Key benchmark indices erased sharp initial gains and ended sharply lower in choppy trade as the rupee hit record low below 64 against the dollar on rising expectations that the US Federal Reserve will soon start withdrawing its monetary stimulus to the US economy. Weakness in European stocks also dampened sentiment. The S&P BSE Sensex settled at its lowest level in over 11 months and below the psychological 18,000 mark. The 50-unit CNX Nifty also settled at over 11-month low. The Sensex lost 340.13 points or 1.86%, off 661.79 points from the day's high and up 98.72 points from the day's low. The market breadth, indicating the overall health of the market, was negative. Indo-Pak tension also weighed on the bourses after the Pakistani military reportedly said on Wednesday that one of its officers has been killed by Indian troops firing across the disputed border in the Kashmir region.
Indian stocks fell for the fourth straight day today, 21 August 2013. The Sensex has lost 1,461.68 points or 7.55% in four trading sessions from a recent high of 19,367.59 on 14 August 2013. The Sensex has fallen 1,439.79 points or 7.44% in this month so far (till 21 August 2013). The Sensex has declined 1,520.80 points or 7.83% in calendar 2013 so far (till 21 August 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 2,537.21 points or 12.41%. From a 52-week low of 17,250.80 on 5 September 2012, the Sensex has surged 655.11 points or 3.8%.
Coming back to today's trade, index heavyweight and cigarette maker ITC declined. Another index heavyweight Reliance Industries (RIL) also dropped. Auto stocks reversed intraday gains. Pharma stocks edged lower, with Ranbaxy tumbling.
IT stocks edged lower on profit taking. Power equipment maker Bharat Heavy Electricals (Bhel) gained on bargain hunting after recent slide. Metal stocks declined. Vedanta group stocks fell after surging on Tuesday, 21 August 2013. Bank stocks cut steep initial gains triggered by the RBI on Tuesday relaxing some rules that will help banks deal with the notional or marked-to-market (MTM) loss in their government bond portfolios due to a recent sharp fall in bond prices.
The market surged amid initial volatility after the Reserve Bank of India (RBI) on Tuesday, 20 August 2013, announced measures to increase the availability of cash in the banking system. The Sensex trimmed gains to hit fresh intraday low in morning trade. A bout of volatility was witnessed as key benchmark indices trimmed gains once again to hit fresh intraday low after regaining strength in mid-morning trade. Key benchmark indices pared steep initial gains amid volatility to hit fresh intraday low in afternoon trade. The market extended intraday losses as rupee weakened past 64 against the dollar to hit a record low. The market pared losses after hitting fresh intraday low in late trade.
The rupee hit record low below 64 against the dollar on rising expectations that the US Federal Reserve will soon start withdrawing its monetary stimulus to the US economy. The rupee was hovering at 64.04, sharply lower than its close of 63.25/26 on Tuesday, 19 August 2013. The fall in rupee was a part of a broad based decline in emerging-market currencies.
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The rupee has slumped in the past few days on worries that India would struggle to fund its current-account deficit when the US central bank pulls back stimulus to the US economy.
Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
Indo-Pak tension also weighed on the bourses after the Pakistani military reportedly said on Wednesday that one of its officers has been killed by Indian troops firing across the disputed border in the Kashmir region. The incident follows the killing of five Indian soldiers along the Line of Control that separates the two sides in the Himalayan region this month. India said the five were killed by Pakistani forces but Pakistan denied involvement.
Data showing stepping of selling of Indian stocks by foreign institutional investors (FIIs) also hit sentiment adversely. FIIs sold shares worth a net Rs 1406.90 crore from the secondary equity markets on Tuesday, 20 August 2013, as per data from Securities & Exchange Board of India (Sebi).
The S&P BSE Sensex lost 340.13 points or 1.86% to 17,905.91, its lowest closing level since 11 September 2012. The index tumbled 438.85 points at the day's low of 17,807.19 in late trade. The index surged 321.66 points at the day's high of 18,567.70 in early trade, its highest level since 19 August 2013.
The CNX Nifty lost 98.90 points or 1.83% to 5,302.55, its lowest closing level since 6 September 2012. The index hit a low of 5,268.45 in intraday trade, its lowest level since 5 October 2012. The index hit a high of 5,504.10 in intraday trade, its highest level since 16 August 2013.
The total turnover on BSE amounted to Rs 2256 crore, higher than Rs 1941.27 crore on Tuesday, 20 August 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,334 shares fell and 926 shares rose. A total of 139 shares were unchanged.
The BSE Mid-Cap index fell 1.24% and the BSE Small-Cap index declined 0.81%. Both these indices outperformed the Sensex.
Among the sectoral indices on BSE, the S&P BSE Consumer Durables index (up 0.74%), the S&P BSE Bankex (up 0.49%), the S&P BSE PSU index (down 1.39%), the S&P BSE IT index (down 1.42%), the S&P BSE Auto index (down 1.55%) and the S&P BSE Power index (down 1.78%) outperformed the Sensex.
