There has been carnage on the street as the Reserve Bank of India's (RBI) curbs on forex outflows to stem rupee's slide rattled investor sentiment. Fears that the Federal Reserve will begin to scale back its monthly bond buys in September 2013 added to the market's setback. The S&P BSE Sensex was provisionally down 749.39 points or 3.87%, off 692.75 points from the day's high and up 58.55 points from the day's low. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than a week. The market breadth, indicating the overall health of the market, was weak. All the thirteen sectoral indices on BSE were in the red. Indian stocks today, 16 August 2013, reversed four-day rising trend.
Data on Thursday, 15 August 2013, showed that the number of Americans claiming jobless benefits slumped to a near six-year low last week. The data cemented expectations that the US central bank will soon cease its bond-buying program that has flooded global markets with liquidity in recent years.
Index heavyweights ITC and Reliance Industries fell. Banking stocks tumbled, with shares of state-run banking giant State Bank of India (SBI) hitting 52-week low. Metal stocks also declined sharply
Key benchmark indices declined in early trade as several upbeat economic reports spurred thinking that the Federal Reserve will begin to scale back its monthly bond buys in September 2013. The Sensex fell below the psychological 19,000 mark. Key benchmark indices tumbled in morning trade as the rupee dropped to a record low against the dollar. Key benchmark indices hit fresh intraday low in mid-morning trade. The Sensex extended losses to hit fresh intraday low in afternoon trade. Key benchmark indices slumped to hit fresh intraday low in mid-afternoon trade. Key benchmark indices extended slide in late trade to hit fresh intraday low.
The rupee trimmed losses after hitting record low below 62 against the dollar as exporters stepped in to sell the greenback. The partially convertible rupee was hovering at 61.82, weaker than its close of 61.43/ 61.44 on Wednesday, 14 August 2013. The rupee hit record low of 62.02 in intraday trade. Indian financial markets were closed on Thursday, 15 August 2013, for Independence Day holiday.
The Reserve Bank of India on Wednesday, 14 August 2013, announced measures to curb gold imports and capital outflows to stem rupee's slide. The RBI limited the investment Indian companies can make overseas without seeking its approval to 100% of their net worth. They were previously allowed to invest up to four times their net worth. The RBI also reduced the amount that people living in India can send abroad to $75,000 a year from $200,000. Further, it said the remittances cannot be used for buying property abroad. "The present set of measures is aimed at moderating outflows," the RBI said in a news release. The central bank would, however, consider requests for permission to invest beyond the limit it set Wednesday, it said. However, the central bank has exempted large state-run companies from this restriction.
As per provisional closing, the S&P BSE Sensex was down 749.39 points or 3.87% to 18,618.20. The index lost 807.94 points at the day's low of 18,559.65 in late trade, its lowest level since 7 August 2013. The index fell 56.64 points at the day's high of 19,310.95 in early trade.
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The CNX Nifty was down 225.35 points or 3.92% to 5,516.95. The index hit a low of 5,496.05 in intraday trade, its lowest level since 7 August 2013. The index hit a high of 5,716.60 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,613 shares declined and 750 shares rose. A total of 145 shares were unchanged.
The total turnover on BSE amounted to Rs 2033 crore, slightly lower than Rs 2041.97 on Wednesday, 14 August 2013.
Hero MotoCorp was the lone gainer from the 30-share Sensex pack. Hero MotoCorp rose 2.25% to Rs 1,980.
Index heavyweight and cigarette major ITC fell 4.04% to Rs 321.05.
Reliance Industries dropped 4.29% to Rs 828. The stock hit a high of Rs 866 and low of Rs 818.05.
Bank pivotals fell across the board. Among PSU bank stocks, Union Bank of India (down 6.32%), Punjab National Bank (down 8.12%), Canara Bank (down 9.94%), Bank of India (down 9.55%) and Bank of Baroda (down 8.89%) tumbled.
Shares of state-run banking giant SBI lost 2.78% to Rs 1,580 after hitting a 52-week low of Rs 1,553.40.
