Weakness continued on the bourses in mid-afternoon trade as the rupee's sharp slide which pushed it to record low against the dollar hit investor sentiment adversely. Weakness in European and Asian stocks also dampened sentiment. The S&P BSE Sensex was down 416.06 points or 2.24%, off close to 405 points from the day's high and up about 30 points from the day's low. The market breadth, indicating the overall health of the market, was weak. Pharma stocks edged lower. Shares of two wheeler makers extended intraday losses. ONGC also extended intraday losses. Telecom major Bharti Airtel tumbled over 7%.
A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak opening. The Sensex hit its lowest level in almost 18 weeks. The 50-unit CNX Nifty hit its lowest level in more than 10 months. Weakness continued on the bourses in early afternoon trade. Key benchmark extended losses in afternoon trade. Weakness continued on the bourses in mid-afternoon trade.
The market sentiment was affected adversely by data showing that foreign funds were net sellers of Indian stocks on Friday, 16 August 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 563.23 crore on Friday, 16 August 2013, as per provisional data from the stock exchanges.
The rupee hit a record low below 62 against the dollar today, 19 August 2013. The partially convertible rupee was hovering at 62.7650, sharply lower than its close of 61.65/66 on Friday, 16 August 2013.
Rupee depreciation fuels inflation, increases import bill and current account deficit and hurts economic growth.
Bond prices declined. The yield on the benchmark federal paper 7.16 GS 2023 was hovering at 9.0938%, higher that its close of 8.8836% on Friday, 16 August 2013. Bond yield and bond prices are inversely related.
At 14:20 IST, the S&P BSE Sensex was down 416.06 points or 2.24% to 18,182.12. The index lost 448.32 points at the day's low of 18,149.86 in afternoon trade, its lowest level since 15 April 2013. The index fell 10.80 points at the day's high of 18,587.38 in opening trade.
The CNX Nifty was down 132.25 points or 2.4% to 5,375.60. The index hit a low of 5,370.05 in intraday trade, its lowest level since 5 October 2012. The index hit a high of 5,499.65 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,491 shares declined and 654 shares rose. A total of 125 shares were unchanged.
Among the 30-share Sensex pack, 24 stocks declined and rest of them gained. ICICI Bank (down 5.29%), Tata Motors (down 4.5%) and M&M (down 4.42%), edged lower.
Shares of two wheeler makers extended intraday losses. Bajaj Auto slipped 5.64%. Bajaj Auto on 13 August 2013 said that the company has received a notice from the workmen's union viz. Vishwa Kalyan Kamgar Sanghatana stating that the stoppage of work at Chakan plant has been withdrawn and all the workmen at Chakan plant will resume their duty in their respective shifts from 14 August 2013. The company had earlier informed on 25 June 2013, that it had received a notice from the workmen's union of its Chakan plant viz., Vishwa Kalyan Kamgar Sanghatana stating that they propose to call for a stoppage of work by all the workmen employed in Chakan plant from the morning shift of 28 June 2013. The workmen at Chakan Plant had however, stopped coming from 25 June 2013 itself, without assigning any reason.
Hero MotoCorp skidded 5.85%.
ONGC fell 5.42%, with the stock extending intraday losses.
Pharma stocks edged lower. Dr Reddy's Laboratories (down 1.07%), Cipla (down 4.6%), and Sun Pharmaceutical Industries (down 4.41%), declined.
Telecom major Bharti Airtel tumbled 7.58%. The stock was the top loser from the Sensex pack.
Siemens rose 0.47% to Rs 430.10 after the company said it has won two contracts aggregating Rs 144 crore from the Rural Electrification Board, Bangladesh to construct 38 new 33/11kV substations. The projects are funded by Japan Bank for International Cooperation Agency (JICA) and are to be delivered on a turnkey basis. The substations would be located in the Rajshahi and Barisal zones in western Bangladesh.
Prime Minister Manmohan Singh on Saturday, 17 August 2013, told a news agency that India wasn't headed for a crisis despite its large current-account deficit and said the country has plenty of foreign-exchange reserves. There is no comparison and no question of going back to the situation India faced in 1991, when the country was on the brink of defaulting on its debts, Mr. Singh was quoted as saying by the agency. This time, he said, India has enough reserves to pay for as many as seven months of imports.
India's economic problems, including a wide current account deficit that has pushed the rupee to record lows, cannot be compared to the country's 1991 balance-of-payments crisis, the World Bank's chief economist Kaushik Basu said on Monday, 19 August 2013. Basu cited a raft of economic data to show that the current situation was healthier than that of 1991, describing such comparisons as a "non question."
In an attempt to assuage concerns that India was moving toward capital controls, economic-affairs secretary Arvind Mayaram told reporters on Friday, 16 August 2013, that India doesn't plan to impose controls on money being repatriated by companies, such as dividends and royalties. His comments came after the Reserve Bank of India (RBI) on Wednesday, 14 August 2013, reduced the amount of money that Indian residents and companies can send abroad in an attempt to stem rupee's slide.
European stock markets edged lower on Monday, 19 August 2013, as rise in US Treasury yields spooked investors. Key benchmark indices in UK, France and Germany were down 0.27% to 0.7%.
Asian stock fell for a third straight day on Monday, 19 August 2013, as worries about the Federal Reserve's policy outlook and rising US Treasury yields weighed on sentiment. Key benchmark indices in Indonesia, Singapore, Hong Kong, South Korea, and Taiwan were down by 0.13% to 5.51%. Key benchmark indices in China and Japan rose by 0.79% to 0.83%.
Japan's exports jumped by the most since 2010 in July, aiding Prime Minister Shinzo Abe's efforts to drive an economic recovery even as rising energy costs boosted the trade deficit. Exports increased 12.2% from a year earlier after a 7.4% rise in June, the Ministry of Finance said in Tokyo today. Imports climbed 19.6%, leaving a trade deficit of 1.02 trillion yen ($10.5 billion), the third biggest on record in data back to 1979. The seasonally-adjusted deficit widened from June to 944 billion yen.
Thailand cut its 2013 growth forecast as the country entered recession for the first time since the global financial crisis, with rising household debt limiting central bank scope to support the economy. Gross domestic product unexpectedly shrank 0.3% in the three months through June from the previous quarter, when it contracted a revised 1.7%, the National Economic and Social Development Board said in Bangkok today.
Trading in US index futures indicated a flat opening of US stocks on Monday, 19 August 2013. US stocks declined on Friday, 16 August 2013, handing the Dow Jones Industrial Average its worst week this year, with investors on uncertain footing as longer-term Treasury yields rose to two-year highs. On US economic data front, the Commerce Department reported housing starts climbed at an annual rate of 896,000, less than the 915,000 estimated. The Labor Department reported productivity rose at a slightly better-than-estimated 0.9% annual rate in the second quarter.
The Federal Open Market Committee (FOMC) on Wednesday, 21 August 2013, will issue minutes of its recent policy meeting held on 30 and 31 July 2013. The minutes of FOMC meet may help provide clues about the future of Fed's bond-buying program.
The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.
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