The BSE Sensex plunged over 629 points and Nifty declined 198 points after 335 point rally in past 2 session, Increasing the volatility.
- Crucial bills such as Goods and Service Tax Amendment bill and the Land Acquisition Bill, which were supposed to be passed in the ongoing session of Parliament, got stuck in the Rajya Sabha. As both these Bills have been refereed to select Committee, in Monsoon Session only can we see passage of these bills.
- The rupee, which has been most stable currency again slipped back to a low of 64.2, taking it closer to its yearly low of 64.28 hence raising worries that foreign portfolio outflows may create a vicious cycle between rupee and stock market.As it happened in August 2013 when Rupee touched low of 70
- CPI and IIP data coming today has kept market participants on the edge, As spike in CPI will deter RBI from cutting rate, Met department has foretasted below normal monsoon.
- Clarifications provided by the Income Tax Department on the Minimum Alternate Tax (MAT) issue did not provide any solace to foreign institutional investors (FII). Lot of Clarity required.
- Corporate earnings so far have been below the Street estimates. Corporate earnings need to catch up with the current market valuations as markets had already factored in improved earnings. Nifty is trading at PE of 21.9 which is quiet high.
- US job growth rebounded in April and the unemployment rate dropped to a near seven-year low of 5.4 per cent, signs of a pick-up in economic momentum that could keep the Federal Reserve on track to hike interest rates this year. Rate hike by the US central bank may lead to outflow of capital from emerging markets like India into US bonds which give a higher risk free return.
- Bond yields especially US Treasury 30 Year Yield move above 3 This is the worst absolute yield move for 30Y bonds since July 2013 with the highest 30Y yield close since Nov 19th 2014 (and first close over 3% since Dec 2nd)
- Greece seemingly has no Plan A or Plan B on debt Its government lacks a credible plan for reaching agreement with its euro zone creditors and the International Monetary Fund. It doesn’t seem to have a thought-out fallback plan of how to default while containing the damage either.