Key benchmark indices edged lower, with the market sentiment hit adversely by data showing that foreign institutional investors (FIIs) remained net sellers of Indian stocks on Friday, 21 June 2013. Weakness in global stocks also weighed on sentiment on the domestic bourses as the the S&P BSE Sensex and the 50-unit CNX Nifty, both, reached their lowest level in 10 weeks. The Sensex lost 233.35 points or 1.24%, off close to 170 points from the day's high and up about 70 points from the day's low. All 13 sectoral indices on BSE were in red.
The market was volatile as traders roll over positions in the futures & options (F&O) segment from the near month June 2013 series to July 2013 series. The June 2013 F&O contracts expire on Thursday, 27 June 2013.
The Sensex has lost 1,219.41 points or 6.17% in this month so far (till 24 June 2013). The Sensex has fallen 885.82 points or 4.55% in calendar 2013 so far (till 24 June 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 1,902.73 points or 9.3%. From a 52-week low of 16,598.48 on 26 July 2012, the Sensex has surged 1,942.41 points or 11.7%.
Coming back to today's trade, index heavyweight and cigarette maker ITC also edged lower. Realty stocks tumbled, with shares of realty major DLF hitting 52-week low. Capital goods pivotals dropped, with shares of Bhel hitting a 52-week low.
Among metal shares, Sterlite Industries (India) hit 52-week low. Jindal Steel & Power (JSPL) reversed direction after hitting a 52-week low in intraday trade. M&M Financial Services dropped in volatile trade after the company said its board of directors has decided not to proceed with the application for a banking licence with Reserve Bank of India.
The market sentiment was hit adversely by data showed that foreign funds remained net sellers of Indian stocks on Friday, 21 June 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 1768.60 crore on Friday, 21 June 2013, as per provisional data from the stock exchanges.
The S&P BSE Sensex lost 233.35 points or 1.24% to 18,540.89, its lowest closing level since 15 April 2013. The index declined 307.08 points at the day's low of 18,467.16 in late trade. The index fell 60.18 points at the day's high of 18,714.06 in opening trade.
The CNX Nifty was down 77.40 points or 1.37% to 5,590.25, its lowest closing level since 15 April 2013. The index hit a low of 5,566.25 in intraday trade. The index hit a high of 5,640 in intraday trade.
The BSE Healthcare index (down 0.89%) and BSE IT index (down 1.05%), outperformed the Sensex. The BSE Realty index (down 4.79%), BSE Consumer Durables index (down 3.38%), BSE Capital Goods index (down 2.91%), BSE PSU index (down 2.42%), BSE FMCG index (down 2.1%), BSE Power index (down 2.01%), BSE Auto index (down 1.55%), BSE Oil & Gas index (down 1.52%), BSE Teck index (down 1.52%), BSE Bankex (down 1.48%) and BSE Metal index (down 1.25%) underperformed the Sensex.
The total turnover on BSE amounted to Rs 1643 crore, lower than Rs 2268.82 crore on Friday, 21 June 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,635 shares declined and 651 shares rose. A total of 114 shares were unchanged.
Among the 30-share Sensex pack, 24 declined and rest of them gained.
ICICI Bank rose 0.69% to Rs 1,050.55. The stock reversed direction after an initial fall. The stock came off the day's low of Rs 1,029.50. In a move to boost the real estate sector, the Reserve Bank of India on Friday, 21 June 2013, reduced the risk weightage on home loans and residential housing projects. RBI said the risk weightage on housing loans up to Rs 75 lakh has been brought down to 50% from the earlier requirement of 75%. On home loans above Rs 75 lakh, the risk weight has been brought down to 75% from 100% earlier. Risk weight to residential housing projects under commercial real estate (CRE) too has been brought down to 75% from the previous requirement of 100%.
