Weakness continued on the bourses in early afternoon trade, with a sharp slide in rupee against the dollar hitting investor sentiment adversely. The S&P BSE Sensex, was down 130.83 points or 0.68%, up close to 90 points from the day's low and off about 110 points from the day's low. The market breadth, indicating the overall health of the market, was weak. Weakness in Asian stocks also weighed on sentiment. Asian stocks fell as investors remained caution ahead of the Federal Reserve's policy decision.
Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. NTPC shed nearly 6%, with the stock extending Tuesday's losses triggered by the company reporting a muted growth in bottomline in Q1 June 2013. Bank stocks dropped as the Reserve Bank of India (RBI) kept its key lending rate viz. the repo rate and cash reserve ratio unchanged after a monetary policy review on Tuesday, 31 July 2013, as the central bank focused on managing the currency volatility rather than pushing for growth.
The market slumped in early trade as a further slide in rupee against the dollar rattled investor sentiment. The Sensex extended initial losses to hit fresh intraday low in morning trade. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their lowest level in nearly five weeks. A bout of volatility was witnessed as key benchmark indices trimming losses after hitting fresh intraday low in mid-morning trade. The Sensex hovered in negative terrain in early afternoon trade.
The rupee approached a record low against the dollar on Wednesday, 31 July 2013, with the local currency extending Tuesday's steep slide. The rupee was hovering at 61.04 versus the dollar, weaker than Tuesday's close of 60.47/48. The rupee had hit record low of 61.21 in intraday deals on 8 July 2013. The Reserve Bank of India (RBI) on Tuesday said that its recent liquidity tightening measures aimed at checking undue volatility in the foreign exchange market will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling monetary policy to revert to supporting growth with continuing vigil on inflation.
Bond prices extended Tuesday's losses. The yield on the most traded 8.2% GS 2025 was currently at 8.6692%, higher than Tuesday's close of 8.6416%. Bond yield and bond prices are inversely related.
At 12:20 IST, the S&P BSE Sensex was down 130.83 points or 0.68% to 19.217.51. The index declined 221.52 points at the day's low of 19,126.82 in morning trade, its lowest level since 28 June 2013. The index fell 22.95 points at the day's high of 19,325.39 in early trade.
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The CNX Nifty was down 52.55 points or 0.91% to 5,702.50. The index hit a low of 5,675.75 in intraday trade, its lowest level since 27 June 2013. The index hit a high of 5,742.10 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,440 shares fell and 506 shares rose. A total of 114 shares were unchanged.
Among the 30-share Sensex pack, 17 stocks fell and rest of them rose. GAIL (India) (down 4.19%), Jindal Steel & Power (down 2.18%) and Tata Steel (down 2.34%), edged lower.
Bank stocks dropped as the Reserve Bank of India (RBI) kept its key lending rate viz. the repo rate and cash reserve ratio unchanged after a monetary policy review on Tuesday, 31 July 2013, as the central bank focused on managing the currency volatility rather than pushing for growth.
ICICI Bank lost 3.23% ahead of its Q1 result today, 31 July 2013.
HDFC Bank declined 1.44%.
Yes Bank tumbled after the private sector bank announced increase in base rate and increase in deposit rates on select tenors. The stock was off 9.96%. The bank during market hours today, 31 July 2013, said it has raised deposit rates by 0.25% to 0.5% in select tenors. This provides an opportunity for retail depositors to lock in higher rates on term deposits, the private sector bank said. Yes Bank has also consequently raised its base rate by 0.25% 10.75% with effect from 1 August 2013.
Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank shed by 1.44% to 3.38%.
NTPC shed 5.94%, with the stock extending Tuesday's losses triggered by the company reporting a muted growth in bottomline in Q1 June 2013. The company's net profit rose 1.13% to Rs 2527.02 crore on 2.9% fall in total income to Rs 16358.78 crore in Q1 June 2013 over Q1 June 2012. The company announced Q1 result during market hours on Tuesday, 30 July 2013.
The company's board of directors at a meeting held on Tuesday, 30 July 2013, accorded the investment approval for Feroze Gandhi Unchahar Thermal Power Project (1x500 MW) to be implemented in Uttar Pradesh at an appraised current estimated cost of Rs 3363.12 crore.
Shares of oil exploration major ONGC were off 3.1%, with the stock extending Tuesday's 5.64% losses.
Reliance Industries (RIL) was off 0.56% to Rs 854 in volatile trade. The stock hit high of Rs 864.45 and low of Rs 851.35 so far during the day.
RIL and ONGC on 27 July 2013 announced signing a memorandum of understanding (MoU) to explore the possibility of sharing RIL's infrastructure facility in the East Coast. The MoU aims at working out the modalities for sharing of infrastructure, identifying additional requirements as well as firming up the commercial terms. The companies intend to enter into a definitive agreement after concluding a joint study which will be spread over the next nine months, RIL said in a statement on 27 July 2013.
Index heavyweight and cigarette major ITC fell 3.28%, with the stock extending intraday losses.
On the political front, the ruling Congress party approved on Tuesday 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.
Asian stocks fell on Wednesday, 31 July 2013, amid caution ahead of the Federal Reserve's policy decision. Key benchmark indices in Japan, Singapore, Indonesia and Taiwan fell by 0.16% to 1.45%. South Korea's Kospi rose 0.08%.
Mainland Chinese stocks rose after the powerful politburo of China's communist party on Tuesday said it would act to maintain steady growth in the second half of 2013. China's Shanghai Composite rose 0.22%. Hong Kong's Hang Seng fell 0.23%.
The results of two separate surveys on Chinese manufacturing activity in July are due tomorrow, 1 August 2013.
Taiwan's economy expanded at a faster-than-estimated pace in the second quarter as domestic consumption improved, even as a slowdown in China damps the outlook for the island's exports. Gross domestic product rose 2.27% from a year earlier after increasing 1.67% in the first quarter, the statistics bureau said in a preliminary report in Taipei today.
Trading in US index futures indicated that the Dow could fall 20 points at the opening bell on Wednesday, 31 July 2013. US stocks closed mixed on Tuesday in quiet trading session as many investors remained on the sidelines ahead of the Federal Reserve's Wednesday announcement on interest rates and monetary policy.
The Federal Open Market Committee's (FOMC) two-day policy meeting ends today, 31 July 2013, with expectations that it will offer further clues on how long it will maintain its bond purchases. In his two-day testimony to Congress, which concluded on 18 July 2013, Federal Reserve Chairman Ben Bernanke said plans to taper asset purchases were not on a preset path and stressed intentions to be very responsive to data. Additionally, Bernanke said recent data have been "mixed" and it was "way too early" to make a judgment on when the central bank will slow down the pace of its asset purchases. 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.
The influential US non-farm payroll data for July 2013 is due on Friday, 2 August 2013.
In Europe, the European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions tomorrow, 1 August 2013.
German retail sales unexpectedly declined in June, suggesting that doubts about Europe' economic recovery weighed on consumer spending. Sales adjusted for inflation and seasonal swings dropped 1.5% from May, when they rose 0.7%, the Federal Statistics Office in Wiesbaden said today.
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