Key benchmark indices dropped amid initial volatility as the yields on government bonds rose after the Reserve Bank of India (RBI) after market hours on Monday, 15 July 2013, announced a slew of measures to address exchange rate volatility. The barometer index, the S&P BSE Sensex, fell below the psychological 20,000 mark. The 50-unit CNX Nifty fell below the psychological 6,000 mark. The Sensex was down 253.22 points or 1.26%, up 131.68 points from the day's low and off 8.36 points from the day's high. The market breadth, indicating the overall health of the market, was weak.
Bank stocks slumped after the Reserve Bank of India (RBI) after market hours on Monday, 15 July 2013, announced measures to curb the rupee's decline by tightening liquidity and making it costlier for banks to access funds from the central bank.
The Reserve Bank of India (RBI) after market hours on Monday, 15 July 2013, announced a slew of measures to address exchange rate volatility. The central bank said that the Marginal Standing Facility (MSF) rate is recalibrated with immediate effect to be 300 basis points above the policy repo rate under the Liquidity Adjustment Facility (LAF). Consequently, the MSF rate will now be 10.25%. Accordingly, the Bank Rate also stands adjusted to 10.25% with immediate effect. The overall allocation of funds under the LAF will be limited to 1% of the Net Demand and Time Liabilities (NDTL) of the banking system, reckoned as Rs 75000 crore for this purpose, the RBI said. The allocation to individual banks will be made in proportion to their bids, subject to the overall ceiling, it said. This change in LAF will come into effect from Wednesday, 17 July 2013.
The RBI also said that it will conduct Open Market Sales of Government of India Securities of Rs 12000 crore on Thursday, 18 July 2013. The RBI said it will continue to closely monitor the markets, the liquidity situation and the macroeconomic developments and will take such other measures as may be necessary, consistent with the growth-inflation dynamics and macroeconomic stability.
The RBI said the market perception of likely tapering of US auantitative easing has triggered outflows of portfolio investment, particularly from the debt segment. Consequently, the rupee has depreciated markedly in the last six weeks. Countries with large current account deficits, such as India, have been particularly affected despite their relatively promising economic fundamentals. The exchange rate pressure also evidences that the demand for foreign currency has increased vis-a-vis that of the rupee in part because of the improving domestic liquidity situation.
While the rupee surged after the RBI measures, bond prices fell. The rupee was hovering at 59.44 versus dollar, against Monday's close of 59.89/90. In the debt market, the yeild on the most traded 8.33 GS 2026 was hovering at 8.0904%, sharply higher than its close at 7.6656% on Monday. Bond yield and bond prices are inversely related.
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Foreign institutional investors (FIIs) sold shares worth a net Rs 227.26 crore on Monday, 15 July 2013, as per provisional data from the stock exchanges.
At 9:29 IST, the S&P BSE Sensex was down 253.22 points or 1.26% to 19,781.26. The index lost 384.90 points at the day's low of 19,649.58 in early trade. The index fell 140.04 points at the day's high of 19,789.62 in early trade.
The CNX Nifty was down 89.75 points or 1.49% to 5,941.05. The index hit a low of 5,910.95 in intraday trade. The index hit a high of 5,942.40 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 647 shares declined and 232 shares gained. A total of 36 shares were unchanged.
The total turnover on BSE amounted to Rs 241 crore by 09:25 IST.
Among the 30-share Sensex pack, 25 stocks declined and rest of them gained. HDFC (down 5.11%), L&T (down 4.34%) and Hindalco Industries (down 2.32%) edged lower from the Sensex pack.
Bank stocks slumped after the Reserve Bank of India (RBI) after market hours on Monday, 15 July 2013, announced measures to curb the rupee's decline by tightening liquidity and making it costlier for banks to access funds from the central bank. ICICI Bank (down 5.4%), HDFC Bank (down 2.9%), Axis Bank (down 4.77%), State Bank of India (down 5.43%), Canara Bank (down 5.7%), Union Bank of India (down 4.46%), Bank of India (down 4.36%), Bank of Baroda (down 5.21%) and Punjab National Bank (down 4.78%) edged lower.
Tata Motors shed 0.8%. Tata Motors Group's global wholesales in June 2013, including Jaguar Land Rover, were 84,458 units. Global wholesales of all commercial vehicles -- Tata, Tata Daewoo and the Tata Hispano Carrocera range -- were 41,577 units in June 2013. Global wholesales of all passenger vehicles in June 2013 were 42,881 units. Global wholesales of Tata passenger vehicles in June 2013 were 12,345 units. Global wholesales for Jaguar Land Rover were 30,536 vehicles. Jaguar wholesales for the month were 6,182 vehicles while Land Rover wholesales for the month were 24,354 vehicles. Tata Motors announced the data on global wholesales after market hours on Monday, 15 July 2013.
Pharma major Cipla slipped 0.09%. The company after trading hours on Monday, 15 July 2013, said Mr. Subhanu Saxena has been designated as managing director and global chief executive officer with effect from today, 16 July 2013. Mr. Saxena joined Cipla as its chief executive officer on 1 February 2013. Cipla also said that Mr. M. K. Hamied has been designated as executive vice-chairman. Mr. Hamied has been reappointed as a whole time director for a fresh term with effect from today, 16 July 2013.
Crompton Greaves gained 2.75%. The company after trading hours on Monday, 15 July 2013, said that the revised date of commencement of the proposed share buyback of program by way of open market purchase is 16 July 2013. Earlier, the company had announced postponement of the date of commencement for the proposed share buyback of program which was initially set as 15 July 2013 since the stock market regulator Securities & Exchange Board of India (Sebi) had advised the company to fulfill certain additional requirements emanating from Sebi's revised guidelines on share buyback announced on 25 June 2013.
Titan Industries fell 1.13% on turning ex-dividend today, 16 July 2013, for dividend of Rs 2.10 per share for the year ended 31 March 2013 (FY 2013).
Novartis India declined 1.73% on turning ex-dividend today, 16 July 2013, for dividend of Rs 10 per share for the year ended 31 March 2013 (FY 2013).
Exide Industries rose 2.37%. The company's net profit rose 4.44% to Rs 158.80 crore on 4.09% growth in total income to Rs rise in net sales to Rs 1633.68 crore in Q1 June 2013 over Q1 June 2012. The result was announced after trading hours on Monday, 15 July 2013.
Asian stocks dropped on Tuesday, 16 July 2013, on concerns about an economic slowdown in China after data on Monday, 15 July 2013, showed China's GDP grew 7.5% in Q2 June 2013, lower than first quarter's 7.7% growth. Key benchmark indices in China, Hong Kong, South Korea, Taiwan and Singapore were down 0.1% to 0.68%. Key benchmark indices in Indonesia and Japan were up 0.31% to 0.43%.
US stocks climbed modestly on Monday, with the S&P 500 and the Dow industrials rising to record closing highs again, after Citigroup Inc. reported better-than-expected earnings.
Federal Reserve Chairman Ben Bernanke is due to deliver testimony on monetary policy in Washington on 17 and 18 July 2013. The minutes of the Fed's June meeting released on 10 July 2013 showed that while "several members judged that a reduction in asset purchases would likely soon be warranted," many want to see further improvement in the labor market before reducing the central bank's $85 billion-a-month quantitative easing program. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth. At a press conference following the June 18-19 meeting, Bernanke said the central bank could start reducing its $85 billion in monthly bond purchases later this year if the economy continues to improve in line with its forecasts.
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