest rates in 2018, as expected, but signaled a slightly more aggressive plan to tighten monetary policy this year than had previously been projected.

The Federal Reserve voted to raise its benchmark federal-funds rate by a quarter percentage point to a range of 1.75% to 2%. Policymakers also projected a slightly faster pace of rate increases in the coming months, with two additional hikes expected by the end of this year, compared to one previously. They see another three rate increases next year, a pace unchanged from their previous forecast.

Chairman Jerome Powell said the Fed was comfortable with a return of once-dormant inflation and emphasized the central bank's desire to avoid a policy error that could result in unnaturally inflating asset valuations or pushing the economy into a recession.

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