Key benchmark indices continued to languish in negative terrain in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently off 117.48 points or 0.42% at 27,748.61. The broad market depicted weakness. There were more than two losers against every gainer on BSE. The BSE Mid-Cap index was off 1.11%. The decline in this index was higher than Sensex's drop in percentage terms.
Weakness in Asian stocks and drop in US index futures weighed on sentiment on the domestic bourses. Global markets have been roiled by the China's unexpected devaluation of the yuan by nearly 2% announced by the Chinese central bank yesterday, 11 August 2015. A weaker yuan is expected to pressure other central banks in Asia to devalue their currencies to keep their economies competitive against China's. Meanwhile, Vietnam's central bank today, 12 August 2015, doubled the width of the dong's trading band. The State Bank of Vietnam widened the dong's trading band against the US dollar to 2% from 1% previously. The dong, like the yuan, is loosely pegged to the dollar.
Closer home, India's rupee fell sharply against the dollar as China's move to devalue the yuan sparked fears of a global currency war. The partially convertible rupee was currently hovering at 64.82 against the dollar, compared with its close of 64.2075 during the previous trading session.
In the stock market, auto stocks declined. Capital goods stocks also dropped.
Earlier, the Sensex, and the 50-unit CNX Nifty, both, hit two-week low as these two key benchmark indices extended initial losses in morning trade.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 736.81 crore yesterday, 11 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 130.74 crore yesterday, 11 August 2015, as per provisional data.
In overseas markets, Asian markets slumped, feeling the aftershocks of China's surprise devaluation of the yuan, which hit US equities overnight. US stocks closed sharply lower yesterday, 11 August 2015, in the wake of a surprise devaluation of the yuan by Chinathe world's second-largest economy.
At 11:26 IST, the S&P BSE Sensex was down 117.48 points or 0.42% at 27,748.61. The index fell 237.31 points at the day's low of 27,628.78 in morning trade, its lowest level since 29 July 2015. The index gained 17.24 points at the day's high of 27,883.33 in early trade.
The CNX Nifty was down 46.05 points or 0.54% at 8,416.30. The index hit a low of 8,382.35 in intraday trade, its lowest level since 29 July 2015. The index hit a high of 8,446.95 in intraday trade.
The market breadth indicating the overall health of the market was quite weak. There were more than two losers against every gainer on BSE. 1,630 shares declined and 755 shares rose. A total of 98 shares were unchanged.
The BSE Mid-Cap index was down 127.91 points or 1.11% at 11,374.64. The BSE Small-Cap index was down 80.92 points or 0.68% at 11,838.12. The decline in both these indices was higher than the Sensex's drop in percentage terms.
Auto stocks declined. Mahindra & Mahindra (M&M) (down 1.81%), Ashok Leyland (down 0.12%), Maruti Suzuki India (down 0.76%), Eicher Motors (down 0.58%), Hero MotoCorp (down 0.36%), Bajaj Auto (down 0.5%) and Tata Motors (down 3.15%) declined.
Capital goods stocks dropped. BEML (down 0.59%), Bharat Heavy Electricals (Bhel) (down 1.41%), Havells India (down 1.14%), L&T (down 1.15%), Thermax (down 1.82%), and Crompton Greaves (down 2.3%) declined.
Meanwhile, investors continue to watch the progress of the monsoon rains which will have a bearing on food prices and rural income. India's weather office, the India Meteorological Department (IMD), said in a daily report issued yesterday, 11 August 2015, that for the country as a whole, cumulative rainfall during this year's monsoon season was 9% below the Long Period Average (LPA) until 11 August 2015. Region wise, the rainfall was 21% below the LPA in South Peninsula, 11% below the LPA in East & Northeast India, 9% below the LPA in Central India and 2% above the LPA in Northwest India until 11 August 2015.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
Among key macro economic announcements this week, the government is scheduled to unveil the consumer price index (CPI) data for the month of July 2015 and industrial production data for June 2015 at 17:30 IST today, 12 July 2015. The CPI inflation accelerated to 5.4% in June 2015 from 5.01% in May 2015. Industrial production rose 2.7% in May 2015, compared with a revised growth of 3.4% in April 2015.
The government will release data on inflation based on the wholesale price index (WPI) for July 2015 at around 12:00 noon on Friday, 14 August 2015. The WPI inflation continued to be in negative zone for the eighth straight month in June 2015. The WPI inflation stood at negative 2.4% in June 2015, unchanged from the level in May 2015.
In overseas markets, Asian stocks edged lower today, 12 August 2015, feeling the aftershocks of China's surprise devaluation of the yuan, which hit US equities overnight. Key indices in South Korea, Taiwan, Indonesia, Japan and Singapore were off 1.01% to 2.66%.
In mainland China, the Shanghai Composite was off 0.51%. In Hong Kong, the Hang Seng index lost 1.99%. China's central bank today, 12 August 2015, set the yuan's daily reference rate 1.6% lower to the US dollar from the pair's closing rate during the previous trading session. The move came after China surprised international markets yesterday, 11 August 2015, by devaluing its tightly controlled currency by nearly 2% in a surprise decision announced yesterday, 11 August 2015.
Trading in US index futures indicated that the Dow could slide 98 points at the opening bell today, 12 August 2015. US stocks closed sharply lower yesterday, 11 August 2015, in the wake of a surprise devaluation of the yuan by Chinathe world's second-largest economy.
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