Reliance Industries (RIL) fell 0.08% to Rs 793.30. The stock was volatile. The scrip hit high of Rs 797 and low of Rs 779.20. The Cabinet Committee on Economic Affairs (CCEA) on Friday, 21 June 2013, deferred a decision on a proposal to hike natural gas prices by a steep 60% as Oil Minister M Veerappa Moily was away on an official tour. The CCEA is likely to consider the proposal this week. The oil ministry has proposed an increase in gas prices to $6.775 million British thermal unit (mbtu) from current $4.2 mbtu. The Oil Ministry has proposed raising gas price for state-run firms immediately and that for Reliance Industries (RIL) from April 2014 when it is contractually due.
Index heavyweight and cigarette major ITC lost 2.62% to Rs 314.40. The stock was volatile. The stock hit a high of Rs 325.45 and low of Rs 311.50.
Capital goods pivotals dropped. India's largest power equipment maker by capacity Bhel fell 3.02% to Rs 165.50 after hitting a 52-week low of Rs 164.50 in intraday trade today, 24 June 2013.
India's largest engineering and construction firm L&T declined 2.8%.
Sterlite Industries (India) lost 3.91% to Rs 77.45 after sliding to a 52-week low of Rs 76.60 in intraday trade today, 24 June 2013.
Jindal Steel & Power (JSPL) rose 1.44% to Rs 207.20. The stock was volatile. The stock hit a 52-week low of Rs 194 in intraday trade today, 24 June 2013. The stock hit a high of Rs 209.70.
Early this month, the Central Bureau of Investigation filed an FIR in the Coalgate case in which JSPL Chairman Naveen Jindal and JSPL, as well as a former minister of state for coal Dasari Narayan Rao have been named. The CBI has alleged that Rao was paid kickbacks for favouring coal block allocation to the Jindal firm.
Realty stocks edged lower. Sobha Developers (down 7.58%), Parsvnath Developers (down 4.96%), HDIL (down 4.65%), Godrej Properties (down 3.71%) and Unitech (down 3.16%), tumbled.
DLF lost 6.13% to Rs 164.30 after sliding to a 52-week low of Rs 161.25 in intraday trade today, 24 June 2013.
Oil exploration stocks declined as crude oil prices fell. Cairn India (down 3.33%), ONGC (down 2.97%) and Oil India (down 2.24%), edged lower. US crude oil futures for August 2013 delivery were down 0.22% at $93.48 a barrel in the electronic trading today, 24 June 2013. US crude oil futures for August 2013 delivery settled 1.5% lower at $93.69 a barrel Friday, 21 June 2013. Lower crude oil prices would result in lower realizations from crude sales for oil exploration firms.
PSU OMCs dropped. HPCL (down 2.97%) and BPCL (down 2.72%) edged lower.
The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas on 17 June 2013 said that the under-recovery on high speed diesel (HSD) applicable for second fortnight of June effective from 16 June 2013 has increased sharply to Rs 6.31 per litre from Rs 4.87 per litre during the first fortnight of June 2013. PSU OMCs are currently incurring daily under-recovery of about Rs 286 crore on the sale of diesel, PDS kerosene and domestic LPG. PSU OMCs suffer under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers.
Indian Oil Corporation (IOC) fell 6.82%. The government intends to divest 10% stake in Indian Oil Corporation (IOC) through an Offer for Sale (OFS) via the stock exchanges mechanism. The government currently holds 78.92% stake in IOC. The stock market regulator Securities & Exchange Board of India (Sebi) has set a deadline of 8 August 2013 for state-run listed companies to meet the mandatory minimum public shareholding of 10%.
GAIL (India) dropped on a likely hike in gas prices. The stock lost 2.03% at Rs 284.45. The scrip hit 52-week low of Rs 276.30 in intraday trade today, 24 June 2013. As per reports, the Cabinet Committee on Economic Affairs (CCEA) will consider a proposal this week for a steep hike in natural gas prices.
Shares of Jaypee Group companies slumped. Jaiprakash Power Ventures tumbled 13.48% to Rs 17.65 after hitting record low of Rs 16.90 in intraday trade today, 24 June 2013. The company before market hours today, 24 June 2013, said the generation of power from its 400 MW Vishnuprayag Hydro-power plant situated at district Chamoli in Uttarakhand has been stopped with effect from 16 June 2013 due to floods. The company said that the unprecedented floods in river Alaknanda has resulted in Force Majeure event for the power unit. While the company is taking effective steps to restore generation, assessment of damages due to the flood conditions shall be made on restoration of commutation and connectivity to Barrage site, the company said.
