Key benchmark indices extended Friday's steep losses as a sharp setback in rupee which hit record low against the dollar and a surge in bond yields spooked investors. The S&P BSE Sensex settled at its lowest level in over 18 weeks. The CNX Nifty settled at over 11-month low. The Sensex lost 290.66 points or 1.56%, off 279.86 points from the day's high and up 168.37 points from the day's low. The market breadth, indicating the overall health of the market, was weak.
Stocks fell across emerging markets, with Indonesia's Jakarta Composite Index tumbling 5.58% in a single trading session. The Borsa Istanbul 100 Index in Turkey fell 1.2%. Thailand's SET Index dropped 2.4%.
Indian stocks fell for second day in a row today, 19 August 2013. The Sensex has lost 1,060.07 points or 5.47% in two trading sessions from a recent high of 19,367.59 on 14 August 2013. The Sensex had tumbled almost 4% in a single trading session on Friday, 16 August 2013, as the Reserve Bank of India's (RBI) curbs on forex outflows to stem the rupee's slide spooked investors. The Sensex has fallen 1,038.18 points or 5.37% in this month so far (till 19 August 2013). The Sensex has declined 1,119.19 points or 5.76% in calendar 2013 so far (till 19 August 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 2,136.10 points or 10.45%. From a 52-week low of 17,250.80 on 5 September 2012, the Sensex has surged 1,056.72 points or 6.13%.
Coming back to today's trade, index heavyweight and cigarette major ITC fell. Another index heavyweight Reliance Industries also declined. Realty stocks declined in volatile trade. IT stocks were mixed. L&T and Bhel, both, hit 52-week low. PSU OMCs were mostly lower due to weak rupee.
Pharma stocks edged lower. Shares of two wheeler makers dropped. Bank stocks declined across the board, with ICICI Bank, State Bank of India, HDFC Bank and Bank of Baroda hitting 52-week low.
A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak opening. Weakness continued on the bourses in early afternoon trade. Key benchmark extended losses in afternoon trade. Weakness continued on the bourses in mid-afternoon trade. The market trimmed losses in late trade.
The market sentiment was affected adversely by data showing that foreign funds were net sellers of Indian stocks on Friday, 16 August 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 502.50 crore into the secondary equity markets on Friday, 16 August 2013, as per data from Securities & Exchange Board of India.
The rupee slumped below 63 against the dollar on a spike in US Treasury yields on increasing concerns the Federal Reserve will begin to taper its $85-billion-a-month asset purchases in September. The partially convertible rupee was hovering at 63.13, sharply lower than its close of 61.65/66 on Friday, 16 August 2013.
Rupee depreciation fuels inflation, increases import bill and current account deficit and hurts economic growth.
Bond prices declined. The yield on the benchmark federal paper 7.16 GS 2023 was hovering at 9.2278%, sharply higher that its close of 8.8836% on Friday, 16 August 2013. Bond yield and bond prices are inversely related.
The S&P BSE Sensex lost 290.66 points or 1.56% to 18,307.52, its lowest closing level since 12 April 2013. The index lost 459.03 points at the day's low of 18,139.15 in mid-afternoon trade, its lowest level since 13 September 2012. The index fell 10.80 points at the day's high of 18,587.38 in opening trade.
The CNX Nifty lost 93.10 points or 1.69% to 5,414.75, its lowest closing level since 11 September 2012. The index hit a low of 5,360.65 in intraday trade. The index hit a high of 5,499.65 in intraday trade.
The total turnover on BSE amounted to Rs 1839 crore, lower than Rs 2132.35 on Friday, 16 August 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,391 shares declined and 898 shares rose. A total of 140 shares were unchanged.
The BSE Mid-Cap index fell 1.4% and the BSE Small-Cap index declined 1.1%. Both these indices outperformed the Sensex.
Among the sectoral indices on BSE, the S&P BSE Metal index (up 1.78%), the S&P BSE IT index (up 0.31%), the S&P BSE Realty index (down 0.26%) the S&P BSE Teck index (down 0.45%), the S&P BSE Power index (down 0.49%), the S&P BSE Oil & Gas index (down 1.37%) outperformed the Sensex.
The S&P BSE Capital Goods index (down 1.91%), the S&P BSE PSU index (down 2.05%), the S&P BSE Consumer Durables index (down 2.05%), the S&P BSE FMCG index (down 2.07%), the S&P BSE Healthcare index (down 2.49%) the S&P BSE Auto index (down 3.13%), the S&P BSE Bankex (down 3.4%) underperformed the Sensex.
Among the 30-share Sensex pack, 24 stocks declined and rest of them gained.
Index heavyweight and cigarette major ITC fell 1.89% to Rs 314. The stock hit a high of Rs 322.05 and low of Rs 310.20.
