Key benchmark indices edged lower for the second straight day as weakness in rupee, which fell below 60 a dollar, and weakness in global stocks hit investor sentiment adversely. The S&P BSE Sensex and the 50-unit CNX Nifty, both, reached their lowest closing level in nearly one week. The Sensex lost 286.06 points or 1.47%, up close to 30 points from the day's low and off about 170 points from the day's high. The market breadth, indicating the overall health of the market, was weak.
Indian stocks fell for the second straight day in a row today, 3 July 2013. From a recent high of 19,577.39 on 1 July 2013, the Sensex has fallen 399.63 points or 2.04% in two trading sessions. The Sensex has declined 218.05 points or 1.12% in first three trading sessions of July 2013 (till 3 July 2013). The Sensex has declined 248.95 points or 1.28% in calendar 2013 so far (till 3 July 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 1,265.86 points or 6.19%. From a 52-week low of 16,598.48 on 26 July 2012, the Sensex has surged 2,579.28 points or 15.53%.
Coming back to today's trade, index heavyweight and cigarette major ITC edged higher. Another index heavyweight Reliance Industries (RIL) dropped. In pharma pack, Lupin scaled record high. ONGC dropped after the company said that the Republic of Kazakhstan has pre-empted ONGC Videsh's bid to acquire 8.4% stake of ConocoPhillips in the North Caspian Sea Production Sharing Agreement. Tata Power Company (TPC) fell for second day in a row after credit rating agency Moody's Investors Service downgraded the outlook on the company to negative from stable. Bharat Heavy Electricals declined on profit booking.
Metal stocks edged lower on weak Chinese economic data. Steel shares led decline in metal stocks. Realty stocks tumbled.
The rupee fell below the psychological 60 a dollar level and bond prices also declined. The rupee was hovering at 60.26, weaker than Tuesday's close of 59.66/67.
In the government bond market, the yield on the most traded 8.20% GS 2025 was currently at 7.7219%, higher than Tuesday's close at 7.6722%. Bond yield and bond prices are inversely related.
The S&P BSE Sensex lost 286.06 points or 1.47% to settle at 19,177.76, its lowest closing level since 27 June 2013. The index lost 316.51 points at the day's low of 19,147.31 in late trade. The index fell 116.71 points at the day's high of 19,347.11 in opening trade.
The CNX Nifty lost 86.65 points or 1.48% to settle at 5,770.90, its lowest closing level since 27 June 2013. The index hit a low of 5,760.40 and a high of 5,815 in intraday trade.
The BSE Mid-Cap index fell 1.69% and underperformed the Sensex. The BSE Small-Cap index declined 1.44% and outperformed the Sensex.
The BSE FMCG index (up 0.26%), BSE Healthcare index (up 0.23%), BSE IT index (down 0.6%), BSE Teck index (down 0.8%) and BSE Auto index (down 0.8%), outperformed the Sensex. The BSE Realty index (down 4.76%), BSE Metal index (down 3.11%), BSE PSU index (down 3.08%), BSE Consumer Durables index (down 2.84%), BSE Power index (down 2.67%), BSE Oil & Gas index (down 2.64%), BSE Capital Goods index (down 2.46%) and BSE Bankex (down 2.33%), underperformed the Sensex.
The total turnover on BSE amounted to Rs 1915 crore, higher than Rs 1794.68 crore on Tuesday, 2 July 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,528 shares declined and 787 shares rose. A total of 129 shares were unchanged.
Among the 30-share Sensex pack, 27 stocks declined and only three of them gained.
Reliance Industries (RIL) fell 2.41% to Rs 850.30. The government on 27 June 2013 agreed to double natural gas prices to industrial and retail consumers to help fund investment in exploration and reverse declining domestic gas output. The price of gas could go up to $8.4 per million metric British thermal units (mmBtu), effective 1 April next year, from current $4.2 mmBtu.
