Metal, mining and oil stocks led losses as key equity benchmark indices tumbled amid a sharp slide in global stocks. The barometer index, the S&P BSE Sensex, hit two-week low and the 50-unit CNX Nifty hit its lowest level in more than two weeks as these two key benchmark indices extended intraday losses in late trade. The market sentiment was also hit adversely after opposition parties once again stalled a discussion on the goods and services tax (GST) bill in the Rajya Sabha. The Sensex was provisionally off 348.48 points or 1.25% at 27,517.61. The broad market depicted weakness. There were more than three losers against every gainer on BSE. The BSE Mid-Cap index lost 2.49%. The BSE Small-Cap index was down 2.13%. The decline in both these indices was higher than the Sensex's drop in percentage terms.
Stocks fell across the globe as concerns over China's growth outlook persisted after the country's central bank further guided its currency lower today, 12 August 2015, a day after it roiled global markets with its decision to devalue the yuan by nearly 2% by shifting to a more market-driven rate. For Asia, a weaker yuan is expected to pressure other central banks in the region to devalue their currencies to keep their economies competitive against China's.
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 64.85 against the dollar, compared with its close of 64.2075 during the previous trading session.
In the stock market, shares of steel makers fell for the second straight day after Chinese central bank's decision to devalue its tightly controlled currency. NMDC dropped after reporting weak Q1 results. Tata Steel edged higher after the company announced first quarter results after trading hour yesterday, 11 August 2015. Vedanta and Hindalco Industries tumbled to 52-week low.
Key indices dropped for the fourth day in a row today, 12 August 2015.
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.
As per provisional figures, the S&P BSE Sensex was down 348.48 points or 1.25% at 27,517.61. The index slumped 386.66 points at the day's low of 27,479.43 in late 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 108.55 points or 1.28% at 8,353.80, as per provisional figures. The index hit a low of 8,337.95 in intraday trade, its lowest level since 27 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 three losers against every gainer on BSE. 2,133 shares declined and 703 shares rose. A total of 125 shares were unchanged.
The BSE Mid-Cap index was down 286.21 points or 2.49% at 11,216.34. The BSE Small-Cap index was down 254.31 points or 2.13% at 11,664.73. The decline in both these indices was higher than the Sensex's drop in percentage terms.
The total turnover on BSE amounted to Rs 3558 crore, lower than turnover of Rs 3888.80 crore registered during the previous trading session.
Shares of steel makers fell for the second straight day after Chinese central bank's decision to devalue its tightly controlled currency. Steel Authority of India (down 0.78%), JSW Steel (down 1.91%), Jindal Steel & Power (down 6.07%) and Bhushan Steel (down 0.42%) edged lower.
A devalued currency will make Chinese exports becoming cheaper. Dumping of cheaper steel products by China will hurt the Indian steel industry. The devaluation will also impact India's exports to China as a weaker yuan makes resources more expensive to Chinese buyers.
Tata Steel edged higher after the company announced first quarter results after trading hour yesterday, 11 August 2015. The stock was up 1.5% at Rs 249.50. The stock hit high of Rs 257.90 and low of Rs 246.25. On a consolidated basis, Tata Steel's net profit jumped 126.17% to Rs 762.96 crore on 16.81% fall in total income from operations (net) to Rs 30300.33 crore in Q1 June 2015 over Q1 June 2014.
Tata Steel's bottom line in Q1 June 2015 was boosted by a surge in non-operational income and also due to one-time and exceptional items. The operating performance was weak. The company's earnings before interest, taxation, depreciation and amortization (EBITDA) after adjusting for one-time and exceptional items fell 35.28% to 2799 crore in Q1 June 2015 over Q1 June 2014. Tata Steel's non-operational income or other income jumped 252.62% to Rs 762.17 crore in Q1 June 2015 over Q1 June 2014.
Consolidated steel deliveries fell to 6.33 million tonnes in Q1 June 2015 from 6.46 million tonnes in Q1 June 2014.
Tata Steel said that there was significant import of steel into India during the quarter which depressed local steel prices. Tata Steel's turnover from its Indian operations fell 13.12% to Rs 9094 crore in Q1 June 2015 over Q1 June 2014.
T V Narendran, Managing Director of Tata Steel India and South East Asia, said that the Indian steel industry continued to bear the brunt of a surge in imports and tepid domestic demand which led to a sharp drop in steel prices over the quarter. Phased commissioning of the 3 MTPA greenfield expansion project at Kalinganagar has started and the company is gearing up to commence commercial production in second half of year ending 31 March 2016.
With regard to European operations, Tata Steel said that the European operations' liquid steel production and deliveries, both, increased by more than 7% on year-on-year basis in Q1 June 2015, reflecting the more stable operating platform. But surging EU imports, especially from China, and, in the case of the UK operations, the appreciation of sterling against the euro, led to lower turnover and EBIT for the European operations, Tata Steel said. The company is combating these headwinds by progressing market differentiation strategy, improving cost base and shifting focus increasingly from volume to value, the company said.