The S&P BSE Teck index (down 2.02%), the S&P BSE Capital Goods index (down 2.18%), the S&P BSE Healthcare index (down 2.6%), the S&P BSE FMCG index (down 3.17%), the S&P BSE Realty index (down 3.34%), the S&P BSE Oil & Gas index (down 3.52%) and the S&P BSE Metal index (down 3.63%) underperformed the Sensex.
Among the 30-share Sensex pack, 24 stocks fell and rest of them rose. NTPC (down 3.67%), ONGC (down 2.55%) and Coal India (down 1.73%) edged lower from the Sensex pack.
Index heavyweight and cigarette maker ITC declined 4.12%.
Reliance Industries (RIL) fell 4.62%.
Bank stocks cut steep initial gains triggered by the RBI on Tuesday relaxing some rules that will help banks deal with the notional or marked-to-market (MTM) loss in their government bond portfolios due to a recent sharp fall in bond prices. Yes Bank (up 6.28%), Axis Bank (up 0.9%), HDFC Bank (up 2.35%) and ICICI Bank (up 1.04%), gained.
PSU bank stocks were mixed. State Bank of India (up 0.35%), Bank of Baroda (up 0.7%) and Punjab National Bank (up 0.4%) gained. Canara Bank (down 4.86%), Union Bank of India (down 6.04%), Bank of India (down 3.76%) declined.
India's largest dedicated housing finance firm HDFC rose 2.59%.
The RBI on Tuesday, 20 August 2013, said it would repurchase government bonds to increase the availability of cash in the banking system, a step that appears to be a partial reversal of the slew of measures it took since mid-July to tighten liquidity. In a late evening news release, the RBI said it would buy back Rs 8000-crore of government bonds on Friday, 23 August 2013. Further repurchase will depend on evolving market conditions, it said. It is important to ensure that the liquidity tightening doesn't harden long-term bond yields and impact the flow of credit to productive sectors of the economy, the central bank said, referring to its buyback plan.
The RBI on Tuesday also relaxed some rules that will help banks deal with the notional or marked-to-market (MTM) loss in their government bond portfolios due to a recent sharp fall in bond prices. They now don't have to record their current marked-to-market losses immediately as the RBI has allowed them to spread the losses equally over the remaining period of this fiscal year.
IT stocks edged lower on profit taking. HCL Technologies (down 1.71%), Wipro (down 0.65%), TCS (down 1%) and Infosys (down 1.53%) declined.
A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Everonn Education rose 3.91% after the company said that its board approved a debt restructuring plan through a scheme of arrangement with the creditors. The announcement was made before trading hours today, 21 August 2013.
Auto stocks reversed intraday gains. Mahindra & Mahindra (M&M) declined 0.92%. The company on 14 August 2013 said it plans to invest Rs 200 crore to strengthen its current product line-up of trucks and buses. The company plans to invest Rs 300 crore to explore new product lines in the LCV, ICV and MCV range, it said.
Tata Motors dropped 0.59%. The company's global wholesale vehicle sales fell 14% to 87,566 vehicles in July 2013 over July 2012. Global sales of passenger cars fell 13% to 46,684 vehicles in July 2013 over July 2012. Sales of its Jaguar Land Rover brand rose 30.61% to 35,162 units. Sales of its Jaguar cars rose 76.53% to 7,174 vehicles and Land Rover sales were higher by 22.45% at 27,988 vehicles during the month. The company announced the global vehicle sales figures on 14 August 2013.
Maruti Suzuki India fell 0.73%. The company said during market hours today, 21 August 2013, that it has introduced the stylish, aggressive, sporty Stingray car model. With this the company has expanded its portfolio and enriched to meet inspirations of young India, Maruti said. Stingray, which is powered by a 998 cc petrol engine, is available in three variants, with price ranging between Rs 4,09,999 to Rs 4,66,999 ex showroom Delhi.
Shares of two wheeler makers also declined. Bajaj Auto shed 1.89%. Bajaj Auto on 13 August 2013 said that the company has received a notice from the workmen's union viz. Vishwa Kalyan Kamgar Sanghatana stating that the stoppage of work at Chakan plant has been withdrawn and all the workmen at Chakan plant will resume their duty in their respective shifts from 14 August 2013. The company had earlier informed on 25 June 2013, that it had received a notice from the workmen's union of its Chakan plant viz., Vishwa Kalyan Kamgar Sanghatana stating that they propose to call for a stoppage of work by all the workmen employed in Chakan plant from the morning shift of 28 June 2013. The workmen at Chakan Plant had however, stopped coming from 25 June 2013 itself, without assigning any reason.
Hero MotoCorp lost 1.87%.
Pharma stocks edged lower. Cipla (down 2.29%), Dr Reddy's Laboratories (down 3.86%), Ranbaxy Laboratories (down 10.8%), Wockhardt (down 5%) and Sun Pharmaceutical Industries (down 4.42%), declined.
Telecom major Bharti Airtel slumped 6.09%.
