Key benchmark indices plunged today, 27 August 2013, as the passage of the food bill in Lok Sabha raised fears that the government might face more subsidy burden. Investors' risk appetite further dampened after the rupee hit a record low against the dollar. Meanwhile, a weakness in global equity markets also weighed on the domestic market. The 50-unit CNX Nifty settled at its lowest level in almost a year. The S&P BSE Sensex closed below the psychological 18,000 mark. The Sensex fell 590.05 points or 3.18%, off about 493 points from the day's high and up close to 46 points from the day's low.
The market breadth, indicating the overall health of the market, was weak. NTPC and HDFC, both, slumped to hit their 52-week low levels. Capital goods pivotals tanked. Bank stocks led losses on the bourses with HDFC Bank hitting 52-week low.
Indian stocks snapped three-day winning streak today, 27 August 2013. From a recent low of 17,905.91 on 21 August 2013, the Sensex gained 652.22 points or 3.64% in three consecutive trading sessions to 18,558.13 on Monday, 26 August 2013. The Sensex has fallen 1,377.62 points or 7.12% in this month so far (till 27 August 2013). The Sensex has declined 1,458.63 points or 7.51% in calendar 2013 so far (till 27 August 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 2,475.54 points or 12.11%. From a 52-week low of 17,250.80 on 5 September 2012, the Sensex has surged 717.28 points or 4.16%.
The market edged lower in early trade. It extended losses and hit fresh intraday low in morning trade. It further weakened and hit fresh intraday low in mid-morning trade. It further extended losses and hit fresh intraday low in early afternoon trade. Weakness prevailed in afternoon trade as a weak opening in European equity markets dampened investor sentiment. It tumbled to hit fresh intraday low in mid-afternoon trade. It trimmed losses after hitting fresh intraday low in late trade.
Global stocks fell on Tuesday after US Secretary of State John Kerry said the US President will hold Syria's government accountable for using chemical weapons against Syrian civilians.
The market sentiment was also affected adversely by data showing that foreign funds remained net sellers of Indian stocks on Monday, 26 August 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 607.43 crore on Monday, 26 August 2013, as per provisional data from the stock exchanges.
Meanwhile, the rupee trimmed losses after weakening past 66 against the dollar to hit record low today, 27 August 2013. The partially convertible rupee was trading at 65.80 per dollar, sharply lower than its close of 64.30 on Monday, 26 August 2013. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
The market is expected to remain volatile for the next two trading sessions as traders roll over positions in the futures & options (F&O) segment from the near month August 2013 series to September 2013 series. The near month August 2013 derivatives contract expire on Thursday, 29 August 2013.
The S&P BSE Sensex fell 590.05 points or 3.18% to 17,968.08, its lowest closing level since 21 August 2013. The index tumbled 636.31 points at the day's low of 17,921.82 in late trade. The index declined 97.41 points at the day's high of 18,460.72 in early trade.
The CNX Nifty fell 189.05 points or 3.45% to 5,287.45, its lowest closing level since 6 September 2012. The index hit a low of 5,274.25 in intraday trade. The index hit a high of 5,427.40 in intraday trade.
The BSE Mid-Cap index fell 2.09% and the BSE Small-Cap index fell 1.70%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,567 shares fell and 701 shares rose. A total of 127 shares were unchanged.
The total turnover on BSE amounted to Rs 2057 crore, higher than Rs 1847.82 crore on Monday, 26 August 2013.
Among the sectoral indices on the BSE, the S&P BSE IT index (up 0.16%), the S&P BSE Teck index (down 0.53%), the S&P BSE Healthcare index (down 1.98%), the S&P BSE Oil & Gas index (down 2.42%), the S&P BSE Consumer Durables index (down 2.44%), the S&P BSE Auto index (down 2.59%) and the S&P BSE FMCG index (down 2.99%), outperformed the Sensex.
