Key benchmark indices extended intraday losses in early afternoon trade after the Reserve bank of India (RBI) held its key policy rates viz. the repo rate and cash reserve ratio unchanged after a monetary policy review. The S&P BSE Sensex hit lowest level in nearly three weeks. The 50-unit CNX Nifty hit over three-week low. The Sensex was down 99.60 points or 0.51%, off close to 180 points from the day's high and up about 20 points from the day's low. The market breadth, indicating the overall health of the market, was weak.
FMCG major Hindustan Unilever (HUL) extended losses for the third straight day after the company reported a muted growth in bottom line in Q1 June 2013. Sterlite Industries (India) extended recent losses triggered by the company reporting weak Q1 results. Hindalco Industries also extended recent steep losses. Tata Steel hit 52-week low. Shares of two wheeler makers skidded. Realty stocks also edged lower.
A bout of initial volatility was witnessed as key benchmark indices pared gains after moving into the positive terrain after opening lower. Volatility continued as key benchmark indices recovered after hitting fresh intraday low in morning trade. The S&P BSE Sensex and the 50- unit CNX Nifty, both, hit their lowest level in nearly three weeks. High volatility was witnessed as key benchmark indices slipped into the red after surging to hit fresh intraday high in mid-morning trade soon after the Reserve bank of India (RBI) held its key policy rates viz. the repo rate and cash reserve ratio unchanged after a monetary policy review. The market extended losses to hit fresh intraday low in early afternoon trade.
After First Quarter Review of Monetary Policy 2013-14, the RBI today, 30 July 2013, kept the repo rate unchanged at 7.25%. The central bank also kept the cash reserve ratio (CRR) unchanged at 4%. RBI said that the macroeconomic outlook for 2013-14 is subject to a number of risks and it scaled down the GDP growth forecast for 2013-14 to 5.5%, from its earlier projection of 5.7% growth. The RBI said that it will endeavour to condition the evolution of inflation to a level of 5% by March 2014, using all instruments at its command.
The RBI said that keeping in view global and domestic macroeconomic conditions, outlook and risks, the policy stance in this review is guided by the need for continuous vigil and preparedness to pro-actively respond to risks to the economy from external developments, especially those stemming from global financial markets, while managing the trade-off posed by increased downside risks to growth and continuing risks to inflation and inflation expectations.
The current situation -- moderating wholesale price inflation, prospects of softening of food inflation consequent on a robust monsoon and decelerating growth -- would have provided a reasonable case for continuing on the easing stance, RBI said. "However, India is currently caught in a classic 'impossible trinity' trilemma whereby we are having to forfeit some monetary policy discretion to address external sector concerns", the RBI said.
The central bank said that its recent liquidity tightening measures are aimed at checking undue volatility in the foreign exchange market and will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling monetary policy to revert to supporting growth with continuing vigil on inflation. It should be emphasised that the time available now should be used with alacrity to institute structural measures to bring the current account deficit (CAD) down to sustainable levels, the RBI said. The RBI said it stands ready to use all available instruments and measures at its command to respond proactively and swiftly to any adverse development.
At 12:20 IST, the S&P BSE Sensex was down 99.60 points or 0.51% to 19,493.68. The index declined 122.16 points at the day's low of 19,471.12 in early afternoon trade, its lowest level since 11 July 2013. The index rose 79.44 points at the day's high of 19,672.72 in mid-morning trade.
The CNX Nifty was down 27.30 points or 0.47% to 5,804.35. The index hit a high of 5,861.30 in intraday trade. The index hit a low of 5,795.65 in intraday trade, its lowest level since 8 July 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,179 shares fell and 593 shares rose. A total of 129 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks fell and rest of them rose. GAIL (India) (down 4.07%), ONGC (down 3.68%) and Bharti Airtel (down 2.9%), edged lower.
Tata Steel dropped 0.72% to Rs 214.20. The stock hit 52-week low of Rs 213.70 in intraday trade today, 30 July 2013.
Sterlite Industries (India) fell 1.56%, with the stock extending recent losses triggered by the company reporting weak Q1 results. Sterlite Industries' consolidated net profit fell 22% to Rs 934 crore on 23% fall net sales/income from operations to Rs 8190 crore in Q1 June 2013 over Q1 June 2012. The Q1 result was announced on 25 July 2013.
