Key benchmark indices edged lower in choppy trade as weakness in European and Asian stocks weighed on sentiment. The barometer index, the S&P BSE Sensex, fell below the psychological 19,000 level. The Sensex was provisionally down 239.41 points or 1.26%, up about 35 points from the day's low and off close to 110 points from the day's high. The market breadth, indicating the overall health of the market, was weak.
MMTC slumped after the government set the floor price for divestment of 9.33% stake in the company at a massive discount to the ruling market price. Shares of power finance companies tumbled. Realty stocks also declined. Two wheeler makers extended Wednesday's losses triggered by reports oil marketing companies may increase petrol prices by Rs 1.5-2/litre with effect from tomorrow, 14 June 2013. Other auto stocks also faltered. Apollo Tyres slumped over 25% after the company said it will acquire Cooper Tire & Rubber Company (Cooper), a company listed on the New York Stock Exchange in an all-cash transaction valued at approximately $2.5 billion. Shares of television broadcaster Sun TV Network witnessed a sell-off in late trade.
The market edged lower in early trade on weak Asian stocks. The market weakened once again after trimming initial losses in morning trade. The market extended losses to hit fresh intraday low in mid-morning trade. The barometer index, the S&P BSE Sensex, hit 8-week low below the psychological 19,000 mark. The 50-unit CNX Nifty also hit 8-week low. The market trimmed intraday losses in early afternoon trade. Key benchmark indices trimmed losses in afternoon trade. The market weakened once again in mid-afternoon trade. Weakness continued in late trade.
The market sentiment was affected adversely by data showing that foreign funds remained net sellers of Indian stocks on Wednesday, 12 June 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 1060.17 crore on Wednesday, 12 June 2013, as per provisional data from the stock exchanges.
As per provisional figures, the S&P BSE Sensex was down 239.41 points or 1.26% to 18,801.72. The index declined 275.60 points at the day's low of 18,765.53 in mid-morning trade, its lowest level since 18 April 2013. The index fell 127 points at the day's high of 18,914.13 in morning trade.
The CNX Nifty was down 65.75 points or 1.14% to 5,694.45, as per provisional figures. The index hit a low of 5,683.10 in intraday trade, its lowest level since 18 April 2013. The index hit a high of 5,729.85 in intraday trade.
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The total turnover on BSE amounted to Rs 1812 crore, lower than Rs 1935.57 crore on Wednesday, 12 June 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,562 shares fell and 761 shares rose. A total of 132 shares were unchanged.
Among the 30-share Sensex pack, 25 stocks fell and the rest of them rose. GAIL (India) (down 3.69%), Sun Pharmaceutical Industries (down 3.2%) and Tata Steel (down 3.19%), edged lower.
Sun TV Network slumped 12.9% in a sell-off in late trade.
Hindalco Industries rose 4.87%, with the stock recovering on bargain hunting after 4-day 9.98% slide triggered by weak Chinese economic data for May 2013. Shares of Hindalco Industries had declined 9.98% in four trading sessions to settle at Rs 92.40 on Wednesday, 12 June 2013, from a recent high of Rs 102.65 on 6 June 2013, hit by weak Chinese economic data. China is the world's largest consumer of copper and aluminum.
Two wheeler makers extended Wednesday's losses triggered by reports oil marketing companies may increase petrol prices by Rs 1.5-2/litre with effect from tomorrow, 14 June 2013. Bajaj Auto (down 1.91%) and Hero MotoCorp (down 0.96%), edged lower.
Other auto stocks also faltered. Tata Motors (down 3.84%), M&M (down 3.78%), and Maruti Suzuki India (down 1.63%), edged lower.
Apollo Tyres slumped 25.54% to Rs 68.50 after the company on Wednesday said it has entered into a definitive merger agreement under which a wholly-owned step subsidiary of the company will acquire Cooper Tire & Rubber Company (Cooper), a company listed on the New York Stock Exchange in an all-cash transaction valued at approximately $2.5 billion. The stock hit 52-week low of Rs 67.75 in intraday trade today, 13 June 2013.
This strategic combination will bring together two companies with highly complementary brands, geographic presence, and technological expertise to create a global leader in tire manufacturing and distribution, Apollo Tyres said in a statement. Cooper is the 11th largest tyre company in the world by revenue and it supplies premium and mid-tier tyres worldwide through renowned brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon. The combined company will be the seventh-largest tyre company in the world and will have a strong presence in high-growth end-markets across four continents, Apollo Tyres said. With a combined $6.6 billion in total sales in 2012, the combined company will have a comprehensive portfolio of signature brands and greater ability to cross-sell products in diverse countries with negligible overlap, Apollo Tyres said.
Realty stocks edged lower. Unitech (down 5.19%), HDIL (down 3.29%), D B Realty (down 2.13%) and DLF (down 1.69%), edged lower.