As prudent practice, 400 megawatt Vishnuprayag project is also covered under Industrial All Risk Insurance Policy, the company said.
Jaiprakash Associates tumbled 11.27%.
Jaypee Infratech slumped 9.72%.
Ranbaxy Laboratories lost 6.85% to Rs 325.50 after sliding to a 52-week low of Rs 323 in intraday trade today, 24 June 2013 on reports the US Food and Drugs Administration (USFDA) has raised concerns about the company's Mohali unit. The USFDA had reportedly issued a Form 483 to the Mohali facility a few months ago. A Form 483 is issued by the FDA at the conclusion of an inspection to notify the company of objectionable conditions that might be in violation of the US Food, Drug and Cosmetic Act and related laws. However, it does not prevent a company from making regulatory filings from that unit.
HCL Technologies rose 0.1%. The company after market hours on Friday, 21 June 2013, said it entered into a multi-year engagement with Vestas Wind Systems A/S as the latter's strategic partner. Vestas is a global leader in manufacturing, selling, installing, and servicing of wind turbine power-plants.
HCL will provide application development and management and IT-consultancy services to applications run by Vestas as part of this engagement. The services will be delivered to Vestas primarily from India, but also from the Philippines and across locations in Denmark. Besides cost reduction, Vestas IT expects to gain increased flexibility in terms of skills, scale, knowledge and experience and achieve higher quality by using the HCL's best in class processes and services.
NHPC fell 0.82%. The company on Friday, 21 June 2013, intimated that due to cloud burst and unprecedented high flood in Uttarakhand, the water has entered into its Dhauliganga Power Station (280 megawatt) and submerged all the system on the early hours of 17 June 2013. The generation from the plant has been stopped and efforts are being made to restore the generation at the earliest, the company said. In addition to this, the water has caused damage to various ancillary structures of the project like roads, residential and non-residential buildings, the company said. The communication and power supply has been fully disrupted in the power house, dam, colony and other project areas. The extent of damage is being worked out. NHPC added that the project is covered under All Risk insurance policy and necessary intimation has been given to insurance company.
MMTC was locked in 5% lower circuit at Rs 126.15 on BSE, also its 52-week low, with the stock extending recent steep slide triggered by government concluding the divestment of 9.33% stake at a huge discount to the stock's ruling market price this month. The government this month sold 9.33% stake in MMTC via Offer for Sale through stock exchanges mechanism at an indicative price of Rs 60.86 per share. The divestment was done to make the company compliant to the public shareholding requirements under the Securities Contract Regulations (Rules) (SCRR). Sebi has mandated minimum public shareholding of 10% for state-run firms by August 2013.
Shares of some gold and diamond jewellery makers decline sharply on the back of recent government measures to curb gold sales and on fall in global prices of gold. Shree Ganesh Jewellery House (I) (down 9.52%), PC Jeweller (down 8.55%), Rajesh Exports (down 7.12%), TBZ (down 6.88%), and Tara Jewels (down 2.27%) declined.
Shares of diamond jewellery maker Gitanjali Gems hit lower permissible limit of 20% at Rs 405.35 on BSE.
Fresenius Kabi Oncology jumped 11.51% to Rs 122.55 after the Securities Appellate Tribunal (SAT) today, 24 June 2013, directed the market regulator Securities and Exchange Board of India (Sebi) to give a personal hearing to Fresenius Kabi Oncology with regard its delisting offer and pass a 'rational and reasonable' order within four weeks. SAT has asked Fresenius to file a reply with Sebi detailing all the facts and circumstances of the delisting offer. On June 4, Sebi had passed an order against more than 100 companies, including Fresenius, for not meeting minimum public shareholding norms (MPS). As the order barred promoters of these companies from dealing in the company's shares, it had potentially rendered the MNC pharma company's delisting bid untenable.