Reliance Industries dropped 1.08% to Rs 816.25. The stock hit a high of Rs 834.05 and low of Rs 807.15.
PSU OMCs were mostly lower due to weak rupee. HPCL (down 1.46%) and Indian Oil Corporation (down 0.69%), declined. BPCL rose 0.91%.
The weakness in rupee had raised concerns about increased costs of importing oil. PSU OMCs import about 70-75% of their crude oil needs and rely heavily on foreign currency borrowings, which largely remain unhedged.
The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas said on Friday, 16 August 2013 that the under-recovery on High Speed Diesel (HSD) applicable for 2nd fortnight of August effective 16 August 2013 increased sharply to Rs 10.22 per litre higher than Rs 9.29 per litre during 1st July fortnight of July 2013 with effect from 1 August 2013. In the case of PDS Kerosene and Domestic LPG, under-recoveries for the month of August 2013 remains same at Rs 33.54 per litre and Rs 412 per cylinder respectively since it is computed on monthly basis on these products.
PSU OMCs, effective 16th August 2013, are incurring combined daily under-recovery of about Rs 389.00 crore on the sale of Diesel, PDS Kerosene and Domestic LPG. This is higher than daily under-recovery of Rs 379 crore for the previous fortnight effective 1 August 2013. The OMC's have reported Rs 25,579 crore as under-recoveries during 1st Quarter of 2013-14 on Diesel, PDS Kerosene, Domestic LPG.
Capital goods pivotals edged lower on worries the ongoing slowdown in the economy could restrict new orders. L&T declined 2.33% to Rs 739 after hitting a 52-week low of Rs 710.10 in intraday trade today, 19 August 2013.
Bhel fell 2.78% to Rs 103, after hitting a 52-week low of Rs 101.80 in intraday trade today, 19 August 2013.
NTPC lost 1.93% to Rs 136.90 after a bulk deal of 3 lakh shares was executed on the counter at Rs 139.50 per share at 09:56 IST on BSE.
Siemens rose 1.06% after the company said it has won two contracts aggregating Rs 144 crore from the Rural Electrification Board, Bangladesh to construct 38 new 33/11kV substations. The projects are funded by Japan Bank for International Cooperation Agency (JICA) and are to be delivered on a turnkey basis. The substations would be located in the Rajshahi and Barisal zones in western Bangladesh.
Auto stocks dropped. Mahindra & Mahindra (M&M) lost 3.43%. The company on 14 August 2013 said it plans to invest Rs 200 crore to strengthen its current product line-up of trucks and buses. The company plans to invest Rs 300 crore to explore new product lines in the LCV, ICV and MCV range, it said.
Maruti Suzuki India lost 1.26%.
Tata Motors shed 3.64%. The company's global wholesale vehicle sales fell 14% to 87,566 vehicles in July 2013 over July 2012. Global sales of passenger cars fell 13% to 46,684 vehicles in July 2013 over July 2012. Sales of its Jaguar Land Rover brand rose 30.61% to 35,162 units. Sales of its Jaguar cars rose 76.53% to 7,174 vehicles and Land Rover sales were higher by 22.45% at 27,988 vehicles during the month. The company announced the global vehicle sales figures on 14 August 2013.
Shares of two wheeler makers dropped. Bajaj Auto slipped 4.08%. Bajaj Auto on 13 August 2013 said that the company has received a notice from the workmen's union viz. Vishwa Kalyan Kamgar Sanghatana stating that the stoppage of work at Chakan plant has been withdrawn and all the workmen at Chakan plant will resume their duty in their respective shifts from 14 August 2013. The company had earlier informed on 25 June 2013, that it had received a notice from the workmen's union of its Chakan plant viz., Vishwa Kalyan Kamgar Sanghatana stating that they propose to call for a stoppage of work by all the workmen employed in Chakan plant from the morning shift of 28 June 2013. The workmen at Chakan Plant had however, stopped coming from 25 June 2013 itself, without assigning any reason.
Hero MotoCorp skidded 2.92% to Rs 1925, off the day's low of Rs 1857.
Metal stocks reversed intraday losses. Hindalco Industries (up 2.36%), Jindal Steel & Power (up 2.91%), JSW Steel (up 2.43%), Sail (up 0.37%), and Hindustan Zinc (up 3.55%) edged higher.
Steel major Tata Steel jumped 5.27%. The stock was the top gainer from the Sensex pack.
Sesa Goa fell 1.23% to Rs 129 in volatile trade. The stock lost as much 3.52% at the day's low of Rs 126 in early trade. The stock gained as much as 4.36% at the day's high of Rs 136.30.
