Key benchmark indices edged lower on rising expectations that the US Federal Reserve will soon start withdrawing its monetary stimulus to the US economy. But, the market trimmed losses after an initial sharp slide. The S&P BSE Sensex was provisionally down 74.58 points or 0.41%, up close to 260 points from the day's low and off about 75 points from the day's high. Intraday volatility was high. The market breadth, indicating the overall health of the market, was positive.
Stocks fell across emerging markets as investors prepare for a winding down of the Federal Reserve's easy money policies. The rupee hit record low against the dollar and many other Asian currencies fell on concern capital outflows will accelerate.
Indian stocks declined for the third straight trading session today, 20 August 2013.
Vedanta group metal stocks rallied on reports that the legal hurdle has been cleared for government's stake sale in Hindustan Zinc and BALCO. Other metal stocks also gained. Shares of basmati rice exporters rallied. Auto stocks dropped.
Intraday volatility was high. The market edged lower in early trade as the rupee slumped to record low below 64 against the dollar. The Sensex regained the psychological 18,000 mark after falling below that level at the onset of the trading session. The market trimmed losses to hit fresh intraday high in morning trade as the rupee trimmed losses after a sharp initial slide. The intraday recovery gathered steam in mid-morning trade. The market weakened once again after paring almost entire intraday losses to hit fresh intraday high in early afternoon trade. A bout of volatility was witnessed in afternoon trade as key benchmark indices trimmed intraday losses after the rupee trimmed losses from an initial steep slide. High volatility was witnessed as key benchmark indices trimmed losses in mid-afternoon trade.
The rupee trimmed losses after hitting record low below 64 against the dollar. The partially convertible rupee was hovering at 63.56, weaker than its close of 63.13/14 on Monday, 19 August 2013. The rupee has declined sharply over the past few days on rising expectations that the US Federal Reserve will start withdrawing its monetary stimulus soon.
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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.
The market sentiment was affected adversely by data showing that foreign funds remained net sellers of Indian stocks on Monday, 19 August 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 680.08 crore on Monday, 19 August 2013, as per provisional data from the stock exchanges.
As per provisional figures, the S&P BSE Sensex was down 74.58 points or 0.41% to 18,232.94. The index lost 336.54 points at the day's low of 17,970.98 in early trade, its lowest level since 12 September 2012. The index fell 1.06 points at the day's high of 18,306.46 in afternoon trade.
The CNX Nifty was down 21.60 points or 0.4% to 5,393.15, as per provisional figures. The index hit a low of 5,306.35 in intraday trade, its lowest level since 5 October 2012. The index hit a high of 5,417.80 in intraday trade.
The total turnover on BSE amounted to Rs 1936 crore, higher than Rs 1844.66 crore on Monday, 19 August 2013.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,174 shares gained and 1,098 shares fell. A total of 128 shares were unchanged. The breadth alternately swung between positive and negative zone in intraday trade today, 20 August 2013.
Among the 30-share Sensex pack, 19 stocks declined and rest of them gained. Sun Pharmaceutical Industries (down 2.7%), Bhel (down 2.65%) and TCS (down 2.24%), edged lower.
Auto stocks dropped. Mahindra & Mahindra (M&M) lost 2.69%. 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.
Maruti Suzuki India dropped 1.15%.
Tata Motors shed 5.07%. 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.
Shares of two wheeler makers also dropped. Bajaj Auto slipped 0.7%. 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 skidded 2.4%.
Metal stocks gained across the board. Jindal Steel & Power (up 0.39%), Tata Steel (up 3.83%), JSW Steel (up 4%), and Sail (up 7.2%), edged higher.
Vedanta group stocks rallied. Hindustan Zinc jumped 11.9% on 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 rallied 14.02%. Sterlite Industries (India) galloped 8.39%. 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.
Cairn India rose 3.48%.
Shares of basmati rice exporters rallied. L T Foods rose by maximum permissible limit for the day of 20%. KRBL rose 4.54%. Kohinoor Foods gained 4.91%.
European stock markets edged lower on Tuesday, 20 August 2013, with investors cautious of placing any new positions ahead of the release of minutes from the latest US Federal Reserve meeting, due on Wednesday. Key benchmark indices in UK, France and Germany were down by 0.69% 1.52%.
Asian stocks retreated on Tuesday, 20 August 2013, following a fourth straight day of losses on the Wall Street on Monday, 19 August 2013. Key benchmark indices in China, Indonesia, Singapore, Hong Kong, Japan, South Korea and Taiwan were down by 0.62% to 3.21%.
Trading in US index futures indicated that the Dow could fall 15 points at the opening bell on Tuesday, 20 August 2013. US stocks edged lower on Monday after the yield on the 10-year Treasury bond hit fresh two-year highs, raising worries about what impact higher rates will have on the US economic recovery.
The Federal Open Market Committee (FOMC) will tomorrow, 21 August 2013, 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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