Fresenius Kabi Oncology filed an appeal against the Sebi order related to non-compliance of minimum 25% public shareholding norms and had sought approval for its delisting plans. Sebi had earlier refused permission to the company for its delisting plans, saying that it had benefited from a specially designed offer-for-sale (OFS) route for expanding the public float of shares.
The company's foreign promoter Fresenius Kabi (Singapore) Pte currently holds 81% stake in the company. While the foreign promoter had earlier sold 9% promoter stake through an OFS, it later proposed to delist its shares from the stock exchanges rather than selling a further 6% to meet the minimum public shareholding requirement. Fresenius Kabi (Singapore) Pte had said in April 2013 that it intends to pay an indicative price of up to Rs 130 per share to acquire the shares offered to it in the delisting offer.
M&M Financial Services lost 8.07% to Rs 236.40 after the company said its board of directors has decided not to proceed with the application for a banking licence with Reserve Bank of India. The stock was volatile. The stock lost as much as 15.9% at the day's low of Rs 216.25. Mahindra & Mahindra Financial Services said its board took the decision not to apply for a banking license after reviewing the implications of the present guidelines issued by the Reserve Bank of India (RBI) for such an application, alongwith the clarifications issued by RBI on 3 June 1013.
The RBI guidelines provide for the conversion of non-banking financial companies (NBFCs) into a bank, but do not provide any flexibility for a NBFC and a bank to co-exist for a reasonable period of time, M&M Financial Services said. The regulations provide that CRR and SLR will be applicable from inception, even though building of CASA will take some time for a newly converted bank. This anomaly will impose an undue penalty on large, successful NBFCs with a pan-India network, that wish to convert into a bank, as compared to smaller NBFCs with a limited network.
Meanwhile, in the currency market, the rupee came under renewed pressure against the dollar. The rupee was hovering at 59.70, lower than Friday's close of 59.27/28. The rupee had hit a record low of 59.9850 in intraday deals on Thursday, 20 June 2013, as global investors pulled out of emerging markets broadly amid concerns over the reduction of a US program that has injected billions of dollars into the global financial system.
European markets declined as investors remained concerned about China's liquidity condition and the potential cutback in monetary stimulus by the US Federal Reserve later in 2013. Key benchmark indices in France, Germany and UK shed by 1.37% to 1.83%.
Business confidence rose in Germany in June, with the Ifo business-climate index climbing to 105.9 compared with a reading of 105.7 in May, according to media reports.
Asian stocks dropped on Monday, 24 June 2013, on mounting concerns that the US Federal Reserve may start scaling back its huge monthly bond-buying plan which was aimed at keeping bond yields down and provide support to its faltering economy. Key benchmark indices in Japan, Singapore, Taiwan, Indonesia and South Korea were off 0.45% to 1.9%.
Chinese stocks tumbled as a recent spike in Shanghai interbank interest rates fueled worries about the world's second-largest economy. In mainland China, the Shanghai Composite lost 5.3% and Hong Kong's Hang Seng lost 2.22%. Short-term interbank interest rates in Shanghai, which hit record highs on Thursday, 20 June 2013, extended their drop from levels seen on Friday, 21 June 2013, but remained above the 6%-level on Monday, 24 June 2013. This fed worries that the People's Bank of China, China's central bank, may keep those rates at a high level.
The China's central bank warned Monday that the nation's banks need to strengthen their liquidity management and control liquidity risks. The statement was the first by the central bank that appeared to be aimed at banks caught in a recent liquidity crunch which sent short-term rates on the interbank market soaring, with the overnight lending rate hitting an intraday high of 30% late last week. The People's Bank of China said liquidity in the banking system is at a reasonable level. It also said banks need to maintain "stable and appropriate" credit growth and adhere to its prudent monetary policy.
Trading in US index futures indicated that the Dow could fall 124 points at the opening bell on Monday, 24 June 2013.
Federal Reserve Chairman Ben Bernanke said last week the central bank may start dialing down its stimulus effort if the economy achieves sustainable growth.
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