Key benchmark indices weakened once again to hit fresh intraday low in morning trade as rupee plunging to a record low against the dollar hurt sentiment. Weakness in Asian stocks also dampened sentiment. The S&P BSE Sensex hit its lowest level in eighteen weeks. The 50-unit CNX Nifty hit over ten month low. The Sensex was down 282.95 points or 1.52%, up about 10 points from the day's low and off close to 270 points from the day's high. The market breadth, indicating the overall health of the market, was weak. PSU OMCs declined on higher crude oil prices and a weak rupee. Mahindra & Mahindra (M&M) extended intraday losses.
A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak opening. It weakened once again to hit fresh intraday low in morning trade.
The market sentiment was affected adversely by data showing that foreign funds remained 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 62.38, weaker 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.
At 10:20 IST, the S&P BSE Sensex was down 282.95 points or 1.52% to 18,315.23. The index lost 294.98 points at the day's low of 18,303.20 in morning 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 94.95 points or 1.72% to 5,412.90. The index hit a low of 5,412.15 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, 792 shares declined and 404 shares rose. A total of 43 shares were unchanged.
Among the 30-share Sensex pack, 23 stocks declined and rest of them gained. ICICI Bank (down 4.16%), Bajaj Auto (down 3.86%) and Bharti Airtel (down 3.56%), edged lower.
Mahindra & Mahindra (M&M) declined 5.3%, with the stock extending intraday losses. The company after market hours on 14 August 2013, said it plans to invest Rs 200 crore to strengthen its current product line-up of trucks and buses. The company plans to invest Rs 300 crore to explore new product lines in the LCV, ICV and MCV range, it said.
PSU OMCs declined on higher crude oil prices and a weak rupee. HPCL (down 1.79%), BPCL (down 3.42%) and Indian Oil Corporation (down 2.02%), declined.
US crude oil futures for September delivery were hovering at a two-week high, as ongoing violence in Egypt fuelled concerns over a disruption to supplies from the Middle East. US crude oil futures for September delivery rose 3 cents to $107.40 a barrel in electronic trading today, 19 August 2013. Higher crude oil prices could increase under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.
The weakness in rupee also raised concerns about increased costs of importing oil. PSU OMCs import about 70-75% of their crude oil needs and rely heavily on foreign currency borrowings, which largely remain unhedged.
The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas said on Friday, 16 August 2013 that the under-recovery on High Speed Diesel (HSD) applicable for 2nd fortnight of August effective 16 August 2013 increased sharply to Rs 10.22 per litre higher than Rs 9.29 per litre during 1st July fortnight of July 2013 with effect from 1 August 2013. In the case of PDS Kerosene and Domestic LPG, under-recoveries for the month of August 2013 remains same at Rs 33.54 per litre and Rs 412 per cylinder respectively since it is computed on monthly basis on these products.
PSU OMCs, effective 16th August 2013, are incurring combined daily under-recovery of about Rs 389.00 crore on the sale of Diesel, PDS Kerosene and Domestic LPG. This is higher than daily under-recovery of Rs 379 crore for the previous fortnight effective 1 August 2013. The OMC's have reported Rs 25,579 crore as under-recoveries during 1st Quarter of 2013-14 on Diesel, PDS Kerosene, Domestic LPG.
Rashtriya Chemicals & Fertilizers lost 4.58% on turning ex-dividend today, 19 August 2013 for final dividend of Rs 1.50 per share for the year ended 31 March 2013.
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.
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.
Asian stocks 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 Hong Kong, Indonesia, Singapore, China, South Korea, and Taiwan were down by 0.06% to 3.86%. Japan's Nikkei Average rose 0.21%.
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 that the Dow could gain 13 points at the opening bell 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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