The S&P BSE Bankex index (down 5.34%), the S&P BSE Capital Goods index (down 4.71%), the S&P BSE Power index (down 4.51%), the S&P BSE Realty index (down 3.95%), the S&P BSE PSU index (down 3.8%) and the S&P BSE Metal index (down 3.52%), underperformed the Sensex.
Among the 30-share Sensex pack, 27 stocks fell and three stocks rose.
NTPC shed 5.86% to Rs 124.50 after hitting a 52-week low of Rs 123.50 in intraday trade today, 27 August 2013. The company said after market hours on Monday, 26 August 2013 that the 500 megawatts (MW) Unit-II of 1500 MW Vallur Thermal Power Project of NTPC Tamil Nadu Energy (NTECL), a JV of NTPC and TANGEDCO, is declared on commercial operation from 25 August 2013. With this the total commercial capacity of Vallur Thermal Power Project has become 1000 MW and that of NTPC Group to 40184 MW.
Engineering and construction major L&T lost 5.30% to Rs 705.10.
Bhel dropped 9.49% to Rs 112.05, with the stock sliding on profit booking after gaining 21.97% in prior four sessions.
Among other capital goods stocks, BEML (down 5.75%), Praj Industries (down 5.39%), Pipavav Defence & Offshore Engineering Company (down 4.99%), Alstom T&D India (down 4.63%), Jindal Saw (down 4.5%), Punj Lloyd (down 2.95%), Siemens (down 2.05%), ABB (down 1.97%), Havells India (down 1.77%), Bharat Electronics (down 1.7%), SKF India (down 1.45%), Crompton Greaves (down 1.17%) and Lakshmi Machine Works (down 0.75%), edged lower.
Bank stocks declined across the board. Yes Bank (down 9.62%), IndusInd Bank (down 7.32%), Federal Bank (down 6.73%), Bank of India (down 6.63%), Axis Bank (down 6.15%), Union Bank of India (down 6.04%), Canara Bank (down 4.17%), Punjab National Bank (down 3.82%), ICICI Bank (down 3.26%), IDBI Bank (down 3.16%), Kotak Mahindra Bank (down 3.07%), Bank of Baroda (down 2.88%) and State Bank of India (down 2.4%), edged lower.
HDFC Bank slumped 8.04% to Rs 560.90 after hitting a 52-week low of Rs 555 in intraday trade today, 27 August 2013.
Mortgage lender HDFC lost 7.70% to Rs 686.85 after hitting a 52-week low of Rs 667.15 in intraday trade today, 27 August 2013.
Realty stocks dropped. HDIL (down 5.84%), Indiabulls Real Estate (down 5.51%), DLF (down 4.96%), Unitech (down 4.9%), Peninsula Land (down 3.94%), Oberoi Realty (down 3.57%), Godrej Properties (down 3.14%), Sunteck Realty (down 2.68%), D B Realty (down 2.41%), Parsvnath Developers (down 1.92%), Prestige Estates (down 1.82%), Anant Raj Industries (down 1.79%), Phoenix Mills (down 1.24%) and Sobha Developers (down 0.92%), edged lower.
Metal and mining stocks also declined in a weak market. Jindal Steel & Power (down 5.68%), NMDC (down 5.12%), Hindalco Industries (down 4.98%), JSW Steel (down 4.36%), Sail (down 4.26%), Tata Steel (down 1.87%), Hindustan Zinc (down 1.75%), Bhushan Steel (down 1.71%) and Nalco (down 0.5%), edged lower.
Shares of Sesa Goa rose 0.18% to Rs 167.55 after its inclusion in the 30-share benchmark S&P BSE Sensex today, 27 August 2013. Sesa Goa replaced Sterlite Industries (India) in the Sensex following the scheme of amalgamation between the two Vedanta group firms, whereby Sterlite Industries (India) merged with Sesa Goa. Trading in Sterlite stopped from today, 27 August 2013.
