Weakness continued on the bourses in early afternoon trade. The barometer index, the S&P BSE Sensex, was down 109.84 points or 0.53%, off close to 50 points from the day's high and up about 25 points from the day's low. The market breadth, indicating the overall health of the market, was negative. Weakness in Asian stocks hit sentiment on the domestic bourses adversely.
Pharma stocks bucked the weak trend. Shares of two-wheeler companies were mostly lower.
The market edged lower in early trade on weak Asian stocks. A bout of volatility was witnessed as key benchmark indices trimmed losses after hitting fresh intraday low in morning trade. Volatility continued as key benchmark indices weakened once again after trimming intraday losses in mid-morning trade. Weakness continued on the bourses in early afternoon trade
Asian stocks edged lower on Thursday, 20 February 2014, after a Chinese manufacturing index dropped more than estimated this month.
At 12:20 IST, the S&P BSE Sensex was down 109.84 points or 0.53% to 20,613.13. The index dropped 133.94 points at the day's low of 20,589.03 in early trade, its lowest level since 18 February 2014. The index fell 60.31 points at the day's high of 20,662.66 in mid-morning trade.
The CNX Nifty was down 38.65 points or 0.63% to 6,114.10. The index hit a low of 6,105.50 in intraday trade, its lowest level since 18 February 2014. The index hit a high of 6,129.10 in intraday trade.
The BSE Mid-Cap index was up 1.34 points or 0.02% at 6,378.28. The BSE Small-Cap index was off 5.71 points or 0.09% at 6,366.49. Both these indices outperformed the Sensex.
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The market breadth, indicating the overall health of the market, was negative. On BSE, 1,273 shares fell and 987 shares rose. A total of 151 shares were unchanged.
Among the 30-share Sensex pack, 24 stocks fell and rest rose. Tata Steel (down 1.94%), ICICI Bank (down 1.72%) and State Bank of India (down 1.47%) edged lower from the Sensex pack.
Shares of two-wheeler companies were mostly lower. TVS Motor Company fell 0.42%.
Hero MotorCorp lost 0.16%. The company early this week said it has decided to pass on the entire benefit of the excise duty reduction to customers. Hero MotorCorp said it has judiciously spread out the price cut across the product portfolio ranging from 2% going up to 5% with the maximum reduction being Rs 4,500 per unit. The government reduced excise duty on two-wheelers to 8% from 12% for a period up to 30 June 2014 in the Interim Budget for 2014-15 announced early this week.
Bajaj Auto rose 1.57%.
Mahindra & Mahindra (M&M) dropped 0.59% after the company after market hours on Wednesday, 19 February 2014, announced a reduction in prices of its passenger vehicle portfolio ranging from Rs 13,000 to Rs 49,000. The company will also reduce prices of its premium SUV, the Rexton by up to Rs 92,000. The reduction is due to the lower excise duties announced in the Interim Budget and would be effective immediately, M&M said in a statement.
Commenting on the price reduction, Pravin Shah, Chief Executive, Automotive Division, M&M said: "We are delighted at the Interim Budget announcements which have been taken to boost the automotive industry. We are confident that the reduction in prices by Mahindra as well as other auto companies would provide the much needed fillip to the auto industry. The prices of our range of commercial vehicles are also being reduced".
The government reduced excise duty on cars, commercial vehicles, sports utility vehicles (SUVs), motorcycles and scooters for the period up to 30 June 2014 in the in the Interim Budget for 2014-15 announced on Monday, 17 February 2014. The excise duty on small cars, two-wheelers and commercial vehicles has been reduced to 8% from 12%. The excise duty on SUVs has been reduced to 24% from 30%. The excise duty on large cars has been cut to 24% from 27%. The excise duty on mid-segment cars has been cut to 20% from 24%.
Pharma stocks gained. Cipla (up 0.33%). Dr. Reddy's Laboratories (up 0.68%) and Sun Pharmaceutical Industries (0.2%) edged higher.
