Markets end lower amid fears of Grexit from euro

The breakdown of talks between Greece and its international creditors raised fears of Greece's exit from the euro zone.

Markets ended lower on Monday, amid weak global cues, after Greece and international creditors which failed to come to an agreement over debt payments raised fears of Greece's exit from the euro zone. 

The 30-share Sensex ended down 167 points at 27,645 and the Nifty ended down 63 points at 8,306. 

In the broader markets BSE Mid-cap and Small-cap indices were down 1.6% each. 

Market breadth was weak with 1,852 losers and 694 gainers on the BSE. 

"The initial knee jerk reaction was on fears that the exit of Greece from the euro zone after talks with its creditors failed. However, markets recovered later sensing the insulated nature of our markets. Other than slight impact on the currency there would be no impact on the stocks," said Prakash Diwan, Director, Altamount Capital Management. 

Markets slumped in initial trades with the Sensex plunging over 500 points in intra-day trade following the debt crisis in Europe. However, markets staged marginal recovery in the latter half of the trading session led by FMCG shares. 

GREECE CRISIS 

Banks in Greece and the stock exchange are shut on Monday after creditors refused to extend the country’s bailout and customers of several banks queued to withdraw cash. Moreover, Prime Minister Alexis Tsipras called a referendum on whether to accept creditors' demands, which could raise the risk that the country may exit out of the euro. 

Further, reports suggest that the Greek government on Monday confirmed that banks will be closed all week, after a decision by the European Central Bank (ECB) not to extend emergency funding. 

GLOBAL MARKETS 

The global markets also witnessed selling pressure in the midst of the on going debt crisis in Greece. Shares in Asia ended lower with sell-off in Japan and China. Japan's Nikkei ended nearly 3% down. Shanghai Composite ended down 3.4% as investors remain wary despite a decision by the central bank to cut interest rates to record low. Hang Seng ended down 2.7% and Straits Times ended 1.2% lower.

The European markets have also reacted to the developments in Greece with Germany and France the biggest lenders witnessing selling pressure. CAC-40 and  DAX were down over 3% while FTSE eased 1.5%. 

KEY STOCKS AND SECTORS 

All sectoral indices ended lower with BSE Realty index emerging as the top loser down 2.2% followed by the IT and Metal indices among others. 

Metal companies witnessed profit taking to end lower. Hindalco Industries, Tata Steel, Vedanta and Jindal Steel ended down 0.8-4.6% down. 

Banking shares ended mixed. SBI, Axis Bank and HDFC Bank ended down 0.7-2.1% each while ICICI Bank ended flat and HDFC ended with marginal gains. 

IT companies weakened after Tech Mahindra warned about its April-June quarter (Q1FY16) results. Tech Mahindra dropped 7% while TCS, Wipro and Infosys ended down 0.1-1.6% each. 

Larsen & Toubro pared early losses to end marginally higher after the engineering and construction major today said it has received orders worth Rs 2,035 crore across various business verticals. 

FMCG shares staged a recovery with ITC and HUL ending 0.5-2.0% each. 

Index heavyweight Reliance Industries ended down 0.9% after the company announced it is planning to shut down one crude distillation unit for routine maintenance and inspection activities in the first half of July for about 10 days. 

Among other shares, JMT Auto surged 9.6%, extending their over-40% rally in the past two trading sessions on the BSE, after the stock turned ex-stock split on June 25. 

Persistent Systems dipped 5.3%, extending their 15% decline in the past three trading sessions on the NSE, after the information technology consulting & software company said that its April-June quarter (Q1) revenues in dollar terms will be marginally lower on a quarter-on-quarter basis.