Key benchmark indices extended losses hit fresh intraday low in early afternoon trade as stocks fell across Asia after the Federal Reserve signaled that it may reduce the amount of monetary stimulus it provides as early as this year and on weak reading for manufacturing activity in China this month. The barometer index, the BSE Sensex and the 50-unit CNX Nifty, both, hit lowest level in one week. The Sensex was down 399.62 points or 2.08%, off close to 225 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. All the 13 sectoral indices on BSE were in the red.
Metal stocks slumped after a survey showed further slowdown in China's manufacturing sector in June 2013. Some IT stocks rose on weak rupee. Index heavyweight Reliance Industries (RIL) extended intraday losses. Shares of power finance companies declined. Auto stocks declined.
The market tumbled in early trade on weak Asian stocks. The Sensex hit one-week low below the psychological 19,000 level. Weakness continued on the bourses in morning trade. The market remained weak in mid-morning trade. It hit fresh intraday low in early afternoon trade.
Data showing that foreign funds remained net sellers of Indian stocks on Wednesday, 19 June 2013, affected market investor sentiment adversely. Foreign institutional investors (FIIs) sold shares worth a net Rs 544.97 crore on Wednesday, 19 June 2013, as per provisional data from the stock exchanges.
A setback was witnessed across the financial markets as the rupee hit record low against the dollar and yields on government bonds surged. The rupee was currently trading at 59.88, sharply weaker that Wednesday's close of 58.71/72. The Reserve Bank of India (RBI) on Monday, 17 June 2013, refrained from cutting its key policy rate further despite sluggish economic growth due to the recent steep slide in rupee against the dollar. The central bank after a monetary policy review said that the weakness in rupee could adversely impact inflation which has been slowing in the past few months. A weak rupee makes the cost of oil and other imported goods higher in rupee terms, adding to inflationary pressure.
The yields on government bonds rose sharply after trading resumed after a halt triggered by a breach in an indicative daily band. The daily cap on yield fluctuations was lifted for today by the Fixed Income Money Market and Derivatives Association of India, which sets the limit. The yield on the most traded paper -- 8.33% GS 2026 -- was up almost 11 basis points at 7.5543 per cent from Wednesday's close of 7.4458 per cent.
At 12:20 IST, the S&P BSE Sensex was down 399.62 points or 2.08% to 18,846.08. The index tumbled 428.91 points at the day's low of 18,816.79 in early afternoon trade, its lowest level since 13 June 2013. The index fell 176.50 points at the day's high of 19,069.20 in opening trade.
The CNX Nifty was down 127.10 points or 2.18% to 5,695.15. The index hit a low of 5,683.95 in intraday trade, its lowest level since 13 June 2013. The index hit a high of 5,755 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,469 shares fell and 507 shares rose. A total of 120 shares were unchanged.
Among the 30-share Sensex pack, 27 stocks fell and only three of them rose. ICICI Bank (down 4%), Bharti Airtel (down 3.82%) and HDFC Bank (down 3.33%), edged lower.
Some IT stocks rose on weak rupee. TCS (up 0.2%) and Wipro (up 0.57%), edged higher. Infosys was off 0.12%. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Index heavyweight Reliance Industries (RIL) fell 2.59%, with the stock extending intraday losses.
Metal stocks extended intraday losses after a survey showed further slowdown in China's manufacturing sector in June 2013. Sterlite Industries (down 4.4%), Tata Steel (down 5.09%), Hindalco Industries (down 5.66%), and Jindal Steel & Power (down 6.88%), edged lower. China is the world's largest consumer of copper and aluminum.
Auto stocks declined. M&M (down 2.77%), Maruti Suzuki India (down 1.77%), Tata Motors (down 1.49%), Hero MotoCorp (down 0.59%) and Bajaj Auto (down 0.13%), edged lower.
Shares of power finance companies declined. Power Finance Corporation (down 5.48%) and Rural Electrification Corporation (down 4.61%), edged lower.
Shares of GlaxoSmithkline Consumer Healthcare slumped 7.61%. The company makes malted food drinks under the Horlicks brand.
Tourism Finance Corporation of India spurted 11.69% after the company said its board approved submitting an application for securing a bank licence from the Reserve Bank of India. The company made the announcement after market hours on Wednesday, 19 June 2013. Applicants seeking new banking licences are required to submit their applications to the Reserve Bank of India (RBI) by 1 July 2013.
Indiabulls Infrastructure & Power (down 8.57%), Vascon Engineers (down 7.41%), Panacea Biotec (down 7.05%), NIIT (down 6.56%) and Sagar Cements (down 6.4%), were the biggest losers from the BSE Small-Cap index.
Prism Cement (down 7.75%), Fresenius Kabi Oncology (down 7.48%), Indiabulls Real Estate (down 6.15%) and Amtek India (down 6.07%), were the biggest losers from the BSE Mid-Cap index.
Asian stocks slumped on Thursday after Federal Reserve Chairman Ben Bernanke said the central bank may reduce bond purchases later this year should the US economy strengthen. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, Taiwan and South Korea fell by 1.35% to 2.94%.
Activity in China's vast manufacturing sector weakened further in June to a 9-month low as new orders faltered, a preliminary survey of purchasing managers showed on Thursday, reinforcing signs of tepid economic growth in the second quarter. The flash HSBC Purchasing Managers' Index fell to 48.3 in June from May's final reading of 49.2, drifting further away from the 50-point level demarcating expansion from contraction. It was the weakest level since September 2012.
Trading in US index futures indicated that the Dow could fall 56 points at the opening bell on Thursday, 20 June 2013. US stocks fell sharply on Wednesday after Federal Reserve Chairman Ben Bernanke said the central bank may scale back its bond purchases this year, depending on the economic outlook.
Bernanke said yesterday the central bank may start dialing down its unprecedented bond-buying program this year and end it entirely in mid-2014 if the economy finally achieves the sustainable growth the Fed has sought since the recession ended in 2009. In its announcement, the Federal Reserve after a two day policy meeting on Wednesday said it would continue to purchase $85 billion in bond purchases each month, but noted that the outlook for the economy and the labor market has improved since the fall. The Federal Open Market Committee (FOMC) reiterated that it was ready to hike or cut the pace of its asset buys, depending on the labor market and inflation.
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