At the EBIT level, the European operations of Tata Steel reported a loss of Rs 124 crore in Q1 June 2015 as against profit of Rs 136 crore in Q1 June 2014. EBITDA of Tata Steel's European operations fell 42.21% to Rs 575 crore on 13.91% decline in turnover to Rs 17855 crore in Q1 June 2015 over Q1 June 2014.
Separately, Tata Steel also said that the company yesterday, 11 August 2015, sold 1.93 crore shares (2.18% stake) of Titan Company to Tata Sons through a market sale for a net consideration of Rs 637.46 crore. Tata Steel made the announcement after market hours yesterday, 11 August 2015.
Shares of Titan Company rose 0.56%.
NMDC dropped after reporting weak Q1 results. The stock fell 3.01% to Rs 99.90. The stock hit a low of Rs 98 in intraday trade, which is a 52-week low for the stock. The company reported 47.25% fall in net profit to Rs 1010.12 crore on 48.04% fall in total income from operations (net) to Rs 1806.43 crore in Q1 June 2015 over Q1 June 2014. The result was announced after market hours yesterday, 11 August 2015.
Other metal stocks also declined. National Aluminum Company (Nalco) (down 4.72%) and Hindustan Zinc (down 3.67%) dropped.
Vedanta dropped 7.63% at Rs 114.40, after hitting 52-week low of Rs 113.25 in intraday trade.
Hindalco Industries lost 7.4% to Rs 95.70 after hitting 52-week low of Rs 95.50 in intraday trade.
Coal India declined 5.26% on reports that the Union Cabinet may consider a proposal for divestment of 5-10% stake in Coal India at a meeting scheduled today, 12 August 2015. Government of India (GoI) currently holds 79.65% stake in Coal India. The government had last sold a 10% stake in Coal India on 31 January 2015. Meanwhile, Coal India is scheduled to announce its Q1 June 2015 results today, 12 August 2015.
TCS rose 2.21%. The company announced during market hours today, 12 August 2015, that Mother Dairy Fruit and Vegetable Private limited, a subsidiary of the National Dairy Development Board (NDDB) and one of India's leading Dairy players, has started leveraging TCS' solutions and services to deliver sustainable savings on sourcing and procurement. This includes consulting on strategy and design of centralized procurement cell, spend analysis for enhanced visibility, as well as deployment of Sourcing and Procurement Platform for streamlined operations.
TCS enabled Strategic Sourcing has helped Mother Dairy to consolidate and standardize sourcing across its 18 plants in India for categories such as Transportation, Packaging, Refrigeration Equipment and Travel. This has helped Mother Dairy realize sustainable savings, thereby aligning with its vision of providing quality food and beverages at affordable prices to the consumers while ensuring fair returns to the producers.
Meanwhile, the sentiment on the stock market was also hit adversely after opposition parties once again stalled a discussion on the goods and services tax (GST) bill in the Rajya Sabha. Members of the Congress party yelled slogans in the well of the Rajya Sabha, leading the speaker to adjourn the proceedings of the upper house for the day. With the monsoon session of the Parliament slated to conclude tomorrow, 13 August 2015, the prospects of the GST bill getting approved by the Rajya Sabha are bleak. Failing to approve the GST bill in this session will make it hard for the government to meet a self-imposed deadline to implement a nationwide GST from 1 April 2016.
GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. At the state level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.
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, European stocks moved sharply lower today, 12 August 2015, as concerns over China's growth outlook persisted after the country's central bank allowed the tightly controlled yuan to slide even further. Key benchmark indices in UK, France and Germany were off 1.38% to 2.64%.
Britain's unemployment rate edged up in June and wage growth stayed flat, signs that the jobs market may be beginning to level off after months of strong employment gains. The Office for National Statistics said today, 12 August 2015, the number of people out of work rose in the three months to June by 25,000, pushing the jobless rate to 5.6%, up from 5.5% in the previous three months.
Asian stocks edged lower today, 12 August 2015, after China's central bank further guided its currency lower today, 12 August 2015, a day after it roiled global markets with its decision to devalue the yuan by nearly 2% in a surprise decision announced yesterday, 11 August 2015. Key indices in South Korea, Taiwan, Indonesia, Japan and Singapore were off 0.56% to 3.1%. A weaker yuan is expected to pressure other central banks in Asia to devalue their currencies to keep their economies competitive against China's.
In mainland China, the Shanghai Composite lost 1.06%. In Hong Kong, the Hang Seng index lost 2.38%.
Growth in Chinese industrial production slowed in July, according to official data released today, 12 August 2015, in a sign of additional economic sluggishness in the world's second-largest economy. Value-added industrial output in China rose 6% in July from a year earlier, slowing from a 6.8% year-over-year increase in June, data from the National Bureau of Statistics showed. Retail sales in China increased 10.5% in July from a year earlier, slowing from a 10.6% year-over-year increase in June.
Trading in US index futures indicated that the Dow could slide 176 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.
Meanwhile, Moody's Investors Service reportedly cut Brazil's credit rating to near-junk status yesterday, 11 August 2015, but said the country's investment grade status was safe for now.
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