Key benchmark indices hit fresh intraday low in mid-morning trade on worries foreign funds may press sales following a likely early US rollback of monetary stimulus. The S&P BSE Sensex was down 470.84 points or 2.43%, off 414.20 points from the day's high and up 44.35 points from the day's low. The market breadth, indicating the overall health of the market, was weak. Indian bourses were closed on Thursday, 15 August 2013, on account of Independence Day.
Index heavyweight and cigarette major ITC reversed direction after hitting an intraday high. Reliance Industries dropped extended intraday fall. Bank stocks fell across the board after the Reserve Bank of India on Wednesday, 14 August 2013 announced fresh set of measures to moderating outflows. Shares of PSU banking giant SBI hit 52-week low.
Key benchmark indices declined in early trade on negative Asian stocks. Key benchmark indices tumbled in morning trade as the rupee dropped to a record low against the dollar. The S&P BSE Sensex dropped below the psychological 19,000 mark. Key benchmark indices tumbled in morning trade as the rupee dropped to a record low against the dollar. Key benchmark indices hit fresh intraday low in mid-morning trade on worries foreign funds may press sales following a likely early US rollback of monetary stimulus.
The rupee dropped to a record low against the dollar in early trade on increased selling of the US currency by banks after RBI announced stern measures to curb foreign exchange outflow amid weakening of the US currency overseas. The partially convertible rupee was hovering at 61.84 after hitting a record low of 62.02, weaker than its close of 61.43/ 61.44 on Wednesday, 14 August 2013.
Foreign institutional investors (FIIs) bought shares worth a net Rs 247.96 crore on Wednesday, 14 August 2013, as per provisional data from the stock exchanges.
At 11:23 IST, the S&P BSE Sensex was down 470.84 points or 2.43% to 18,896.75. The index lost 515.19 points at the day's low of 18,852.40 in mid-morning trade, its lowest level since 12 August 2013. The index fell 56.64 points at the day's low of 19,310.95 in early trade.
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The CNX Nifty was down 161.90 points or 2.82% to 5,580.40. The index hit a low of 5,569.40 in intraday trade, its lowest level since 12 August 2013. The index hit a high of 5,716.60 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,216 shares declined and 495 shares rose. A total of 93 shares were unchanged.
The total turnover on BSE amounted to Rs 753 crore by 11:20 IST on BSE compared to Rs 479 crore by 10:20 IST.
Among the 30-share Sensex pack, 27 stocks declined and only three of them gained.
Index heavyweight and cigarette major ITC fell 1.97% to Rs 328. The stock reversed direction after hitting an intraday high of Rs 337.95. Reliance Industries dropped 2.84% to Rs 840.55, with the stock extending intraday fall.
Bank stocks fell across the board after the Reserve Bank of India on Wednesday, 14 August 2013 announced fresh set of measures to moderating outflows.
Among PSU bank stocks, Punjab National Bank (down 4.1%), Canara Bank (down 5.48%), Bank of India (down 5.66%) and Bank of Baroda (down 6.7%) declined.
SBI lost 4.31% to Rs 1,555 after hitting a 52-week low of Rs 1,553.40. Among private sector bank stocks, ICICI Bank (down 3.51%), HDFC Bank (down 3.36%), Yes Bank (down 7.88%) and Kotak Mahindra Bank (down 3.83%) declined.
Axis Bank lost 8.17% after MSCI said it would exclude the stock from its standard and large cap indices with effect from 2 September 2013. MSCI made the announcement on Thursday, 15 August 2013, when the Indian stock market was shut for Independence Day holiday.
MSCI Barra is a leading provider of benchmark indices and risk management analytics products. Many global mutual funds are linked with MSCI indices. Hence, deletion of a stock from the MSCI index leads to outflow of passive funds that use the MSCI index to benchmark their portfolios.
Meanwhile, shares of Axis Bank also came under pressure after the Reserve Bank of India (RBI) on Wednesday, 14 August 2013, said that overseas investors will not be allowed to purchase additional shares in the bank given the foreign shareholding limit of 49% in the stock has been breached.
The Reserve Bank of India on Wednesday, 14 August 2013 announced measures including reducing the limit for Overseas Direct Investment (ODI) under automatic route for all fresh ODI transactions, from 400% of the net worth of an Indian Party to 100% of its net worth. This reduced limit would also apply to remittances made under the ODI scheme by Indian Companies for setting up unincorporated entities outside India in the energy and natural resources sectors. This reduction in limit, however, would not apply to ODI by Navratna PSUs, ONGC Videsh and Oil India in overseas unincorporated entities and incorporated entities, in the oil sector. The RBI also announced reduction in the limit for remittances made by Resident Individuals, under the Liberalised Remittance Scheme (LRS Scheme), from $200,000 to $75,000 per financial year. Resident Individuals have, however, now been allowed to set up Joint Venture (JV)/Wholly Owned Subsidiary (WOS) outside India under the ODI route within the revised LRS limit.
While current restrictions on the use of LRS for prohibited transactions, such as, margin trading and lottery would continue, use of LRS for acquisition of immovable property outside India directly or indirectly will, henceforth, not be allowed, RBI said.
The present set of measures is aimed at moderating outflows. However, any genuine requirement beyond these limits will continue to be considered by RBI under the approval route.
Asian stocks were mostly lower on Friday after some weak earnings and worries the Federal Reserve would soon pare its bond purchases slammed Wall Street. Key benchmark indices in Indonesia, South Korea, Hong Kong, Singapore and Japan were down by 0.12% to 1.54%. Key benchmark indices in China and Taiwan rose 0.59% to 0.74%.
Trading in US index futures indicated a flat opening of US stocks on Friday, 16 August 2013. US stocks dropped on Thursday for a second day, with the Dow industrials posting their first back-to-back triple-digit drop since June, as Treasury yields spiked to 2011 highs and Wal-Mart Stores Inc. and Cisco Systems Inc. cut their forecasts.
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