Key benchmark indices extended losses in late trade as European stocks dropped after weak economic reports in Germany and Italy and on Russia-Ukraine tension. A sharp slide in rupee against the dollar also weighed on sentiment. The barometer index, the S&P BSE Sensex, was provisionally down 246.91 points or 0.96% at 25,659.10. The market breadth indicating the overall health of the market was positive. PSU OMCs declined as rupee edged lower against the dollar. Metal and mining stocks dropped. Index heavyweight and cigarette maker ITC fell. Hero MotoCorp edged higher in volatile trade after the company's board of approved increasing the investment limits of foreign institutional investors (FIIs) from 40% to 49%.
Before extending losses in late trade, key indices had seen intermittent recovery from lower level in intraday trade after remaining in the red since the beginning of the trading session on weak Asian stocks and after drop in US stocks on Tuesday, 5 August 2014.
Key benchmark indices snapped two-day winning streak today, 6 August 2014.
As per provisional figures, the S&P BSE Sensex was down 246.91 points or 0.96% to 25,659.10. The index declined 286.16 points at the day's low of 25,621.85 in late trade. The index fell 6.33 points at the day's high of 25,901.68 in morning trade.
The CNX Nifty was down 77.80 points or 1% to 7,668.75, as per provisional figures. The index hit a low of 7,658.95 in intraday trade. The index hit a high of 7,740.95 in intraday trade.
The total turnover on BSE amounted to Rs 3016 crore, higher than Rs 2991.34 crore on Tuesday, 5 August 2014.
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The market breadth indicating the overall health of the market was positive. On BSE, 1,485 shares rose and 1,479 shares fell. A total of 126 shares were unchanged.
The BSE Mid-Cap index was down 71.30 points or 0.77% at 9,201.24. The BSE Small-Cap index was down 14.99 points or 0.15% at 10,096.28. Both these indices outperformed the Sensex.
Among the 30 Sensex shares, 23 declined and the remaining shares rose.
Index heavyweight and cigarette maker ITC fell 2.97% to Rs 345.20. The stock hit high of Rs 354.95 and low of Rs 345.05.
Metal and mining stocks dropped. Sesa Sterlite (down 2.48%), JSW Steel (down 2.11%), Hindalco Industries (down 1.71%), NMDC (down 0.54%), Hindustan Zinc (down 1.27%), Tata Steel (down 1.96%), Steel Authority of India (Sail) (down 1.78%), National Aluminum Company (down 2.15%) and Hindustan Copper (down 2.06%) declined.
Jindal Steel & Power declined 2.66% ahead of its Q1 results today, 6 August 2014.
Bhushan Steel fell by maximum permissible 20% lower circuit at Rs 304.60, with the stock resuming fall after a seeing a small recovery on Tuesday, 5 August 2014. The stock was the biggest loser from the BSE A group.
Shares of Bhushan Steel had dropped 4.23% to Rs 378.15 on Monday, 4 August 2014, after the Central Bureau of Investigation (CBI) on Saturday, 2 August 2014, arrested the now-suspended Chairman-cum-Managing Director of Syndicate Bank SK Jain after he had allegedly demanded a bribe of Rs 50 lakh from Bhushan Steel to not convert the company's outstanding loan into a Non Performing Asset (NPA). As per reports, Bhushan Steel had taken a loan of Rs 100 crore from Syndicate Bank while Prakash Industries had taken a loan of Rs 120 crore. Both companies were desperate to avoid their loans being declared NPAs for default in repayments.
Meanwhile, CBI Director Ranjit Sinha has reportedly ordered an internal inquiry after his team did not arrest Bhushan Steel vice-chairman Neeraj Singhal during searches at his residence in the Syndicate Bank bribery case, despite clear instructions to pick him up. Neeraj Singhal is on the run from the time of the raid and the CBI has been trying to trace him since, so that he can be arrested, reports added. Neeraj Singhal has filed an anticipatory bail application in a local court which will come for hearing today, 6 August 2014.
Hero MotoCorp edged higher in volatile trade after the company's board of approved increasing the investment limits of foreign institutional investors (FIIs) from 40% to 49%. The stock rose 0.48% to Rs 2,596.55. The stock hit high of Rs 2,606.05 and low of Rs 2,525. The company's net profit rose 2.58% to Rs 562.76 crore on 14% increase in total income to Rs 7,149.59 crore in Q1 June 2014 over Q1 June 2013. EBITDA margin stood at 13.46% in Q1 June 2014. The result was announced after market hours on Tuesday, 5 August 2014.
