Weakness continued on the bourses in early afternoon trade as the Reserve Bank of India's (RBI) latest measures to squeeze liquidity from the banking system to stem rupee's decline rattled investor sentiment. The S&P BSE Sensex was down 282.72 points or 1.39%, up about 20 points from the day's low and off close to 230 points from the day's high. The market breadth, indicating the overall health of the market, was weak.
Mining and metal stocks edged lower after a survey showed that China's manufacturing-sector activity is slowing further this month. Interest rate sensitive auto stocks edged lower as RBI's latest measures to tighten liquidity in the banking system to stem rupee's slide have virtually wiped off possibility of any downward revision in RBI's key policy rate viz. the repo rate at its first quarter review of Monetary Policy 2013-14 on 30 July 2013. Shares of telecom services provider were in demand on hopes the government may reduce spectrum price for the upcoming third round of auctions.
The market trimmed losses after a weak start. The intraday recovery proved short lived as the market weakened again in morning trade. The market extended losses to hit fresh intraday low in mid-morning trade. The S&P BSE Sensex hit its lowest level in almost one week. The 50-unit CNX Nifty hit one-week low below the psychological 6,000 mark. It remained weak in early afternoon trade. Weakness continued on the bourses in early afternoon trade.
The market may remain volatile in the immediate future as traders roll over positions in the futures & options (F&) segment from the July 2013 series to August 2013 series. The near month July 2013 derivatives contracts expire tomorrow, 25 July 2013.
The Reserve Bank of India (RBI) on Tuesday, 23 July 2013, announced additional measures to squeeze liquidity from the banking system to stem rupee's decline. The central bank imposed restrictions on commercial banks' access to cash, allowing banks to borrow cash only up to 0.5% of their net deposits from the central bank' daily at the benchmark interest rate of 7.25%. The RBI also tightened rules on the cash reserve ratio (CRR) -- the percentage of deposits that banks must hold as cash with the central bank -- which is 4% at present.
At 12:20 IST, the S&P BSE Sensex was down 282.72 points or 1.39% to 20,019.41. The index fell 300.89 points at the day's low of 20,001.24 in mid-morning trade, its lowest level since 18 July 2013. The index declined 49.43 points at the day's high of 20,252.70 in morning trade.
The CNX Nifty was down 106.65 points or 1.75% to 5,971.15. The index hit a low of 5,962.75 in intraday trade, its lowest level since 17 July 2013. The index hit a high of 6,047.25 in intraday trade.
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The market breadth, indicating the overall health of the market, was weak. On BSE, 1,385 shares declined and 479 shares rose. A total of 102 shares were unchanged.
Among the 30-share Sensex pack, 23 stocks fell and rest of them rose. ICICI Bank (down 4.02%), HDFC Bank (down 3.74%) and State Bank of India (down 3.43%), edged lower.
Mining and metal stocks edged lower after a survey showed that China's manufacturing-sector activity is slowing further this month. China is the world's largest consumer of copper and aluminum. Sterlite Industries (down 4.84%), JSW Steel (down 4.43%), Jindal Steel & Power (down 4.33%), Sesa Goa (down 4.13%), Hindalco Industries (down 3.28%), Sail (down 3.82%), Hindustan Zinc (down 2.47%), Tata Steel (down 2.2%), and NMDC (down 1.51%), edged higher.
Interest rate sensitive auto stocks edged lower as RBI's latest measures to tighten liquidity in the banking system to stem rupee's slide have virtually wiped off possibility of any downward revision in RBI's key policy rate viz. the repo rate at its first quarter review of Monetary Policy 2013-14 on 30 July 2013. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Maruti Suzuki India (down 2.56%), Mahindra & Mahindra (M&M) (down 3.41%) and Tata Motors (down 0.89%), edged lower.
Bajaj Auto dropped 0.33%.
Hero MotoCorp shed 0.39% ahead of its Q1 results today, 24 July 2013.
Yes Bank tumbled 8.72%. The bank's net profit surged 38.15% to Rs 400.84 crore on 30.6% growth in total income to Rs 2839.97 crore in Q1 June 2013 over Q1 June 2012. The Q1 result was announced during trading hours today, 24 July 2013.
Shares of telecom services provider were in demand on hopes the government may reduce spectrum price for the upcoming third round of auctions. Reliance Communications, Idea Cellular and Bharti Airtel rose by 0.87% to 3.98%. MTNL and Tata Teleservices (Maharashtra) shed by 1.84% to 3.11%.
On Tuesday, the Telecom Regulatory Authority of India (TRAI) released consultation paper on valuation and reserve price of spectrum for the third auction. TRAI has invited comments on the quantity of spectrum that should be kept for auction, time that winner of airwaves should be given to roll out network and the method to be used for valuation and estimation of reserve price. The regulator has also hinted at the possibility of lowering the base price for spectrum. TRAI has sought view from parties interested in the process by August 14 and counter comments by August 21. It will also hold an open house discussion on the subject on August 26.
ING Vysya Bank (down 7.33%), Federal Bank (down 6.86%), Chola Investment & Finance Company (down 6.48%), Shoppers Stop (down 6.34%) and M&M Financial Services (down 6.34%), were among the major losers from the BSE Mid-Cap index.
Most Asian stocks edged lower on Wednesday, 24 July 2013, after a private survey showed manufacturing weakened further in July in China. Key benchmark indices in China, Indonesia, Japan, and Taiwan were down by 0.22% to 0.41%. Key benchmark indices in Hong Kong, Singapore and South Korea rose by 0.05% to 0.42%.
China's manufacturing weakened further in July, signaling the worst of the nation's slowdown has yet to be reached, according to a preliminary survey of purchasing managers. The reading of 47.7 for an index released today by HSBC Holdings Plc and Markit Economics, was less than estimated and if confirmed in the final report Aug. 1, would be the lowest in 11 months. Readings below 50 indicate contraction.
Japan's exports rose for a fourth straight month in June as a weak yen made the nation's products more competitive and shipments to the European Union rebounded. Exports gained 7.4% from a year earlier, the Finance Ministry said in Tokyo today.
Trading in US index futures indicated a flat opening of US stocks on Wednesday, 24 July 2013. US stocks ended mostly lower on Tuesday after a decline in a regional manufacturing gauge prompted concern, but the Dow Jones Industrial Average climbed to a record close. The Federal Reserve Bank of Richmond said manufacturing activity in the central Atlantic region weakened.
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