Hindalco Industries dropped 2,81%, with the stock extending recent steep losses.
Shares of two wheeler makers skidded. Bajaj Auto (down 2.14%) and Hero MotoCorp (down 1.33%), edged lower.
FMCG major Hindustan Unilever (HUL) fell 2.4%, with the stock extending losses for the third straight day after the company reported a muted growth in bottom line in Q1 June 2013. The company's net profit declined 23.43% to Rs 1019.25 crore on 5.88% increase in total income to Rs 6985.79 crore in Q1 June 2013 over Q1 June 2012. The result was announced on 26 July 2013.
The company said that the year on year fall in net profit was due to significant exceptional income generated in Q1 June 2012 from the sale of properties. Profit after tax but before exceptional items rose 4% to Rs 885 crore in Q1 June 2013 over Q1 June 2012. HUL stated that while commodity costs were relatively benign, PFAD prices started to move up and the rupee sharply depreciated towards the end of the quarter. Competitive intensity remained at high levels and the company continued to invest in its brands. Advertisement and promotion (A&P) cost increased by Rs 70 crore on year on year basis in Q1 June 2013.
Realty stocks edged lower after the Reserve bank of India (RBI) held its key policy rates viz. the repo rate and cash reserve ratio unchanged after first quarter review of the Monetary Policy 2013-14 announced today, 30 July 2013. Purchases of both residential and commercial property are largely driven by finance. HDIL (down 2.67%), Unitech (down 1.54%) and Godrej Properties (down 1.54%), edged lower.
DLF dropped 4.32% as the stock turned ex-dividend today, 30 July 2013, for dividend of Rs 2 per share for the year ended 31 March 2013 (FY 2013).
Easun Reyrolle jumped 10.71% after the company acquired 82% stake in Australia-based Electrical Distribution Solutions. Easun Reyrolle, through its subsidiary ERL International, has acquired 82% equity and ownership control in an Australian company, Electrical Distribution Solutions Pty (EDS). This synergic and strategic acquistion would help Easun Reyrolle establish and hold presence in Australian power transmission and distribution market, the company said. It may be noted, recently Easun Reyrolle obtained order from EDS to supply Medium Voltage Switchgear products to Australian Utility, Energex in the State of Queensland. The total supply value of this order $84 million to be supplied over the next seven years. Energex manages energy distribution networks of the State of Queensland for more than 100 years.
Jaypee Infratech dropped 4.87% after net profit slumped 61.4% to Rs 81.01 crore on 13.4% increase in net sales to Rs 769.20 crore in Q1 June 2013 over Q1 June 2012. The company announced the result after market hours on Monday, 29 July 2013.
Asian stocks rose on Tuesday, 30 July 2013, after China's central bank injected funds into money markets easing cash crunch worries. Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea, Indonesia and Taiwan rose by 0.13% to 1.53%.
China's central bank injected funds into money markets via open market operations on Tuesday for the first time since February, easing fears of another cash crunch ahead of the month end after a severe cash squeeze in June caused market panic.
Meanwhile, the results of two separate surveys on Chinese manufacturing activity in July are due on Thursday, 1 August 2013.
In Japan, data released on Tuesday, 30 July 2013, showed that Japan's industrial production unexpectedly fell a seasonally adjusted 3.3% in June from the level in May. Japanese household spending also declined, though the monthly unemployment rate eased to 3.9% from 4.1%.
Trading in US index futures indicated that the Dow could gain 25 points at the opening bell on Tuesday, 30 July 2013. US stocks edged lower on Monday, 29 July 2013, slipping after a decline in June home sales as investors look ahead to key data later in the week and the Federal Reserve's upcoming policy meeting. The National Association of Realtors said pending home sales fell 0.4% in June, with rising rates blamed for undercutting sales momentum.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting today (30 July 2013) and tomorrow (31 July 2013), with expectations that it will offer further clues on how long it will maintain its bond purchases. In his two-day testimony to Congress, which concluded on 18 July 2013, Federal Reserve Chairman Ben Bernanke said plans to taper asset purchases were not on a preset path and stressed intentions to be very responsive to data. Additionally, Bernanke said recent data have been "mixed" and it was "way too early" to make a judgment on when the central bank will slow down the pace of its asset purchases. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth.
In Europe, the European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions on Thursday, 1 August 2013.
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