L&T shed 2.83% to Rs 712.50, with the stock reversing intraday gains. The stock hit a 52-week low of Rs 704.05 in intraday trade today, 21 August 2013. The company on Tuesday, 20 August 2013, said it has won an order valued around Rs 1500 crore from Petroleum Development Oman LLC (PDO). The engineering, procurement and construction (EPC) order is for the Yibal 3rd stage depletion compression (Y3DC) project at the Yibal-Natih gas reservoir in Oman. The project is scheduled to be completed in 39 months.
Power equipment maker Bharat Heavy Electricals (Bhel) gained 3.74% to Rs 105.30 on bargain hunting after recent slide. The stock had hit a 52-week low of Rs 100.35 on Tuesday, 20 August 2013. Shares of Bhel had tumbled 16.05% in four trading sessions to Rs 101.50 on 20 August 2013, from a recent high of Rs 120.90 on 13 August 2013.
Metal stocks declined in volatile trade. Jindal Steel & Power (down 0.36%), Tata Steel (down 3.11%), JSW Steel (down 5.21%), and Sail (down 3.53%), edged lower.
Vedanta group stocks declined after spurting on Tuesday, 21 August 2013. Hindustan Zinc declined 8.63%. The stock had jumped 13.1% on Tuesday triggered by reports that the legal hurdle has been cleared for government's stake sale in the company and BALCO. Government of India holds 29.54% stake in Hindustan Zinc while Sterlite Industries (India) has 64.92% stake as of 30 June 2013.
Sesa Goa fell 9.06% after rallying 15.93% on Tuesday. Sterlite Industries (India) declined 4.81% after galloping 9.91% on Tuesday. Sesa Goa on Monday, 19 August 2013, said that the merger of Sterlite Energy (SEL) with Sesa Goa and the demerger of the aluminium business undertaking of Vedanta Aluminium (VAL) into Sesa Goa pursuant to the Scheme of Amalgamation and Arrangement have become effective. The company's wholly owned subsidiary, Bloom Fountain, would acquire 38.68% stake in Cairn India together with the associated debt, effective 26 August 2013. Further, the company has also approved the acquisition of 1,215 MW thermal power plants situated at Jharsuguda and 90 MW co-generation facility at Lanjigarh, from its wholly owned subsidiary, VAL, on a going concern basis.
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.
Realty stocks dropped. DLF (down 3.48%), HDIL (down 5.29%), Unitech (down 7.95%), Indiabulls Real Estate (down 7.41%), Godrej Properties (down 2.15%), Oberoi Realty (down 3.89%) edged lower.
The RBI on Tuesday, 20 August 2013, said it would repurchase government bonds to increase the availability of cash in the banking system, a step that appears to be a partial reversal of the slew of measures it took since mid-July to tighten liquidity. In a late evening news release, the RBI said it would buy back Rs 8000-crore of government bonds on Friday, 23 August 2013. Further repurchase will depend on evolving market conditions, it said. It is important to ensure that the liquidity tightening doesn't harden long-term bond yields and impact the flow of credit to productive sectors of the economy, the central bank said, referring to its buyback plan.
The RBI on Tuesday also relaxed some rules that will help banks deal with the notional or marked-to-market (MTM) loss in their government bond portfolios due to a recent sharp fall in bond prices. They now don't have to record their current marked-to-market losses immediately as the RBI has allowed them to spread the losses equally over the remaining period of this fiscal year.
Bond prices rose after the RBI on Tuesday, 20 August 2013, announced measures to increase the availability of cash in the banking system. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.4065%, lower than its close of 8.9028% on Tuesday, 19 August 2013. Bond yield and bond prices are inversely related.
European stock markets edged lower on Wednesday, 21 August 2013, with investors remaining cautious ahead of minutes from the US Federal Reserve's latest meeting, which could shed more light on a potential tapering of asset purchases. Key benchmark indices in France, UK and Germany were down by 0.12% to 0.74%.
Britain posted its first July budget deficit since 2010 as an increase in government spending outstripped tax revenue. Net borrowing excluding temporary support for banks was 488 million pounds ($764 million) compared with a surplus of 823 million pounds a year earlier, the Office for National Statistics said in London today. Including coupon cash received from the Bank of England on its holdings of gilts, the deficit was 62 million pounds.
Asian stocks were mixed on Wednesday, 21 August 2013, before the release of minutes of the Federal Reserve's July meeting. Key benchmark indices in Singapore, Hong Kong and South Korea were down by 0.63% to 1.08%. Key benchmark indices in Japan, China and Indonesia rose by 0.02% to 1.04%. Taiwan's markets were closed amid a tropical storm.
Trading in US index futures indicated that the Dow could fall 43 points at the opening bell on Wednesday, 21 August 2013. US stocks on Tuesday, 20 August 2013, mostly climbed, with the S&P 500 halting its longest losing streak this year, as retailers including Best Buy Co. beat estimates and as Wall Street looked to clues about future US monetary policy. The Federal Open Market Committee (FOMC) later in the global day today, 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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