Auto stocks fell across the board. Escorts (down 3.95%), Maruti Suzuki India (down 3.8%), Ashok Leyland (down 3.25%), Bajaj Auto (down 3%), TVS Motor Company (down 2.93%), Tata Motors (down 2.63%), M&M (down 2.33%), Hero MotoCorp (down 2.32%) and Eicher Motors (down 0.81%), edged lower.
Meanwhile, India's cabinet has approved infrastructure projects worth Rs 183000 crore, Finance Minister P. Chidambaram reportedly said on Tuesday, part of a government drive to fast-track clearances and win back investor confidence. A cabinet panel cleared 18 power projects at a cost of Rs 83000 crore, Chidambaram said.
Lok Sabha on Monday passed the Food Security Bill after considering all the amendments, with the Opposition saying they will support the bill even though it is half-baked. The bill seeks to provide cheap foodgrains to 82 crore people in the country, ushering in the biggest programme in the world, to fight hunger. The ambitious bill was adopted by the House through a voice vote after a nine-hour combined discussion on the measure and a statutory resolution seeking to disapprove the ordinance promulgated on 5 July. Over 300 amendments moved by the opposition were rejected. The bill proposes subsidised foodgrain for up to 75% of the rural and up to 50% of the urban population. It proposes meal entitlement to specific groups. Eligible households would get five kg of foodgrain per person every month at Rs 3 per kilo of rice, Rs 2 per kilo of wheat and Rs 1 per kilo of coarse grains.It still needs to be passed by the upper house, the Rajya Sabha, to become law.
Meanwhile, the government has reportedly extended the monsoon session of parliament by seven days until September 6, giving the Congress party-led ruling coalition more time to pass economic reforms after weeks of disruptions in the house. The government will try to pass a bill to allow foreign investment in the pension sector during the extended session, a law seen as a first step to building a viable private pension industry in India. Also up for debate is a bill setting rules for compensation for land acquired for infrastructure projects and industry, a move seen as raising costs but potentially reducing protests that have plagued India's industrialization drive.
Based on the current assessment of prevailing and evolving market conditions, the Reserve Bank has decided to conduct Open Market Operations by purchasing the government securities for an aggregate amount of Rs 8000 crore on 30 August 2013 through multi-security auction using the multiple price method.
European stock markets edged lower on Tuesday, reflecting some concerns that the US could be nearing possible military action against Syria. Key benchmark indices in UK, France and Germany were down by 0.64% to 1.54%.
German business confidence rose to the highest level in 16 months in August, beating forecasts and indicating that the recovery in Europe's largest economy is gathering pace. A measure of construction activity fell. The Ifo business climate index, based on a survey of 7,000 executives, climbed to 107.5 from 106.2 in July, the Munich-based institute said today.
Asian stocks fell on Tuesday after US Secretary of State John Kerry said the US President will hold Syria's government accountable for using chemical weapons against Syrian civilians. Key benchmark indices in Singapore, Taiwan, Hong Kong, Indonesia, South Korea and Japan fell by 0.11% to 3.71%. China's Shanghai Composite rose 0.34%.
China's industrial-profit growth rebounded in July, adding to signs that the world's second-biggest economy is stabilizing after a two-quarter slowdown and an interbank lending squeeze in June. Net income rose 12% from a year earlier after gaining 6.3% in June, the statistics bureau said in Beijing today.
Economic data in South Korea showed the nation's consumer confidence was unchanged in August.
Trading in US index futures indicated that the Dow could fall 95 points at the opening bell on Tuesday, 27 August 2013. US stocks closed lower on Monday after Secretary of State John Kerry warned that the United States would demand accountability after an obscene chemical weapons attack on Syrian civilians. More than 100,000 people have died in clashes between forces loyal to Assad and rebels trying to oust him from power in Syria over the past two and a half years.
On US economic data front, the Commerce Department reported new orders for durable manufactured goods plunged 7.3% in July, much sharper than the 5% drop expected.
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