Sterlite Industries (India) was marginally lower by 0.07% to Rs 75.80 in volatile trade. The stock had lost as much as 3.75% at the day's low of Rs 73 in early trade. The stock rose as much as 4.88% at the day's high of Rs 79.55
Sesa Goa (Sesa Goa) and Sterlite Industries (India) (Sterlite) in a joint statement issued on Saturday, 17 August 2013, said that the merger of Sterlite and The Madras Aluminium Company (MALCO) with Sesa Goa and transfer of MALCO power plant to Vedanta Aluminium (VAL) pursuant to the Scheme of amalgamation and arrangement amongst Sterlite, MALCO, Sterlite Energy (SEL), VAL and Sesa Goa and their respective Shareholders and Creditors ('Composite Scheme') and the Scheme of Amalgamation of Ekaterina (Ekaterina) with Sesa Goa and their respective Shareholders and Creditors (Ekaterina Scheme) has become effective. The companies have fixed 28 August 2013 as the record date for determining the list of the shareholders of Sterlite, MALCO and Ekaterina to whom the equity shares of the Sesa Goa will be allotted as per terms of the scheme as already announced on 25 February 2012.
As per the swap ratio, every equity shareholder of Sterlite holding 5 equity shares of the company will be entitled to be issued 3 shares of the Sesa Goa. Every equity shareholder of MALCO holding 10 equity shares will be entitled to be issued 7 equity shares of the Sesa Goa.
IT stocks were mixed. Infosys (up 0.82%) and HCL Technologies (up 1.11%) edged higher. Wipro (down 0.05%) and TCS (down 0.57%) declined. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
MCX rose by its maximum permissible limit for the day of 5% to Rs 255.40 on bargain hunting after the stock crashed 67.23% in the preceding 17 trading sessions to Rs 243.25 on Friday, 16 August 2013, from a recent high of Rs 742.25 on 22 July 2013.
Shares of MCX witnessed selling pressure recently as National Spot Exchange Ltd (NSEL), was engulfed in a crisis after it suspended trade on 31 July 2013, raising concerns about possible default of Rs 5600 crore due to investors, including 7,000 small investors. MCX and NSEL are group companies of Financial Technologies India Ltd (FTIL).
MCX issued a clarification during trading hours on Friday, 16 August 2013, that it has no exposure to crisis-hit NSEL. MCX and NSEL are totally different entities with no financial commitments or exposure to each other whatsoever, MCX said in a filing with the BSE. MCX is in full compliance with the directive of the Forward Markets Commission (FMC), the commodity markets regulator, on investments, loans and advances, it said in the filing. That apart, the exchange has effective risk management system and monitoring of warehouses, it added. MCX is a debt-free company and has a net worth of Rs 1214 crore in the quarter ended 30 June 2013. The market share continues to be above 86% of the total commodity futures trade in the country, the filing added.
Bank stocks declined. ICICI Bank declined 5.25% to Rs 813.50 after hitting a 52-week low of Rs 810.55 in intraday trade today, 19 August 2013. The bank on Friday, 16 August 2013, reportedly raised interest rates on fixed deposit by 0.25%-0.75% mainly on short term deposits. Deposit rate in the 46 days to 60 days tenure has been hiked by 0.75% to 7%, while in the 61 days to 289 days by 0.75% to 7.75%. One year to 389 day deposit has been hiked by 0.50% to 8%. Five year deposit has been hiked by 0.25% to 8.5%. The bank however kept its benchmark lending rate or base rate unchanged at 9.75%, reports added.
HDFC Bank dropped 1.61% to Rs 580 after hitting a 52-week low of Rs 570.10 in intraday trade today, 19 August 2013.
Axis Bank slumped 7.26% to Rs 979.80, with the stock extending Friday's sharp slide triggered by an announcement from MSCI that it would exclude the banking stock from its standard and large cap indices with effect from 2 September 2013. The stock had lost 8.23% to Rs 1,055.40 on Friday, 16 August 2013.
Shares of Axis Bank have also came under pressure after the Reserve Bank of India (RBI) on Wednesday, 14 August 2013, said that overseas investors will not be allowed to purchase additional shares of the bank given the foreign shareholding limit of 49% in the stock has been breached.
State Bank of India (SBI) declined 2.56% to Rs 1530.90 after hitting a 52-week low of Rs 1521.20 in intraday trade today, 19 August 2013.
Bank of Baroda lost 5.03% to Rs 455 after hitting a 52-week low of Rs 439 in intraday trade today, 19 August 2013.
Among other PSU bank stocks, Canara Bank, Union Bank of India, Bank of India, and Punjab National Bank shed by 3.65% to 6.36%.
CRISIL lost 1.08%. The company's overseas parent McGraw Hill Financial has raised its stake in the credit rating agency to 67.8% from 52.8% through a voluntary open offer to the shareholders of CRISIL. The open offer began on 23 July 2013 and concluded on 6 August 2013.
Pharma stocks edged lower. Dr Reddy's Laboratories (down 1.01%), Cipla (down 3.36%), and Sun Pharmaceutical Industries (down 4.05%), declined.
