Key benchmark indices trimmed some losses in a range bound market in afternoon trade. The S&P BSE Sensex was down 173.66 points or 0.91%, up about 102 points from the day's low and off close to 47 points from the day's high. The market breadth, indicating the overall health of the market, was weak. Weakness in global stocks weighed on sentiment. Tata Coffee, Apollo Tyres, Tata Teleservices (Maharashtra), Sterlite Industries (India) and KSK Energy Ventures saw a surge in volumes on BSE today, 13 June 2013.
The market edged lower in early trade on weak Asian stocks. The market weakened once again after trimming initial losses in morning trade. The market extended losses to hit fresh intraday low in mid-morning trade. The barometer index, the S&P BSE Sensex, hit 8-week low below the psychological 19,000 mark. The 50-unit CNX Nifty also hit 8-week low. The market trimmed intraday losses in early afternoon trade. Key benchmark indices trimmed some losses in a range bound market in afternoon trade.
The market sentiment was affected adversely by data showing that foreign funds remained net sellers of Indian stocks on Wednesday, 12 June 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 1060.17 crore on Wednesday, 12 June 2013, as per provisional data from the stock exchanges.
At 13:20 IST, the S&P BSE Sensex was down 173.66 points or 0.91% to 18,867.47. The index declined 275.60 points at the day's low of 18,765.53 in mid-morning trade, its lowest level since 18 April 2013. The index fell 127 points at the day's high of 18,914.13 in morning trade.
The CNX Nifty was down 49.25 points or 0.86% to 5,710.95. The index hit a low of 5,683.10 in intraday trade, its lowest level since 18 April 2013. The index hit a high of 5,729.85 in intraday trade.
The BSE Mid-Cap index underperformed the Sensex, falling 1.06%. The BSE Small-Cap index outperformed the Sensex, falling 0.83%.
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The market breadth, indicating the overall health of the market, was weak. On BSE, 1,453 shares fell and 657 shares rose. A total of 142 shares were unchanged.
Among the 30-share Sensex pack, 23 stocks fell and the rest of them rose. Tata Motors (down 3.46%), Sun Pharmaceutical Industries (down 3.19%), Maruti Suzuki India (down 2.44%), Bajaj Auto (down 2.37%), ITC (down 2.11%), Wipro (down 1.99%), Bhel (down 1.90%) and NTPC (down 1.75%), edged lower from the Sensex pack.
Hindalco Industries (up 4.27%), Bharti Airtel (up 2.86%), State Bank of India (up 0.51%), Hero MotoCorp (up 0.34%), Jindal Steel & Power (up 0.13%), Dr. Reddy's Laboratories (up 0.07%) and Hindustan Unilever (up 0.06%), edged higher from the Sensex pack.
Shares of select PSU firms declined after the government set the floor price for divestment of 9.33% stake in state-run MMTC at a massive discount to the ruling market price. State Trading Corporation of India (down 11.61%), Hindustan Copper (down 4.61%), Rural Electrification Corporation (down 3.86%) and National Fertilizers (down 3.77%), edged lower.
MMTC was locked at 10% lower circuit at Rs 190.35 on BSE after the government set the floor price for divestment of 9.33% stake in the company at a massive discount to the ruling market price. The government is selling 9.33 crore equity shares, aggregating to 9.33% of the total paid up equity share capital of the company through offer for sale (OFS) route via the stock exchanges mechanism on today, 13 June 2013. The government has fixed the floor price for the OFS at Rs 60 per share, a 71.62% discount to MMTC's Wednesday's closing price of Rs 211.45 on BSE.
As on 13:05 IST, MMTC's offer for sale (OFS) was subscribed 28.16%. It received total bids for 2.62 crore shares at an indicative price of Rs 60.96 per share. The stake sale would help the company to meet minimum public shareholding norms given by Sebi. The Government of India currently owns 99.33% stake in MMTC (as per the shareholding pattern as on 31 March 2013). Market regulator Securities & Exchange Board of India (Sebi) has mandated minimum public shareholding of 10% for state-run firms by August 2013.
Tata Coffee clocked volume of 10.99 lakh shares, a 38.31-times surge over two-week average daily volume of 29,000 shares. The stock fell 3.27% to Rs 1,064.25, recovering after an initial sharp slide. The stock had tumbled by the maximum permissible level of 20% of Rs 880.25 at the onset of the trading session after Wedneday's 20% slide.
Apollo Tyres notched up volume of 38.52 lakh shares, a 31.25-fold surge over two-week average daily volume of 1.23 lakh shares. The stock slumped 20.92% to Rs 72.75 after the company on Wednesday said that the company has entered into a definitive merger agreement under which a wholly-owned step subsidiary of the company will acquire Cooper Tire & Rubber Company (Cooper), a company listed on the New York Stock Exchange in an all-cash transaction valued at approximately $2.5 billion. This strategic combination will bring together two companies with highly complementary brands, geographic presence, and technological expertise to create a global leader in tire manufacturing and distribution, Apollo Tyres said in a statement.