Ranbaxy Laboratories rose 0.66%, with the stock gaining for the second day in a row. The New York Attorney General and the US units of Ranbaxy Laboratories and Teva Pharmaceutical Industries have reportedly settled claims that an agreement between the two drugmakers unlawfully restricted competition. Under the terms of the settlement, the two generic drug makers will end a 2010 agreement of not challenging each other's rights to sell certain drugs exclusively in the United States. Teva and Ranbaxy will pay the New York state $300,000 and have agreed to refrain from similar agreements in the future.
In the foreign exchange market, the rupee edged lower against the dollar on concern inflows will slow after a Federal Reserve report on Wednesday, 19 February 2014, showed support for a plan to reduce monetary stimulus for the US economy. The partially convertible rupee was hovering at 62.29, compared with its close of 62.20/21 on Tuesday, 18 February 2014. The Indian currency, bond and money markets were closed on Wednesday, 19 February 2014, for a holiday.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
Asian stocks edged lower on Thursday, 20 February 2014, after a Chinese manufacturing index dropped more than estimated this month. Key benchmark indices in Indonesia, Taiwan, Singapore, Japan, Hong Kong and South Korea were off 0.05% to 2.15%.
China's Shanghai Composite rose 0.28%. A Chinese manufacturing index fell to the lowest level in seven months in February, adding to challenges for Communist Party officials grappling with risks to the financial system from trust defaults and soured loans. The preliminary February reading of 48.3 for a Purchasing Managers' Index released today by HSBC Holdings Plc and Markit Economics compares with January's final figure of 49.5. A number below 50 indicates contraction.
Japan's trade deficit widened to a record in January as surging import costs weigh on Prime Minister Shinzo Abe's campaign to drive a sustained recovery. Imports rose 25% from a year earlier and outbound shipments gained 9.5%.
Singapore's economy expanded last quarter after a pick-up in manufacturing at the year end, with the government predicting an improvement in overseas demand in 2014 amid a global recovery. Gross domestic product rose an annualized 6.1% in the three months through December from the previous quarter, when it climbed a revised 0.3%, the trade ministry said in a statement today.
Trading in US index futures indicated that the Dow could drop 46 points at the opening bell on Thursday, 20 February 2014. US stocks edged lower on Wednesday, 19 February 2014, after data showed US housing starts sank last month by the most in almost three years and after the Federal Reserve indicated stimulus cuts will likely continue. Construction on new US homes tumbled 16% in January to a seasonally adjusted annual rate of 880,000, with drops for single-family homes and apartments, according to Commerce Department. Building permits, a sign of future demand, fell to the lowest rate since August. US producer prices rose in January under the government's new formula for measuring wholesale inflation, the Labor Department said on Wednesday, 19 February 2014.
Federal Reserve policy makers backed away from their year-old commitment to consider raising interest rates when unemployment falls below 6.5%, according to minutes of their January meeting released on Wednesday, 19 February 2014. With joblessness falling faster than expected even as other labor-market indicators show weakness, policy makers agreed it would "soon be appropriate" to revise their guidance about how long the era of record-low interest rates will remain, the minutes showed. "Several" Federal Reserve officials said that in "the absence of an appreciable change in the economic outlook, there should be a clear presumption in favor of continuing to reduce the pace" of bond buying at each meeting, the minutes showed.
Ahead of the release of the Fed minutes, Atlanta Federal Reserve President Dennis Lockhart on Wednesday, 19 February 2014, said he expects a mid-2015 interest-rate hike.
Federal Reserve Chairwoman Janet Yellen said last week that US growth has strengthened and that only a "notable change in the outlook" for the economy would prompt policy makers to slow the pace of cuts to the monthly bond-buying program.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion.
The International Monetary Fund, in a staff report prepared for central bankers and finance ministers from the Group of 20, said Wednesday, 19 February 2014, that significant downside risks remain for the world economy. Risks of prolonged market turmoil in emerging markets and of deflation in the euro area are threatening the world's improved economic prospects, IMF staff wrote in the report. The ministers meet this weekend in Sydney.
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