Key benchmark indices slumped in early trade as Asian shares collapsed. The market breadth indicating the overall health of the market was weak. The barometer index, the S&P BSE Sensex, was currently down 887.50 points or 3.24% at 26,478.57. The BSE Sensex hit its lowest level in 10 weeks. The CNX Nifty hit its lowest level in almost 10 weeks.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 2340.60 crore on Friday, 21 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1524.10 crore on Friday, 21 August 2015, as per provisional data.
The market may remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month August 2015 series to September 2015 series. The near month August 2015 derivatives contracts are set to expire on Thursday, 27 August 2015.
In overseas markets, Asian stocks slumped as a rout in Chinese equities gathered pace, hastening an exodus from riskier assets as fears of a China-led global economic slowdown roiled world markets. US stock markets slumped on Friday, 21 August 2015, as concerns about the health of the Chinese economy rattled investors across the world.
At 9:20 IST, the S&P BSE Sensex was down 887.50 points or 3.24% at 26,478.57. The index fell 635.67 points at the day's high of 26730.40 at the onset of trading session. The index fell 1,006.54 points at the day's low of 26,359.53 at the onset of trading session, its lowest level since 15 June 2015.
The CNX Nifty was down 243.80 points or 2.94% at 8,056.15. The index hit a high of 8,060.05 in intraday trade. The index hit a low of 7,990.90 in intraday trade, its lowest level since 16 June 2015.
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The BSE Mid-Cap index was down 411.68 points or 3.67% at 10,804.97. The BSE Small-Cap index was down 445.28 points or 3.84% at 11,165.16. The decline in both these indices was higher than the Sensex's decline in percentage terms.
The market breadth indicating the overall health of the market was weak. On BSE, 1,290 shares fell and 102 shares rose. A total of 17 shares were unchanged.
Steel Authority of India (Sail) fell 4.06%. The Minister for Steel & Mines Narendra Singh Tomar on Friday, 21 August 2015, announced that the Government of India intends to revive Visvesvaraya Iron & Steel (VISL) by modernization and expansion of its facilities with an investment of Rs 1000 crore. However, this investment will be subject to recommendations of the consultant and approval by the board of directors of Sail. VISL's steel plant is located in Karnataka. VISL is a unit of Sail. Sail is a state-run steel giant. Tomar said after visiting the VISL steel plant that he has held two meetings with the Chief Minister of Karnataka and raised the issue of allotment of mines, including 240 Ha of iron ore mines in the Ramanadurga area to VISL for iron ore security. The Chief Minister has assured to actively consider the matter on priority basis.
Punjab National Bank (PNB) fell 3.95%. The bank on Saturday, 22 August 2015 said that the bank's board of directors at its meeting held on Friday, 21 August 2015, approved holding of Extraordinary General Meeting (EGM) of shareholders of the bank on 28 September 2015, for the purpose of seeking approval for issuance of equity shares of face value of Rs 2 each aggregating upto an amount of Rs 1732 crore on preferential allotment basis to the Government of India (GoI), subject to necessary approvals.
Indian Oil Corporation fell 3.07% The company announced after market hours on Friday, 21 August 2015, that the promoter of the company namely, the government of India (GoI) has fixed floor price of Rs 387 per share for the offer for sale of 24.27 crore shares aggregating to 10% of the total paid up equity share capital of the company held by GoI in the company, through a sale on the separate window provided by the stock exchanges for this purpose. The offer, to take place on a separate window of the stock exchanges, began today, 24 August 2015 at 9:15 IST and shall close at 15:30 IST today itself.
L&T fell 3.55%. L&T clarified after market hours on Friday, 21 August 2015, that L&TIDPL, a subsidiary of L&T, had incorporated a wholly-owned subsidiary called L&T Port Sutrapada to implement the project awarded by Gujarat Maritime Board (GMB) in February 2008 on a competitive bidding basis for setting up a greenfield sea port at Sutrapada on BOOT (build, own, operate, transfer) basis. While the company had geared itself for undertaking the project, GMB faced severe difficulties in allocating the required land for the project. In July 2010, GMB approved shifting of the location of the project site to Kachchigarh in Dwaraka district for development of the sea port. Hence, the subsidiary was re-christened as L&T Port Kachchigarh. However, pursuant to marine surveys carried out at Kachchigarh and detection of the presence of growing coral reefs in the vicinity, it was communicated to GMB that the company did not seek further extension to the Letter of Intent for carrying out the project. The Letter of Intent for the project expired in August 2013.
India's weather office, the India Meteorological Department (IMD), said in a daily report issued on Sunday, 23 August 2015, that for the country as a whole, cumulative rainfall during this year's monsoon season was 10% below the Long Period Average (LPA) until 23 August 2015. Region wise, the rainfall was 13% below the LPA in Central India, 6% below the LPA in East & Northeast India, 3% below the LPA in Northwest India and 1% below the LPA in South Peninsula, until 23 August 2015.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
Meanwhile, a committee headed by A.P. Shah, chairman of the Law Commission, has reportedly suggested sparing foreign portfolio investors (FPIs) from the levy of minimum alternate tax (MAT) for the period prior to 1 April 2015. If the government accepts the recommendations of the committee, it would provide a significant relief to foreign investors facing several years of levies on capital gains made by them. In the February 2015 Budget, the government had exempted FPIs from MAT starting 1 April 2015, but had not made the clarification retrospective. The tax row started after the income-tax department started demanding MAT from foreign investors on capital gains accruing to them from the sale of shares, citing an August 2012 order by the Authority for Advance Rulings (AAR) in the case of Castleton Investment that MAT is applicable to both domestic and foreign companies. MAT is a tax levied on profit-making entities that don't pay corporate income tax because of exemptions and incentives. FPIs have argued that MAT is applicable only to domestic companies that have a base in India. The government appointed the Shah panel to defuse the row that threatened India's image as an investment destination. The Shah committee submitted its report to the government last month. The tax department had earlier clarified that MAT will not apply to investment routed through countries with which India has a tax treaty.
In overseas markets, Asian indices slumped as a rout in Chinese equities gathered pace, hastening an exodus from riskier assets as fears of a China-led global economic slowdown roiled world markets. Key benchmark indices in Indonesia, Japan, Singapore, South Korea and Taiwan were down 3.20% to 4.60%.
Key benchmark index in China was down 8.45% and key benchmark index in Hong Kong was down 4.45%.
The Chinese government on Sunday, 23 August 2015, published finalized rules that allow pension funds managed by local governments to invest in pension funds. Under the new rules, these pension funds, with assets estimated at more than 2 trillion yuan, or about $322 billion, can invest up to 30% of their net assets in stocks, equity funds and balanced funds. They previously had been limited to bank deposits and Treasurys. A draft version of the rules had been published 30 June 2015.
US stock markets dropped dramatically on Friday, 21 August 2015, dragging overall global markets to their worst week of the year as concerns about the health of the Chinese economy rattled investors across the world. All of the main US indices closed down more than 3% on Friday, the fourth consecutive day of falls.
There are two things worrying stock market investors generally. The first are signs of weakening economic growth in China, which has been a key engine for the global economy in recent years. The second thing stock market investors are concerned about is the US Federal Reserve, which has appeared to be heading toward its first interest rate hike since the financial crisis. Rising interest rates are conventionally seen as bad for stocks and the idea that the US central bank might be moving to change monetary policy is clearly spooking the markets.
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