 "Mkts drop for 2nd consecutive week, Midcaps drag")
Markets witnessed steep fall in the week ended Friday as RBI kept key policy rates unchanged, lowered growth forecast for the current fiscal from 5.7% to 5.5%, downgrading of Indian stocks to underweight by Goldman Sachs and the crisis emerging on the National Spot Exchange.
The 30-share BSE Sensex crumbled 584 points or 2.96% to 19,164.02. The 50-share CNX Nifty fell 208 points or 3.54% to 5,677.90.
The broader markets underperformed the benchmark indices significantly. The BSE Mid-Cap index fell 6.07% and the S&P BSE Small-Cap index declined 6.13%.
The ECB on Thursday kept its key financing rate at a record low, and ECB President Mario Draghi said interest rates would remain at or below present levels for an extended period of time. The Bank of England also on Thursday, 1 August 2013 also left its benchmark interest rate and bond-buying program unchanged.
The Federal Open Market Committee, which has floated the prospect of reductions to its stimulus program should economic risks abate, said Wednesday, 31 July 2013 after a two-day long meet that while growth should pick up, persistently low inflation may hamper the recovery. Policy makers, however, expect inflation to move back toward its 2% objective over the next 18 months. The Fed slightly downgraded its view of economic recovery. The Fed said that that the world's largest economy was expanding at a "modest" pace. It had called the pace "moderate" in June.
The Fed offered no clues as to when it plans to slow the pace of monetary stimulus. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth.
INDIAN ECONOMY
The RBI on Thursday said that foreign institutional investors who have issued a participatory note, can hedge their forex risk in these securities provided they have a mandate from the participatory note holder.
The Union Cabinet on Thursday approved proposals to relax foreign-investment rules in a number of sectors including telecommunications, multibrand retail and defense.
A slowdown in factory activity deepened in July as order books shrank by the most in over four years, suggesting a broad stagnation in the manufacturing sector, a survey showed on Thursday, 1 August 2013. The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, edged down to 50.1 in July from 50.3 in May.
INDIAN RUPEE
The rupee fell to a record closing low on Friday, posting its worst week in 22 months, raising concerns the RBI is losing the battle to prop up the currency while the government has yet to take any meaningful measures to bring in inflows.
The rupee weakened ahead of key U.S. employment data, which will help shape expectations about when the Federal Reserve will start tapering down its monetary stimulus.
The currency fell 3.4% this week, and is below the levels at which it was trading on July 15 when the Reserve Bank of India unveiled its cash tightening steps to defend the currency.
POLITICS
The ruling Congress party approved on Tuesday, 30 July 2013 the creation of a new Telangana state, a move that has revived deep political divisions and raised fears of violence in the area, home to global firms including Google. The decision to break up Andhra Pradesh and establish Telangana comes ahead of elections next year.
SECTORAL INDICES
BSE Realty index was the top loser during the week, slumping by nearly 15%. BSE Power, PSU, FMCG, Metal, Oil & Gas and Bankex indices dropped 10.49%, 9.45%, 8.20%, 6.72%, 5.67% and 4.43%, respectively.
On the gaining side, BSE IT index surged by nearly 4%.
STOCKS IN ACTION
Coal India dropped 9.86% to Rs 254.55 after sliding to 52-week low of Rs 250.65 after the company missed production target for the third month in a row.
Coal India said the company and its subsidiary produced 32.77 million tonnes (MT) of coal in July, missed the months target of 33.44 MT.
Index heavyweights ITC and RIL declined between 4-10%.
Bank stocks declined. HDFC Bank, ICICI Bank, and State Bank of India slipped between 2-5%.
BHEL declined 5.92% to Rs 149.40 after hitting a 52-week low of Rs 147.95 in intraday trade on Friday.
