Key benchmark indices extended losses to hit fresh intraday low in mid-afternoon trade as European and Asian markets dropped after the Federal Reserve signaled that it may reduce the amount of monetary stimulus it provides as early as this year and on weak reading for manufacturing activity in China this month. The barometer index, the S&P BSE Sensex hit 9-week low. The 50-unit CNX Nifty hit its lowest level in more than 9 weeks. The Sensex was down 488.56 points or 2.54%, off close to 315 points from the day's high and up about 20 points from the day's low. The market breadth, indicating the overall health of the market, was weak. All the 13 sectoral indices on BSE were in the red.
Bank stocks dropped as the yields on government bonds surged. Index heavyweight Reliance Industries (RIL) fell nearly 4%. NTPC dropped on reports that the state-run power equipment major scrapped its bond sale after a sell-off in government bonds caused worries about the pricing of its debt. Metal stocks slumped after a survey showed further slowdown in China's manufacturing sector in June 2013.
The market tumbled in early trade on weak Asian stocks. The Sensex hit one-week low below the psychological 19,000 level. Weakness continued on the bourses in morning trade. The market remained weak in mid-morning trade. The Sensex hit fresh intraday low in early afternoon trade. Weakness persisted on the bourses in afternoon trade. The market extended losses to hit fresh intraday low in mid-afternoon trade.
Data showing that foreign funds remained net sellers of Indian stocks on Wednesday, 19 June 2013, affected market investor sentiment adversely. Foreign institutional investors (FIIs) sold shares worth a net Rs 544.97 crore on Wednesday, 19 June 2013, as per provisional data from the stock exchanges.
A setback was witnessed across the financial markets as the rupee hit record low against the dollar and yields on government bonds surged. The rupee was currently trading at 59.72, sharply weaker that Wednesday's close of 58.71/72.
The yields on government bonds rose sharply after trading resumed after a halt triggered by a breach in an indicative daily band. The daily cap on yield fluctuations was lifted for today by the Fixed Income Money Market and Derivatives Association of India, which sets the limit. The yield on the most traded paper -- 8.33% GS 2026 -- was up more than 12 basis points at 7.5683 per cent from Wednesday's close of 7.4458 per cent.
At 14:20 IST, the S&P BSE Sensex was down 488.56 points or 2.54% to 18,757.14. The index tumbled 511.49 points at the day's low of 18,734.21 in mid-afternoon trade, its lowest level since 18 April 2013. The index fell 176.50 points at the day's high of 19,069.20 in opening trade.
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The CNX Nifty was down 161.30 points or 2.77% to 5,660.95. The index hit a low of 5,659.35 in intraday trade, its lowest level since 16 April 2013. The index hit a high of 5,755 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,626 shares fell and 566 shares rose. A total of 107 shares were unchanged.
Among the 30-share Sensex pack, 28 stocks fell and only two of them rose.
Index heavyweight Reliance Industries (RIL) dropped 3.78% to Rs 799.70. The stock hit a high of Rs 821 and low of Rs 796 so far during the day.
Bank stocks dropped as the yields on government bonds surged. Lower bond prices will result in diminution in value of bond holdings by banks. Bond yields and bond prices are inversely related. HDFC Bank (down 3.92%), ICICI Bank (down 3.98%) and State Bank of India (down 1.62%) edged lower.
Bank of India fell 6.51% as the stock turned ex-dividend today, 20 June 2013, for dividend of Rs 10 per share for the year ended 31 March 2013.
Dena Bank tumbled 7.61% as the stock turned ex-dividend today, 20 June 2013, for dividend of Rs 4.70 per share for the year ended 31 March 2013.
Union Bank of India dropped 6.4% as the stock turned ex-dividend today, 20 June 2013, for dividend of Rs 8 per share for the year ended 31 March 2013.
NTPC dropped 4% on reports that the state-run power equipment major scrapped its bond sale after a sell-off in government bonds caused worries about the pricing of its debt. NTPC was reportedly planning to raise up to Rs 1000 crore through an issue of dual tranche bonds on Thursday, 20 June 2013.
Metal stocks extended intraday losses after a survey showed further slowdown in China's manufacturing sector in June 2013. Sterlite Industries (down 4.4%), Tata Steel (down 5.73%), Hindalco Industries (down 6.14%), and Jindal Steel & Power (down 8.19%), edged lower. China is the world's largest consumer of copper and aluminum.
European stock markets dropped on Thursday, 20 June 2013, after Federal Reserve Chairman Ben Bernanke said late the prior day the central bank may scale back its bond purchases this year, depending on the economic outlook. Key benchmark indices in UK, France and Germany were down by 1.9% to 2.19%.
UK retail sales rose more than economists forecast in May as consumers spent more online and food sales increased at their fastest pace for more than two years. Sales including auto fuel jumped 2.1% from April, when they fell 1.1%, the Office for National Statistics said today in London.
Asian stocks slumped on Thursday after Federal Reserve Chairman Ben Bernanke said the central bank may reduce bond purchases later this year should the US economy strengthen. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, Taiwan and South Korea fell by 1.35% to 3.69%.
Activity in China's vast manufacturing sector weakened further in June to a 9-month low as new orders faltered, a preliminary survey of purchasing managers showed on Thursday, reinforcing signs of tepid economic growth in the second quarter. The flash HSBC Purchasing Managers' Index fell to 48.3 in June from May's final reading of 49.2, drifting further away from the 50-point level demarcating expansion from contraction. It was the weakest level since September 2012.
Trading in US index futures indicated that the Dow could fall 65 points at the opening bell on Thursday, 20 June 2013. US stocks fell sharply on Wednesday after Federal Reserve Chairman Ben Bernanke said the central bank may scale back its bond purchases this year, depending on the economic outlook.
Bernanke said yesterday the central bank may start dialing down its unprecedented bond-buying program this year and end it entirely in mid-2014 if the economy finally achieves the sustainable growth the Fed has sought since the recession ended in 2009. In its announcement, the Federal Reserve after a two day policy meeting on Wednesday said it would continue to purchase $85 billion in bond purchases each month, but noted that the outlook for the economy and the labor market has improved since the fall. The Federal Open Market Committee (FOMC) reiterated that it was ready to hike or cut the pace of its asset buys, depending on the labor market and inflation.
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