A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak opening triggered by the rupee plunging to record low against the dollar. The S&P BSE Sensex was down 105.45 points or 0.57%, up about 140 points from the day's low and off close to 95 points from the day's high. The market breadth, indicating the overall health of the market, was weak. L&T and Bhel, both, hit 52-week low.
Foreign institutional investors (FIIs) sold shares worth a net Rs 563.23 crore on Friday, 16 August 2013, as per provisional data from the stock exchanges.
The rupee hit a record low below 62 against the dollar today, 19 August 2013. The partially convertible rupee was hovering at 62.35, weaker 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.
At 9:25 IST, the S&P BSE Sensex was down 105.45 points or 0.57% to 18,492.73. The index lost 241.86 points at the day's low of 18,356.32 in early trade. The index fell 10.80 points at the day's high of 18,587.38 in opening trade.
The CNX Nifty was down 76.40 points or 1.39% to 5,431.45. The index hit a low of 5,421.80 in intraday trade. The index hit a high of 5,499.65 in intraday trade.
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The market breadth, indicating the overall health of the market, was weak. On BSE, 651 shares declined and 260 shares rose. A total of 24 shares were unchanged.
Among the 30-share Sensex pack, 24 stocks declined and rest of them gained. Jindal Steel & Power (down 3.82%), Tata Steel (down 3.91%) and Bharti Airtel (down 3.17%), edged lower.
Capital goods pivotals edged lower on worries the ongoing slowdown in the economy could restrict new orders. L&T declined 4.05% to Rs 726 after hitting a 52-week low of Rs 710.10 in intraday trade today, 19 August 2013.
Bhel fell 3.59% to Rs 102.15, after hitting a 52-week low of Rs 101.80 in intraday trade today, 19 August 2013.
ICICI Bank dropped 1.69%. 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.
Shares of Sesa Goa declined 2.26%. Sterlite Industries (India) fell 2.24%. 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.
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.
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.
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 Hong Kong, Indonesia, China, South Korea, and Taiwan were down by 0.08% to 3.79%. Key benchmark indices in Japan and Singapore rose by 0.02% to 0.35%.
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.
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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