Telecom stocks dropped. Idea Cellular (down 2.56%), MTNL (down 7.29%), Tata Teleservices (Maharashtra) (down 3.04%) declined. Reliance Communications rose 0.29% in volatile trade, with the stock reversing intraday fall.
Telecom major Bharti Airtel shed 5.51% to Rs 317.35, off the day's low of Rs 307.70.
Realty stocks declined in volatile trade. Unitech (down 2.13%), Oberoi Realty (down 5.07%), Godrej Properties (down 7.81%), HDIL (down 1.11%), D B Realty (down 1.32%), edged lower.
Realty major DLF was down marginally by 0.03% to Rs 145.50. The stock high and high of Rs 150.65 and low of Rs 139.
Indiabulls Real Estate rose 2.89% after the company said it has purchased the entire stake of FlM and its affiliates (managed by Farallon Capital Management LLC and its affiliates, a leading US private equity fund), in its 7 project subsidiaries for a total consideration of Rs 1172.16 crore. FlM held 49% equity stake in these JVs and had invested Rs 847.48 crore in 2006 to 2008. With the purchase of FlM's entire stake, these project subsidiaries will now be 100% owned by Indiabulls Real Estate.
Rashtriya Chemicals & Fertilizers lost 5.59% on turning ex-dividend today, 19 August 2013 for final dividend of Rs 1.50 per share for the year ended 31 March 2013.
Power generation firm Jaiprakash Power Ventures surged 20.25% to Rs 13.24.
Prime Minister Manmohan Singh on Saturday, 17 August 2013, told a news agency that India wasn't headed for a crisis despite its large current-account deficit and said the country has plenty of foreign-exchange reserves. There is no comparison and no question of going back to the situation India faced in 1991, when the country was on the brink of defaulting on its debts, Mr. Singh was quoted as saying by the agency. This time, he said, India has enough reserves to pay for as many as seven months of imports.
India's economic problems, including a wide current account deficit that has pushed the rupee to record lows, cannot be compared to the country's 1991 balance-of-payments crisis, the World Bank's chief economist Kaushik Basu said on Monday, 19 August 2013. Basu cited a raft of economic data to show that the current situation was healthier than that of 1991, describing such comparisons as a "non question."
In an attempt to assuage concerns that India was moving toward capital controls, economic-affairs secretary Arvind Mayaram told reporters on Friday, 16 August 2013, that India doesn't plan to impose controls on money being repatriated by companies, such as dividends and royalties. His comments came after the Reserve Bank of India (RBI) on Wednesday, 14 August 2013, reduced the amount of money that Indian residents and companies can send abroad in an attempt to stem rupee's slide.
European stock markets edged lower on Monday, 19 August 2013, as rise in US Treasury yields spooked investors. Key benchmark indices in UK, France and Germany were down 0.19% to 1.09%.
Asian stock fell for a third straight day on Monday, 19 August 2013, as worries about the Federal Reserve's policy outlook and rising US Treasury yields weighed on sentiment. Key benchmark indices in Indonesia, Singapore, Hong Kong, South Korea, and Taiwan were down by 0.13% to 5.58%. Key benchmark indices in China and Japan rose by 0.79% to 0.83%.
Japan's exports jumped by the most since 2010 in July, aiding Prime Minister Shinzo Abe's efforts to drive an economic recovery even as rising energy costs boosted the trade deficit. Exports increased 12.2% from a year earlier after a 7.4% rise in June, the Ministry of Finance said in Tokyo today. Imports climbed 19.6%, leaving a trade deficit of 1.02 trillion yen ($10.5 billion), the third biggest on record in data back to 1979. The seasonally-adjusted deficit widened from June to 944 billion yen.
Thailand cut its 2013 growth forecast as the country entered recession for the first time since the global financial crisis, with rising household debt limiting central bank scope to support the economy. Gross domestic product unexpectedly shrank 0.3% in the three months through June from the previous quarter, when it contracted a revised 1.7%, the National Economic and Social Development Board said in Bangkok today.
Trading in US index futures indicated a flat opening of US stocks on Monday, 19 August 2013. US stocks declined on Friday, 16 August 2013, handing the Dow Jones Industrial Average its worst week this year, with investors on uncertain footing as longer-term Treasury yields rose to two-year highs. On US economic data front, the Commerce Department reported housing starts climbed at an annual rate of 896,000, less than the 915,000 estimated. The Labor Department reported productivity rose at a slightly better-than-estimated 0.9% annual rate in the second quarter.
The Federal Open Market Committee (FOMC) on Wednesday, 21 August 2013, will issue minutes of its recent policy meeting held on 30 and 31 July 2013. The minutes of FOMC meet may help provide clues about the future of Fed's bond-buying program.
The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.
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