The company reported highest ever quarterly sales of 17.15 lakh units of two-wheeler in Q1 June 2014.
The board of Hero MotoCorp appointed Pawan Munjal as Vice Chairman of the company in addition to Managing Director & CEO from 5 August 2014.
PSU OMCs declined as rupee edged lower against the dollar. HPCL (down 2.78%), BPCL (down 2.15%) and Indian Oil Corporation (down 2.02%) edged lower. The weakness in rupee against the dollar has increased concerns of higher cost of crude oil imports. Public sector oil marketing companies (PSU OMCs) import about 70-75% of their crude oil needs.
PSU OMCs suffer under-recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. The government has adopted the policy of gradually increasing diesel prices to eliminate under recovery and deregulate the diesel prices. It is expected that the gap between administered price and market price of diesel would be eliminated by early FY 2015, the Finance Ministry said in its fiscal policy strategy statement on 10 July 2014. The government has already freed pricing of petrol.
The under-recovery on High Speed Diesel (HSD) applicable for 1st fortnight of August effective 1 August 2014 will go down to Rs 1.33 per litre. This was Rs 2.49 per litre during 2nd fortnight of July 2014. In the case of PDS Kerosene and Domestic LPG, the under-recoveries for the 1st fortnight of August 2014 will be Rs 32.98 per litre (Rs 33.07 per litre in last fortnight) and Rs 447.87 per cylinder (Rs 449.17 per cylinder in last fortnight) respectively. Oil Marketing Companies (OMCs), effective 1 August 2014, are now incurring combined daily under-recovery of about Rs 226 crore on the sale of Diesel, PDS Kerosene and Domestic LPG. This is lower than Rs 261 crore daily under-recoveries during previous fortnight. The under-recoveries for the financial year 2014-15 are projected to be Rs 91665 crore while the figure was Rs 1.39 lakh crore in 2013-14. The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas reviewed on 1 August 2014, international prices of crude oil and petroleum products during the 2nd fortnight of July 2014.
A foreign brokerage has reportedly said that PSU OMCs are headed into a sweet spot, as oil retailers will benefit from falling diesel subsidy burden and rebounding gross refining margins. Competition from private players is also a year away, the brokerage estimated.
Amara Raja Batteries rose 3.95% after net profit rose 8.16% to Rs 106 crore on 15.55% growth in net sales excluding other operating income to Rs 1025 crore in Q1 June 2014 over Q1 June 2013. The Q1 result was announced during market hours today, 6 August 2014.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.35, compared with its close of 60.84 on Tuesday, 5 August 2014.
European stocks slid for the fifth time in six days today, 6 August 2014, as a buildup of Russian armed forces along the border with Ukraine escalated tension, and a report showed German factory orders unexpectedly dropped. Key benchmark indices in UK, France and Germany were off 1.01% to 1.42%.
Italy unexpectedly fell back into recession in the second quarter, as its gross domestic product shrank 0.2%.
German factory orders dropped by the most in more than 2 1/2 years in a sign that geopolitical tension with Russia is leaving its mark on Europe's largest economy. Orders, adjusted for seasonal swings and inflation, slid 3.2% in June from May, when they fell a revised 1.6%, the Economy Ministry in Berlin said today.
UK industrial production rose less than economists forecast in June and the output estimate for the second quarter was revised lower. Production increased 0.3% from May, when it fell 0.6%, the Office for National Statistics said in London today.
Poland's foreign minister yesterday, 5 August 2014, warned that a renewed buildup of Russian troops on Ukraine's border may signal an invasion as Russian President Vladimir Putin ordered a response to US and European sanctions. Putin is showing no sign of backing down over Ukraine since the US and the European Union tightened sanctions last week, with Russia amassing forces on its neighbor's border in the biggest military buildup since troops were withdrawn from the area in May.
Asian stocks dropped today, 6 August 2014, after US stocks fell yesterday, 5 August 2014, amid escalating tensions in Ukraine. Key benchmark indices in China, Japan, Indonesia, Hong Kong, Singapore, and South Korea were off 0.11% to 1.05%. However, Taiwan's Taiwan Weighted index rose 0.03%.
Trading in US index futures indicated that the Dow could fall 33 points at the opening bell on Wednesday, 6 August 2014. US stocks fell on Tuesday, 5 August 2014, as energy shares tumbled and concern increased over escalating tensions in Ukraine.
Service industries in the US expanded in July at the fastest pace since December 2005, according to data from the Institute for Supply Management, indicating the economy was building more momentum at the start of the second half of 2014. Another release showed factory orders rose 1.1% in June, which was higher than market expectations.
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