Among private sector bank stocks, ICICI Bank (down 4.87%), HDFC Bank (down 4.69%), Yes Bank (down 12.2%) and Kotak Mahindra Bank (down 4.14%) declined.
Axis Bank lost 8.48% after MSCI said it would exclude the stock from its standard and large cap indices with effect from 2 September 2013. MSCI made the announcement on Thursday, 15 August 2013, when the Indian stock market was shut for Independence Day holiday.
MSCI Barra is a leading provider of benchmark indices and risk management analytics products. Many global mutual funds are linked with MSCI indices. Hence, deletion of a stock from the MSCI index leads to outflow of passive funds that use the MSCI index to benchmark their portfolios.
Meanwhile, shares of Axis Bank 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 in the bank given the foreign shareholding limit of 49% in the stock has been breached.
Metal stocks fell across the board. Tata Steel lost 6.75% on profit booking. The stock had gained 25.78% in five trading sessions to Rs 249.80 on 14 August 2013 from a recent low of Rs 198.60 on 6 August 2013. The company's consolidated net profit jumped 90.46% to Rs 1139 crore on 3% fall in turnover to Rs 32805 crore in Q1 June 2013 over Q1 June 2012. The result was announced on 13 August 2013. This improvement was on the back of robust performance by the Indian operations and improved performance at the European operations, Tata Steel said.
Sterlite Industries (India) dropped 7.26%. The company on 8 August 2013 said that the National Green Tribunal (NGT) has in its judgment upheld its interim order of 31 May 2013, and has allowed the company's Tuticorin Copper Smelter to continue to operate.
Sesa Goa fell 6.22%. The company on 12 August 2013 said that the Division Bench of the High Court of Bombay at Goa vide its order dated 12 August 2013 has dismissed the appeal filed by the shareholder of Sesa Goa and sanctioned the Scheme of amalgamation and arrangement amongst Sterlite Industries (India), Madras Aluminium Company, Sterlite Energy, Vedanta Aluminium and Sesa Goa and their respective shareholders and creditors and the scheme of amalgamation of Ekaterina with the company and their respective shareholders and creditors.
Hindalco Industries slipped 5.56%. The company's net profit rose 11.52% to Rs 474 crore on 3.15% decline in revenue from operations to Rs 5838 crore in Q1 June 2013 over Q1 June 2012. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 3.45% to Rs 479 crore in Q1 June 2013 over Q1 June 2012. Hindalco said that the performance in Q1 June 2013 was achieved despite adverse macro-economic headwinds. Hindalco announced the standalone results during trading hours on Tuesday, 13 August 2013.
On future business outlook, the company said that its focus is now on ramping up the new projects already on stream. Depressed LME prices in an otherwise inflationary scenario pose a significant challenge, Hindalco said. However, the company is confident of riding through these challenges with its trust on stabilizing the projects, operational efficiencies and cost control, Hindalco Industries said.
JSW Steel (down 9.95%), Hindustan Copper (down 8.51%), NMDC (down 5.03%), and Hindustan Zinc (down 4.18%) edged lower.
Steel Authority of India fell 5.96%. The company's net profit declined 35.25% to Rs 450.91 crore on 5.08% fall in total income to Rs 10494.08 crore in Q1 June 2013 over Q1 June 2012. The company announced the first quarter results during trading hours on Wednesday, 14 August 2013
European stocks declined on Friday, 16 August 2013, ahead of data from the US, including a sentiment survey. Key benchmark indices in France, Germany and UK fell by 0.02% to 0.2%.
Asian stocks declined on Friday, 16 August 2013, as several upbeat economic reports spurred thinking that the Federal Reserve will begin to scale back its monthly bond buys in September 2013. Key benchmark indices in Indonesia, China, South Korea, Hong Kong, Singapore and Japan were down by 0.1% to 2.49%. Taiwan's Taiwan Weighted index rose 0.48%.
Trading in US index futures indicated a flat opening of US stocks on Friday, 16 August 2013. US stocks slumped on Thursday, 15 August 2013, as better-than-expected data, such as weekly jobless numbers, heightened fears of imminent tapering of the Federal Reserve'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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