Key benchmark indices dropped in choppy trade as the rupee hit record low below 64 against the dollar on rising expectations that the US Federal Reserve will soon start withdrawing its monetary stimulus to the US economy. Weakness in European stocks also dampened sentiment. The S&P BSE Sensex provisionally settled below the psychological 18,000 mark. The Sensex was provisionally down 266.98 points or 1.46%, off close to 590 points from the day's high and up about 170 points from the day's low. The market breadth, indicating the overall health of the market, was negative. Indo-Pak tension also weighed on the bourses after the Pakistani military reportedly said on Wednesday that one of its officers has been killed by Indian troops firing across the disputed border in the Kashmir region.
Indian stocks fell for the fourth straight day today, 21 August 2013.
Index heavyweight and cigarette maker ITC declined. Another index heavyweight Reliance Industries also dropped. Auto stocks reversed intraday gains. Pharma heavyweights edged lower, with Ranbaxy tumbling.
The market surged amid initial volatility after the Reserve Bank of India (RBI) on Tuesday, 20 August 2013, announced measures to increase the availability of cash in the banking system. The Sensex trimmed gains to hit fresh intraday low in morning trade. A bout of volatility was witnessed as key benchmark indices trimmed gains once again to hit fresh intraday low after regaining strength in mid-morning trade. Key benchmark indices pared steep initial gains amid volatility to hit fresh intraday low in afternoon trade. The market extended intraday losses as rupee weakened past 64 against the dollar to hit a record low. The market pared losses after hitting fresh intraday low in late trade.
The rupee hit record low below 64 against the dollar on rising expectations that the US Federal Reserve will soon start withdrawing its monetary stimulus to the US economy. The rupee was hovering at 64.20, sharply lower than its close of 63.25/26 on Tuesday, 19 August 2013.
Indo-Pak tension also weighed on the bourses after the Pakistani military reportedly said on Wednesday that one of its officers has been killed by Indian troops firing across the disputed border in the Kashmir region. The incident follows the killing of five Indian soldiers along the Line of Control that separates the two sides in the Himalayan region this month. India said the five were killed by Pakistani forces but Pakistan denied involvement.
As per provisional figures, the S&P BSE Sensex was down 266.98 points or 1.46% to 17,979.06. The index tumbled 438.85 points at the day's low of 17,807.19 in late trade, its lowest level since 11 September 2012. The index surged 321.66 points at the day's high of 18,567.70 in early trade, its highest level since 19 August 2013.
The CNX Nifty was down 77.85 points or 1.44% to 5,323.60, as per provisional figures. The index hit a low of 5,268.45 in intraday trade, its lowest level since 5 October 2012. The index hit a high of 5,504.10 in intraday trade, its highest level since 16 August 2013.
The total turnover on BSE amounted to Rs 2256 crore, higher than Rs 1941.27 crore on Tuesday, 20 August 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,334 shares fell and 926 shares rose. A total of 139 shares were unchanged.
Among the 30-share Sensex pack, 24 stocks fell and rest of them rose. Hindalco Industries (down 3.9%), Sterlite Industries (down 4.93%), and NTPC (down 3.89%), edged lower.
Auto stocks reversed intraday gains. Mahindra & Mahindra (M&M) declined 0.92%. The company 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.
Tata Motors dropped 0.59%. The company's global wholesale vehicle sales fell 14% to 87,566 vehicles in July 2013 over July 2012. Global sales of passenger cars fell 13% to 46,684 vehicles in July 2013 over July 2012. Sales of its Jaguar Land Rover brand rose 30.61% to 35,162 units. Sales of its Jaguar cars rose 76.53% to 7,174 vehicles and Land Rover sales were higher by 22.45% at 27,988 vehicles during the month. The company announced the global vehicle sales figures on 14 August 2013.
Maruti Suzuki India fell 0.73%. The company said during market hours today, 21 August 2013, that it has introduced the stylish, aggressive, sporty Stingray car model. With this the company has expanded its portfolio and enriched to meet inspirations of young India, Maruti said. Stingray, which is powered by a 998 cc petrol engine, is available in three variants, with price ranging between Rs 4,09,999 to Rs 4,66,999 ex showroom Delhi.