MMTC declined by the maximum permissible level of 10% to Rs 190.35 on BSE after the government set the floor price for divestment of 9.33% stake in the company at a massive discount to the ruling market price. The government had put on block 9.33 crore equity shares, aggregating to 9.33% of the total paid up equity share capital of the company through offer for sale (OFS) route via the stock exchanges mechanism on today, 13 June 2013. The government had fixed the floor price for the OFS at Rs 60 per share, a 71.62% discount to MMTC's Wednesday's closing price of Rs 211.45 on BSE.
The offer for sale (OFS) was subscribed 154.60%. The OFS received total bids for 14.42 crore shares at an indicative price of Rs 60.86 per share.
The stake sale would help the company to meet minimum public shareholding norms given by Sebi. The Government of India currently owns 99.33% stake in MMTC (as per the shareholding pattern as on 31 March 2013). Market regulator Securities & Exchange Board of India (Sebi) has mandated minimum public shareholding of 10% for state-run firms by August 2013.
Shares of power finance companies tumbled. Power Finance Corporation (down 4.85%) and Rural Electrification Corporation (down 5.31%), edged lower.
The government today, 13 June 2013, said that industrial production growth for April 2013 has been revised upwards to 2.3% from 2% reported on Wednesday, 12 June 2013, as the government corrected production data for electricity. However, the growth rate still remained lower than the upwardly revised 3.4% expansion in March 2013.
Finance Minister P Chidambaram speaking on the state of the economy today, 13 June 2013, said he expects decisions to be announced in June that will accelerate economic reforms and spur investments in critical sectors and that steps government had taken in the last nine months have yielded results. The government plans to announce a review of the foreign direct investment limits as also coal pricing and allocation to power plants and gas pricing by the end of June, he said. Chidambaram said he is confident of attracting enough capital inflows to finance current-account deficit.
In a strong measure aimed at defending the rupee, the Centre on Wednesday announced a hike in the foreign investment limits in government debt by $5 billion. The measure aims at reversing the outflow of FII funds from debt instruments, one of the reasons for the depreciation in the rupee in recent weeks. Currently, the government debt limit stands at $25 billion. The move comes a day after the Chief Economic Advisor to the finance ministry Raghuram Rajan had said the government will be announcing measures to ensure that portfolio investor inflows are enabled and encouraged.
A committee set up by the Securities and Exchange Board of India on Wednesday, 12 June 2013, recommended the market regulator to simplify rules on foreign portfolio investments in the country. Among the major recommendations, the committee has suggested that existing foreign institutional investors (FIIs), Sub Accounts and Qualified Foreign Investors (QFI) categories be merged into a new investor class to be termed as "Foreign Portfolio Investor" (FPI). The committee has also suggested allowing foreign venture-capital funds to invest in more sectors. Foreign venture funds are currently allowed to invest in only nine sectors including biotechnology, nanotechnology and information technology.
According to the panel, foreign institutional investors should be allowed to register with local depositories recommended by Sebi. Currently, FIIs that want to invest in the Indian market must register directly with the regulator. The committee has also asked Sebi to simplify verification processes -- also called know-your-customer documentation
Global credit rating agency, Fitch Ratings on Wednesday raised its outlook on India's sovereign debt to stable from negative. Fitch cited the government's steps to contain its budget deficit despite the economic slowdown as the main reason for raising the outlook. India also made progress in addressing structural issues such as regulatory uncertainties, delays in government approvals for industrial projects and problems in sectors such as power and mining, it said.
Fitch acknowledged challenges, noting a recovery would remain slow until a healthier investment climate is created, and warning the rupee drop would limit the scope for RBI rate cuts.
European markets declined on Thursday, with investors turning risk averse after the Japan's Nikkei index fell into bear-market territory, and the dollar dropped to its weakest level against the Japanese yen since 4 April 2013. Key benchmark indices in UK, France and Germany were down 0.8% to 1.64%.
Asian equities dropped on Thursday after the World Bank cut its global growth forecast amid concern central banks may pare monetary stimulus. Key benchmark indices in China, Hong Kong, Indonesia, Singapore, Taiwan and South Korea were off 0.72% to 2.83%.
Japanese shares tumbled as the yen rose against the dollar. The Nikkei 225 Average lost 6.35%.
Trading in US index futures indicated that the Dow could fall 67 points at the opening bell on Thursday, 13 June 2013. US stocks fell on Wednesday on concerns the Federal Reserve could taper down its bond purchases. The Federal Open Market Committee meets next week after the Bank of Japan this week left its lending program unchanged.
The World Bank cut its global growth forecast for this year after emerging markets from China to Brazil slowed more than projected, while budget cuts and slumping investor confidence deepened Europe's contraction. The world economy will expand 2.2%, less than a January forecast for 2.4% growth and slower than last year's 2.3%, the bank said in a report. It lowered its prediction for developing economies and sees the euro region's gross domestic product shrinking 0.6%. In contrast, forecasts were raised for the US and Japan, which was helped by fiscal and monetary stimulus.
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