Cooper is the 11th largest tyre company in the world by revenue and it supplies premium and mid-tier tyres worldwide through renowned brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon. The combined company will be the seventh-largest tyre company in the world and will have a strong presence in high-growth end-markets across four continents, Apollo Tyres said. With a combined $6.6 billion in total sales in 2012, the combined company will have a comprehensive portfolio of signature brands and greater ability to cross-sell products in diverse countries with negligible overlap, Apollo Tyres said.
Tata Teleservices (Maharashtra) saw volume of 1.06 crore shares, a 9.47-fold surge over two-week average daily volume of 11.23 lakh shares. The stock rose 3.44% to Rs 5.72.
Sterlite Industries (India) clocked volume of 32.75 lakh shares, a 9.14-fold surge over two-week average daily volume of 3.58 lakh shares. The stock fell 0.66% to Rs 83.05. The stock reversed direction after hitting 52-week low of Rs 82.40 in intraday trade today, 13 June 2013.
KSK Energy Ventures saw volume of 11.67 lakh shares, a 8.62-fold rise over two-week average daily volume of 1.35 lakh shares. The stock fell 3.91% to Rs 51.60.
Finance Minister P Chidambaram speaking on the state of the economy today, 13 June 2013, said he expects decisions to be announced in June that will accelerate economic reforms and spur investments in critical sectors and that steps government had taken in the last nine months have yielded results. The government plans to announce a review of the foreign direct investment limits as also coal pricing and allocation to power plants and gas pricing by the end of June, he said. Chidambaram said he is confident of attracting enough capital inflows to finance current-account deficit.
In a strong measure aimed at defending the rupee, the Centre on Wednesday announced a hike in the foreign investment limits in government debt by $5 billion. The measure aims at reversing the outflow of FII funds from debt instruments, one of the reasons for the depreciation in the rupee in recent weeks. Currently, the government debt limit stands at $25 billion. The move comes a day after the Chief Economic Advisor to the finance ministry Raghuram Rajan had said the government will be announcing measures to ensure that portfolio investor inflows are enabled and encouraged.
A committee set up by the Securities and Exchange Board of India on Wednesday, 12 June 2013, recommended the market regulator to simplify rules on foreign portfolio investments in the country. Among the major recommendations, the committee has suggested that existing foreign institutional investors (FIIs), Sub Accounts and Qualified Foreign Investors (QFI) categories be merged into a new investor class to be termed as "Foreign Portfolio Investor" (FPI). The committee has also suggested allowing foreign venture-capital funds to invest in more sectors. Foreign venture funds are currently allowed to invest in only nine sectors including biotechnology, nanotechnology and information technology.
According to the panel, foreign institutional investors should be allowed to register with local depositories recommended by Sebi. Currently, FIIs that want to invest in the Indian market must register directly with the regulator. The committee has also asked Sebi to simplify verification processes -- also called know-your-customer documentation
Global credit rating agency, Fitch Ratings on Wednesday raised its outlook on India's sovereign debt to stable from negative. Fitch cited the government's steps to contain its budget deficit despite the economic slowdown as the main reason for raising the outlook. India also made progress in addressing structural issues such as regulatory uncertainties, delays in government approvals for industrial projects and problems in sectors such as power and mining, it said.
Fitch acknowledged challenges, noting a recovery would remain slow until a healthier investment climate is created, and warning the rupee drop would limit the scope for RBI rate cuts.
European markets declined in early trade, with investors turning risk averse after the Japan's Nikkei index fell into bear-market territory, and the dollar dropped to its weakest level against the Japanese yen since 4 April 2013. Key benchmark indices in UK, France and Germany were down by 0.96% to 1.74%.
Asian equities dropped on Thursday after the World Bank cut its global growth forecast amid concern central banks may pare monetary stimulus. Key benchmark indices in China, Hong Kong, Indonesia, Singapore, Taiwan and South Korea were off 0.83% to 2.83%.
Japanese shares tumbled as the yen rose against the dollar. The Nikkei 225 average lost 6.35%.
The World Bank cut its global growth forecast for this year after emerging markets from China to Brazil slowed more than projected, while budget cuts and slumping investor confidence deepened Europe's contraction. The world economy will expand 2.2%, less than a January forecast for 2.4% growth and slower than last year's 2.3%, the bank said in a report. It lowered its prediction for developing economies and sees the euro region's gross domestic product shrinking 0.6%. In contrast, forecasts were raised for the US and Japan, which was helped by fiscal and monetary stimulus.
Trading in US index futures indicated that the Dow could fall 64 points at the opening bell on Thursday, 13 June 2013. US stocks fell on Wednesday on concerns the Federal Reserve could taper down its bond purchases. The Federal Open Market Committee meets next week after the Bank of Japan this week left its lending program unchanged.
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