Shares of two wheeler makers also declined. Bajaj Auto shed 1.89%. Bajaj Auto on 13 August 2013 said that the company has received a notice from the workmen's union viz. Vishwa Kalyan Kamgar Sanghatana stating that the stoppage of work at Chakan plant has been withdrawn and all the workmen at Chakan plant will resume their duty in their respective shifts from 14 August 2013. The company had earlier informed on 25 June 2013, that it had received a notice from the workmen's union of its Chakan plant viz., Vishwa Kalyan Kamgar Sanghatana stating that they propose to call for a stoppage of work by all the workmen employed in Chakan plant from the morning shift of 28 June 2013. The workmen at Chakan Plant had however, stopped coming from 25 June 2013 itself, without assigning any reason.
Hero MotoCorp lost 1.87%.
Pharma heavyweights edged lower. Cipla (down 2.29%), Dr Reddy's Laboratories (down 3.86%), Ranbaxy Laboratories (down 10.8%) and Sun Pharmaceutical Industries (down 4.42%), declined.
Index heavyweight and cigarette maker ITC declined 4.12%.
Reliance Industries (RIL) fell 4.62%.
Telecom major Bharti Airtel slumped 6.09%.
L&T shed 2.83% to Rs 712.50, with the stock reversing intraday gains. The stock hit a 52-week low of Rs 704.05 in intraday trade today, 21 August 2013. The company on Tuesday, 20 August 2013, said it has won an order valued around Rs 1500 crore from Petroleum Development Oman LLC (PDO). The engineering, procurement and construction (EPC) order is for the Yibal 3rd stage depletion compression (Y3DC) project at the Yibal-Natih gas reservoir in Oman. The project is scheduled to be completed in 39 months.
The RBI on Tuesday, 20 August 2013, said it would repurchase government bonds to increase the availability of cash in the banking system, a step that appears to be a partial reversal of the slew of measures it took since mid-July to tighten liquidity. In a late evening news release, the RBI said it would buy back Rs 8000-crore of government bonds on Friday, 23 August 2013. Further repurchase will depend on evolving market conditions, it said. It is important to ensure that the liquidity tightening doesn't harden long-term bond yields and impact the flow of credit to productive sectors of the economy, the central bank said, referring to its buyback plan.
The RBI on Tuesday also relaxed some rules that will help banks deal with the notional or marked-to-market (MTM) loss in their government bond portfolios due to a recent sharp fall in bond prices. They now don't have to record their current marked-to-market losses immediately as the RBI has allowed them to spread the losses equally over the remaining period of this fiscal year.
Bond prices rose after the RBI on Tuesday, 20 August 2013, announced measures to increase the availability of cash in the banking system. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.4307%, lower than its close of 8.9028% on Tuesday, 19 August 2013. Bond yield and bond prices are inversely related.
European stock markets edged lower on Wednesday, 21 August 2013, with investors remaining cautious ahead of minutes from the US Federal Reserve's latest meeting, which could shed more light on a potential tapering of asset purchases. Key benchmark indices in France, UK and Germany were down by 0.03% to 0.72%.
Britain posted its first July budget deficit since 2010 as an increase in government spending outstripped tax revenue. Net borrowing excluding temporary support for banks was 488 million pounds ($764 million) compared with a surplus of 823 million pounds a year earlier, the Office for National Statistics said in London today. Including coupon cash received from the Bank of England on its holdings of gilts, the deficit was 62 million pounds.
Asian stocks were mixed on Wednesday, 21 August 2013, before the release of minutes of the Federal Reserve's July meeting. Key benchmark indices in Singapore, Hong Kong and South Korea were down by 0.63% to 1.08%. Key benchmark indices in Japan, China and Indonesia rose by 0.02% to 1.04%. Taiwan's markets were closed amid a tropical storm.
Trading in US index futures indicated that the Dow could fall 35 points at the opening bell on Wednesday, 21 August 2013. US stocks on Tuesday, 20 August 2013, mostly climbed, with the S&P 500 halting its longest losing streak this year, as retailers including Best Buy Co. beat estimates and as Wall Street looked to clues about future US monetary policy. The Federal Open Market Committee (FOMC) later in the global day today, 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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