Key benchmark indices extended initial losses, with the barometer index, the S&P BSE Sensex, sliding below the psychological 20,000 mark as hawkish comments by Reserve Bank of India governor D. Subbarao on Thursday, 30 May 2013, on inflation dashed hopes that the central bank will continue to lower interest rates to boost economic growth. Index heavyweight and cigarette major ITC fell after turning ex-dividend. Anther index heavyweight Reliance Industries (RIL) extended initial decline. The Sensex was down 235.53 points or 1.17%, off 211.42 points from the day's high and up 62.30 points from the day's low. The market breadth, indicating the overall health of the market, turned negative from positive.
FMCG stocks extended recent gains on expectations of normal monsoon rains this year. GlaxoSmithkline Consumer Healthcare hit record high ahead of its inclusion in MSCI India Index from close of trading today, 31 May 2013. MMTC dropped after reporting dismal Q4 result. Jet Airways (India) dropped as an auction for sale of some of the promoters' stake through the stock exchange mechanism failed to garner the requisite response on Thursday, 30 May 2013.
Key benchmark indices dropped in early trade as hawkish comments by Reserve Bank of India governor D. Subbarao on Thursday, 31 May 2013, on inflation dashed hopes that the central bank will continue to lower interest rates to boost economic growth. The market extended initial fall in morning trade, with Sensex sliding below the psychological 20,000 mark.
At 10:18 IST, the S&P BSE Sensex was down 235.53 points or 1.17% to 19,979.87. The index lost 297.83 points at the day's low of 19,917.57 in morning trade, its lowest level since 27 May 2013. The index slipped 24.11 points at the day's high of 20,191.29 in early trade.
The CNX Nifty was down 80 points or 1.31% to 6,044.05. The index hit a low of 6,031.80 in intraday trade, its lowest level since 27 May 2013. The index hit a high of 6,106.25 in intraday trade.
The market breadth, indicating the overall health of the market, turned negative from positive in morning trade. On BSE, 923 shares fell and 707 shares rose. A total of 94 shares were unchanged.
The total turnover on BSE amounted to Rs 431 crore by 10:20 IST compared to Rs 129 crore by 09:30 IST.
Among the 30-share Sensex pack, 24 stocks declined and the rest of them gained.
Index heavyweight Reliance Industries (RIL) shed 2.37% to Rs 816.20. The stock hit high of Rs 835 and low of Rs 808.20 so far during the day. RIL and its partners BP and NIKO on 24 May 2013 announced a significant gas and condensate discovery in the KG D6 block off the eastern coast of India. RIL is the operator of KG D6 with 60% equity. BP has a 30% share and NIKO the remaining 10%.
Index heavyweight and cigarette major ITC lost 3.19% at Rs 342.95 as the stock turned ex-dividend today, 31 May 2013, for dividend of Rs 5.25 per share for the year ended 31 March 2013. The stock hit record high of Rs 355.75 in intraday trade on Thursday, 30 May 2013.
FMCG stocks extended recent gains on expectations of normal monsoon rains this year. FMCG firms derive substantial revenue from rural India.
Britannia Industries (up 1.39%), Godrej Consumer Products (up 1.56%), Hindustan Unilever (up 0.23%), Nestle India (up 1.13%), Marico (up 2.66%) and Colgate-Palmolive (India) (up 1.11%) gained.
GlaxoSmithkline Consumer Healthcare surged 4.57% to Rs 5,505 after striking a record high of Rs 5,594 in intraday trade today, 31 March 2013. The stock surged ahead of its inclusion in MSCI India Index from close of trading today, 31 May 2013.
MMTC lost 2.77%. The company's net profit declined 97.5% to Rs 2.21 crore on 31.4% decline in net sales to Rs 7287.69 crore in Q4 March 2013 over Q4 March 2012. The result was announced after trading hours on Thursday, 30 May 2013.