Metal and mining stocks declined. Steel giant Tata Steel lost 7.58% to Rs 202.30. The stock hit a 52-week low of Rs 201.30 in intraday trade on Friday. Hindalco Industries fell 8.1% to Rs 86.75. Sterlite Industries (India) lost 5.61% to Rs 72.30.
Jindal Steel & Power slipped 1.66% to Rs 186.90 after hitting a 52-week low of Rs 181.55 in intraday trade on Friday. The company's consolidated net profit rose 28.27% to Rs 494.28 crore on 2.65% decline in total income to Rs 4593.55 crore in Q1 June 2013 over Q1 June 2012.
Bajaj Auto fell 5.86%. The company during market hours on Friday, 2 August 2013, said that total sales fell 18% to 2.81 lakh units in July 2013 over July 2012.
Mahindra & Mahindra (M&M) dropped 4.3% to Rs 855.10. The company said that as part of aligning its production with sales requirements, the company would be observing no production days at its automotive plants for a period ranging from 0 to 6 days in the forthcoming months. Its auto sales fell 21% to 37,096 units in July 2013 over July 2012.
IT pivotals gained on positive economic data in US, the biggest outsourcing market for the Indian IT firms. Weak rupee also boosted IT stocks. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
IT major Wipro jumped 14.62% to Rs 438.75.
Infosys gained 3.13% to Rs 3,006.70 after hitting a 52-week high of Rs 3,019.95 in intraday trade on Friday.
TCS rose 4.11% to Rs 1,845.35. The stock hit record high of Rs 1,849.50 in intraday trade on Friday.
Bharti Airtel advanced 2.18% to Rs 344.70. The company's consolidated net profit fell 9.6% to Rs 689 crore on 9.2% growth in total revenue to Rs 20264 crore in Q1 June 2013 over Q1 June 2012.
Titan Industries spurted over 10% after a foreign brokerage upgraded the stock to buy from hold after the company's strong Q1 June 2013 results.
Shares of financial technologies group, Financial Technologies (India) (FT) and Multi Commodity Exchange of India (MCX) came under hammer this week, after FT-promoted National Spot Exchange (NSEL) suspended trading in all contracts except "e-series" until further notice because of poor volumes on the exchange following a government order.
The 30-share BSE Sensex crumbled 584 points or 2.96% to 19,164.02. The 50-share CNX Nifty fell 208 points or 3.54% to 5,677.90.
The broader markets underperformed the benchmark indices significantly. The BSE Mid-Cap index fell 6.07% and the S&P BSE Small-Cap index declined 6.13%.
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GLOBAL MARKETS
The ECB on Thursday kept its key financing rate at a record low, and ECB President Mario Draghi said interest rates would remain at or below present levels for an extended period of time. The Bank of England also on Thursday, 1 August 2013 also left its benchmark interest rate and bond-buying program unchanged.
The Federal Open Market Committee, which has floated the prospect of reductions to its stimulus program should economic risks abate, said Wednesday, 31 July 2013 after a two-day long meet that while growth should pick up, persistently low inflation may hamper the recovery. Policy makers, however, expect inflation to move back toward its 2% objective over the next 18 months. The Fed slightly downgraded its view of economic recovery. The Fed said that that the world's largest economy was expanding at a "modest" pace. It had called the pace "moderate" in June.
The Fed offered no clues as to when it plans to slow the pace of monetary stimulus. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth.
INDIAN ECONOMY
The RBI on Thursday said that foreign institutional investors who have issued a participatory note, can hedge their forex risk in these securities provided they have a mandate from the participatory note holder.
The Union Cabinet on Thursday approved proposals to relax foreign-investment rules in a number of sectors including telecommunications, multibrand retail and defense.
A slowdown in factory activity deepened in July as order books shrank by the most in over four years, suggesting a broad stagnation in the manufacturing sector, a survey showed on Thursday, 1 August 2013. The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, edged down to 50.1 in July from 50.3 in May.