Oil & Natural Gas Corporation (ONGC) fell 3.48% after the company said that the Republic of Kazakhstan has pre-empted ONGC Videsh's bid to acquire 8.4% stake of ConocoPhillips in the North Caspian Sea Production Sharing Agreement. ONGC said that based on communication received through ConocoPhillips (COP), the Government of Kazakhstan has announced that in accordance with the Republic of Kazakhstan Law (ROK) on Subsurface and Subsurface use, ROK has exercised its priority right and pre-empted the bid by the 100% owned subsidiary of ONGC viz. ONGC Videsh to acquire 8.4% stake of ConocoPhillips in the North Caspian Sea Production Sharing Agreement (NCS PSA). It is understood that KazMunayGaz (KMG), the national oil company of Kazakhstan shall be designated as the buyer, on behalf of the state, ONGC said.
ONGC Videsh had in November 2012 finalized the definitive agreements for acquisition of 8.4% participating interest of ConocoPhillips in NCS PSA. The bid of ONGC Videsh was not pre-empted by the Co-venturers of the NCSPSA within the stipulated time period that ended in January 2013, ONGC said.
PSU OMCs edged lower as US crude oil futures crossed $100 a barrel for the first time since September 2012 as Egypt's political tensions escalated and as stockpiles in the US shrank the most this year. HPCL (down 3.77%), BPCL (down 4.01%) and Indian Oil Corporation (down 4.59%) edged lower.
US crude oil futures for August 2013 delivery were up $1.40 a barrel at $101 a barrel in the electronic trading today, 3 July 2013. The contract had surged $1.61 a barrel or 1.64% to settle at $99.60 a barrel on the New York Mercantile Exchange on Tuesday, 2 July 2013, its highest closing level since May 2012.
Higher crude oil price will increase under-recovery of PSU OMCs on domestic sales of diesel, LPG and kerosene at government 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. The government has already freed pricing of petrol.
PSU OMCs raised diesel price by 50 paise per litre, excluding state levies, effective from Tuesday, 2 July 2013.
Metal stocks edged lower on weak Chinese economic data. China is the world's largest consumer of copper and aluminum. Sterlite Industries (India) (down 4.58%), Hindalco Industries (down 3.61%) and Hindustan Zinc (down 2.87%), edged lower.
NMDC fell 3.29%. The company during market hours today, 3 July 2013, said total production of iron ore on a provisional basis rose 0.29% to 6.83 million tonne in the quarter ended 30 June 2013 over the quarter ended 30 June 2012. Sales of iron ore rose 5.83% to 7.26 million tonne in the quarter ended 30 June 2013 over the quarter ended 30 June 2012
Hindustan Copper lost 3.1% to Rs 70.40. Bids were received for a total of 4.38 crore shares at an indicative price of Rs 70 per share for the Offer for Sale (OFS) of the company's shares which was held today, 3 July 2013, as per data from the stock exchanges. The government had announced Offer for Sale (OFS) for divestment of 3.71 crore shares constituting 4.01% stake in Hindustan Copper to enable the company to comply with the minimum public shareholding norms. The government had set floor price of Rs 70 for the OFS, a 3.78% discount to Hindustan Copper's closing price on BSE on Tuesday, 2 July 2013. The government currently holds 94.01% in Hindustan Copper. The stake-sale would make the company compliant with the minimum 10% public holding norm of market regulator Sebi. Sebi has mandated minimum public shareholding of 10% for state-run firms by 8 August 2013.
Shares of Hindustan Copper lost 6.62% to settle at Rs 72.65 on Tuesday, 2 July 2013.
Some steel shares fell sharply. JSW Steel (down 4.96%), Tata Steel (down 4.54%) and Sail (down 4.41%) declined. Jindal Steel & Power was up 0.98%.
Tata Power Company (TPC) lost 4.9% to Rs 82.50. The stock fell for second day in a row after credit rating agency Moody's Investors Service downgraded the outlook on TPC to negative from stable. The negative outlook reflects renewed uncertainties related to the material covenant breaches on bank debt associated with TPC's Gujarat-based Mundra Ultra Mega Power Project which is being executed under its fully owned subsidiary, Coastal Gujarat Power or CGPL, said Ray Tay, a Moody's Associate Vice President and Analyst.