MMTC reported net loss of Rs 70.62 crore for the year ended 31 March 2013 (FY 2013), as against net profit of Rs 70.72 crore for the year ended 31 March 2012 (FY 2012). Net sales declined 56.9% to Rs 28415.62 crore in FY 2013 over FY 2012.
Jet Airways (India) dropped as an auction for sale of some of the promoters' stake through the stock exchange mechanism failed to garner the requisite response on Thursday, 30 May 2013. The stock was down 3.24% to Rs 511.40.
On Thursday, 30 May 2013, Tail Winds, a promoter of Jet Airways (India), had put on block 43.17 lakh shares of the company, representing approximately 5% of the total paid up equity share capital, via Offer for Sale (OFS) through a separate window provided by the stock exchanges for this purpose. The OFS got bids for 29.86 lakh shares, compared with 43.17 lakh shares on offer, as per data from the stock exchanges. The OFS was subscribed 69.16% at an indicative bid price of Rs 515.17 per share. The floor price for the offer for sale was fixed at Rs 510.
The Reserve Bank of India (RBI) governor D. Subbarao on Thursday, 30 May 2013, said that the central bank is concerned about the country's wide current-account deficit (CAD) and still-high retail inflation. Mr. Subbarao, while speaking at an event in Ahmedabad, said the RBI will factor in the current-account gap while formulating its monetary policy. He said the wide deficit is weakening the local currency and may fan inflation that has slowed in recent months. The bank is concerned about the size of the deficit as well as the way India funds it, Mr. Subbarao said. The result of the high current-account deficit has been the depreciation of the rupee, he said. Rupee depreciation is a problem because it pushes up the cost of our imports, it increases debt-servicing cost, it causes inflation and it erodes our external payment situation, he added. Mr. Subbarao said India's retail inflation is still a concern. Sacrificing growth in the short term is "inevitable" as the RBI strives to rein in inflation, he added.
RBI undertakes mid-quarter review of the monetary policy on 17 June 2013. The RBI on 3 May 2013 cut its key policy rate viz. the repo rate by 25 basis points (bps) to 7.25% and kept the cash reserve ratio (CRR) for banks unchanged at 4% after a monetary policy review. RBI said at that time that the balance of risks stemming from its assessment of the growth-inflation dynamic provides little space for further monetary easing. The RBI said it will endeavour to condition the evolution of inflation to a level of 5% by March 2014, using all instruments at its command.
The government will announce Q4 March 2013 gross domestic product (GDP) data today, 31 May 2013. India's GDP grew 4.5% in Q3 December 2012, sharply slower than the 5.3% expansion reported for Q2 September 2012.
The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The government hopes to reduce the fiscal deficit to 3% by March 2017.
Asian markets were trading mostly higher tracking gains in US markets. Key benchmark indices in South Korea, Taiwan and China were rose by 0.03% to 0.86%. Key benchmark indices in Hong Kong, Indonesia and Singapore were down by 0.11% to 0.69%.
Japan's industrial production rose 1.7% during April, the Ministry of Economy, Trade and Industry said today, 31 May 2013.
China will release the government-sponsored manufacturing data for May 2013 tomorrow, 1 June 2013. Investors will be watching to see if the government-sponsored Purchasing Managers' Index matches preliminary results from a privately-compiled version, produced by HSBC and Markit, which showed Chinese manufacturing activity contracting in May.
Trading in US index futures indicated that the Dow could gain 19 points at the opening bell on Friday, 31 May 2013. US stocks edged higher on Thursday, 30 May 2013, as another report cast a positive light on the US housing market and as weaker-than-expected data on first-quarter economic growth and jobless claims raised hopes the Federal Reserve may keep its current level of bond purchases.
Fed Chairman Ben Bernanke said last week that an improvement in data could trigger the central bank to start tapering its asset purchases in coming months, stoking fears that the $85-billion-a-month liquidity injection will soon come to an end.
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