INDIAN RUPEE
The rupee fell to a record closing low on Friday, posting its worst week in 22 months, raising concerns the RBI is losing the battle to prop up the currency while the government has yet to take any meaningful measures to bring in inflows.
The rupee weakened ahead of key U.S. employment data, which will help shape expectations about when the Federal Reserve will start tapering down its monetary stimulus.
The currency fell 3.4% this week, and is below the levels at which it was trading on July 15 when the Reserve Bank of India unveiled its cash tightening steps to defend the currency.
POLITICS
The ruling Congress party approved on Tuesday, 30 July 2013 the creation of a new Telangana state, a move that has revived deep political divisions and raised fears of violence in the area, home to global firms including Google. The decision to break up Andhra Pradesh and establish Telangana comes ahead of elections next year.
SECTORAL INDICES
BSE Realty index was the top loser during the week, slumping by nearly 15%. BSE Power, PSU, FMCG, Metal, Oil & Gas and Bankex indices dropped 10.49%, 9.45%, 8.20%, 6.72%, 5.67% and 4.43%, respectively.
On the gaining side, BSE IT index surged by nearly 4%.
STOCKS IN ACTION
Coal India dropped 9.86% to Rs 254.55 after sliding to 52-week low of Rs 250.65 after the company missed production target for the third month in a row.
Coal India said the company and its subsidiary produced 32.77 million tonnes (MT) of coal in July, missed the months target of 33.44 MT.
Index heavyweights ITC and RIL declined between 4-10%.
Bank stocks declined. HDFC Bank, ICICI Bank, and State Bank of India slipped between 2-5%.
BHEL declined 5.92% to Rs 149.40 after hitting a 52-week low of Rs 147.95 in intraday trade on Friday.
Metal and mining stocks declined. Steel giant Tata Steel lost 7.58% to Rs 202.30. The stock hit a 52-week low of Rs 201.30 in intraday trade on Friday. Hindalco Industries fell 8.1% to Rs 86.75. Sterlite Industries (India) lost 5.61% to Rs 72.30.
Jindal Steel & Power slipped 1.66% to Rs 186.90 after hitting a 52-week low of Rs 181.55 in intraday trade on Friday. The company's consolidated net profit rose 28.27% to Rs 494.28 crore on 2.65% decline in total income to Rs 4593.55 crore in Q1 June 2013 over Q1 June 2012.
Bajaj Auto fell 5.86%. The company during market hours on Friday, 2 August 2013, said that total sales fell 18% to 2.81 lakh units in July 2013 over July 2012.
Mahindra & Mahindra (M&M) dropped 4.3% to Rs 855.10. The company said that as part of aligning its production with sales requirements, the company would be observing no production days at its automotive plants for a period ranging from 0 to 6 days in the forthcoming months. Its auto sales fell 21% to 37,096 units in July 2013 over July 2012.
IT pivotals gained on positive economic data in US, the biggest outsourcing market for the Indian IT firms. Weak rupee also boosted IT stocks. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
IT major Wipro jumped 14.62% to Rs 438.75.
Infosys gained 3.13% to Rs 3,006.70 after hitting a 52-week high of Rs 3,019.95 in intraday trade on Friday.
TCS rose 4.11% to Rs 1,845.35. The stock hit record high of Rs 1,849.50 in intraday trade on Friday.
Bharti Airtel advanced 2.18% to Rs 344.70. The company's consolidated net profit fell 9.6% to Rs 689 crore on 9.2% growth in total revenue to Rs 20264 crore in Q1 June 2013 over Q1 June 2012.
Titan Industries spurted over 10% after a foreign brokerage upgraded the stock to buy from hold after the company's strong Q1 June 2013 results.
Shares of financial technologies group, Financial Technologies (India) (FT) and Multi Commodity Exchange of India (MCX) came under hammer this week, after FT-promoted National Spot Exchange (NSEL) suspended trading in all contracts except "e-series" until further notice because of poor volumes on the exchange following a government order.