Key benchmark indices extended intraday losses in mid-morning trade as bond prices fell after the Reserve Bank of India (RBI)'s after market hours on Monday, 15 July 2013, announcement of measures to tighten liquidity in the banking system to prevent a sharp depreciation of the rupee against the dollar. While the rupee surged after the RBI measures, bond prices declined sharply. The barometer index, the S&P BSE Sensex was down 256301.84 points or 1.51%, off 78.83 points from the day's high and up 83.06 points from the day's low. The market breadth, indicating the overall health of the market, was weak. Investor sentiment was also hit adversely after South Korean steel major Posco scrapped a large steel project in Karnataka.
Reliance Industries (RIL) fell in volatile trade. Bank and financial stocks slumped as RBI's latest measures to tighten liquidity in the banking system will make it costlier for banks and financial companies to raise short-term funds. Pharma major Sun Pharmaceutical Industries hit record high. FMCG firm Nestle India also scaled record high. Allcargo Logistics jumped after a bulk deal.
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 BSE Sensex, fell below the psychological 20,000 mark. The 50-unit CNX Nifty fell below the psychological 6,000 mark. Weakness continued on the bourses in morning trade. Key benchmark indices weakened further in mid-morning trade.
The Reserve Bank of India (RBI) after market hours on Monday, 15 July 2013, announced a slew of measures to address exchange rate volatility. RBI raised the Marginal Standing Facility (MSF) rate and Bank Rate each by 200 bps to 10.25% while capped the amount up to which banks can borrow or lend under its daily liquidity window at Rs 75000 crore. Furthermore, RBI will additionally sell Rs 12000-crore of government bonds on Thursday, 18 July 2013, to mop up liquidity from the system, it said.
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.
Finance Minister P. Chidambaram today, 16 July 2013, said RBI's steps to curb rupee liquidity are aimed at quelling excessive speculation and volatility in the forex market and should not be read as a prelude to policy rate changes.
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While the rupee surged after the RBI measures, bond prices fell. The rupee was hovering at 59.3650 versus dollar, against Monday's close of 59.89/90. In the debt market, the yield on the most traded 8.33 GS 2026 was hovering at 8.169%, sharply higher than its close at 7.6656% on Monday. Bond yield and bond prices are inversely related.
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 11:20 IST, the S&P BSE Sensex was down 301.84 points or 1.51% to 19,732.64. The index lost 384.90 points at the day's low of 19,649.58 in early trade, its lowest level since 11 July 2013. The index fell 223.01 points at the day's high of 19,811.47 in morning trade.
The CNX Nifty was down 97.90 points or 1.61% to 5,932.90. The index hit a low of 5,910.95 in intraday trade, its lowest level since 11 July 2013. The index hit a high of 5,954 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,212 shares declined and 618 shares gained. A total of 113 shares were unchanged.
The total turnover on BSE amounted to Rs 759 crore by 11:20 IST compared to Rs 540 crore by 10:20 IST.
Among the 30-share Sensex pack, 22 stocks declined and rest of them gained. ONGC (up 2.18%), TCS (up 0.58%) and NTPC (up 0.56%) edged higher from the Sensex pack.
Reliance Industries (RIL) shed 0.54% to Rs 890.60 in volatile trade. The stock hit a high of Rs 900 and low of Rs 882.80 so far during the day. The Cabinet Committee on Economic Affairs (CCEA) on 27 June 2013 approved new gas pricing formula from 1 April 2014. The price of gas as per the formula is likely to be about $8.4 mmBtu as opposed to $4.2 mmBtu currently.
Bank and financials stocks slumped as RBI's latest measures to tighten liquidity in the banking system will make it costlier for banks and financial companies to raise short-term funds. ICICI Bank (down 5.54%), HDFC Bank (down 2.93%) and State Bank of India (down 4.93%) declined.
Among housing finance stocks, HDFC (down 4.7%), LIC Housing Finance (down 5.83%), Dewan Housing Finance Corporation (down 3.48%), Gruh Finance (down 0.49%) and Can Fin Homes (down 0.82%) declined.
Among power finance companies, REC (down 3.45%) and Power Finance Corporation (down 5.77%) declined.
Among non-banking finance companies (NBFC's), Mahindra and Mahindra Financial Services (down 6.12%), Bajaj Finserv (down 1.71%), Bajaj Finance (down 2.65%), Reliance Capital (down 3.63%), L&T Finance Holdings (down 1.82%), IDFC (down 7.69%) and Religare Enterprises (down 1.42%) declined.
Pharma major Sun Pharmaceutical Industries rose 1.11% to Rs 1,120.05 after striking a record high of Rs 1,128 in intraday trade today, 16 July 2013.
FMCG firm Nestle India rose 1.8% to Rs 5,665 after striking a record high of Rs 5,680 in intraday trade today, 16 July 2013.
Allcargo Logistics jumped 10.5% to Rs 90 after a bulk deal of 6.11 lakh shares was executed on the counter at Rs 88 per share at 10:17 IST on BSE today, 16 July 2013.
South Korean steel major Posco on Tuesday it is no longer pursuing plans to build a steel plant in Karnataka after failing to secure land and infrastructure due to local opposition. "Since signing the memorandum of understanding in June 2010, we have been in talks with Karnataka state to secure mining rights, land, and infrastructure. But we have agreed to drop the project given a delay in (acquiring mining rights) and opposition by local people," Posco, the world's fourth-largest steelmaker by output, said in a filing to the Korea Exchange.
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, South Korea, Taiwan and Singapore were down 0.11% to 0.64%. Key benchmark indices in Hong Kong, Indonesia and Japan were up 0.16% to 0.55%.
Trading in US index futures indicated a flat opening of US stocks on Tuesday, 16 July 2013. 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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