Bharat Heavy Electricals (Bhel) lost 2.99% to Rs 178.20, with the stock sliding on profit booking. Shares of Bhel had rallied 12.66% in three trading sessions to settle at Rs 183.70 on Tuesday, 2 July 2013, from a recent low of Rs 163.05 on 27 June 2013.
L&T fell 2.6%. L&T during market hours on Tuesday, 2 July 2013, said that L&T Hydrocarbon has secured an order of over Rs 1000 crore to construct a paraxylene plant for a leading refinery in India. The order will be executed over a period of 30 months.
Lupin gained 3.7% to Rs 830.95 after striking a record high of Rs 834.65 in intraday trade today, 3 July 2013.
Realty stocks declined. Unitech (down 10.11%), HDIL (down 8.18%), D B Realty (down 4.91%), DLF (down 4.14%), Godrej Properties (down 1.15%), Oberoi Realty (down 1.39%) and Parsvnath Developers (down 2.79%) declined.
Auto stocks fell for the second straight day. Ashok Leyland lost 0.25%. The company's total sales declined 31.3% to 6,967 units in June 2013 over June 2012. Ashok Leyland's sales of commercial vehicles excluding small commercial vehicle (SCV) Dost declined 36.5% to 4,714 units in June 2013 over June 2012. Sales of SCV Dost fell 17.3% to 2,253 units in June 2013 over June 2012. The company announced the sales numbers on Monday, 1 July 2013.
Tata Motors shed 0.75% in volatile trade. The company on Monday, 1 July 2013, said that total sales of Tata commercial and passenger vehicles declined 18.08% to 52,708 units in June 2013 over June 2012. The company's domestic sales of Tata commercial and passenger vehicles declined 16.40% to 48,712 units in June 2013 over June 2012. Exports declined 34.17% to 3,996 units in June 2013 over June 2012.
Maruti Suzuki India slipped 1.15%. The company on Tuesday, 2 July 2013, announced the launch of limited edition of sporty version of its compact car model Swift. The Swift RS comes with new styling and graphics, which give it a distinct sporty character and looks, Maruti said. Swift RS will be available only in limited numbers and for a short period.
The company reported 12.6% fall in total sales to 84,455 units in June 2013 over June 2012. The company's domestic sales fell 7.8% to 77,002 units in June 2013 over June 2012. Exports declined 43% to 7,453 units in June 2013 over June 2012. The company announced the monthly sales data on Monday, 1 July 2013.
M&M shed 0.19%. The company on Monday, 1 July 2013, said its domestic tractor sales rose 19% to 26,723 units in June 2013 over June 2012. M&M's total tractor sales rose 17% to 27,749 units in June 2013 over June 2012. Exports declined 19.33% to 1,026 units in June 2013 over June 2012.
M&M's total automobile sales fell 7.81% to 38,092 units in June 2013 over June 2012. Sales of the company's passenger vehicle segment (which includes UVs and Verito) declined 12.93% to 17,232 units in June 2013 over June 2012. The company's domestic sales declined 7.04% to 36,207 units in June 2013 over June 2012. Exports fell 20% to 1,885 units in June 2013 over June 2012.
Hero MotoCorp dropped 1.65%. The company reported a 5.95% decline in total sales at 5.02 lakh units in June 2013 over June 2012.
Bajaj Auto slipped 1.17%. The company on Tuesday, 2 July 2013, reported 14% fall in total sales to 2.95 lakh units in June 2013 over June 2012. Motorcycles sales fell 20% to 2.54 lakh units in June 2013 over June 2012. The company said that the illegal strike at Chakan caused a loss of production of 20,000 motorcycles in June 2013. The company's commercial vehicles sales jumped 54% to 41,205 units in June 2013 over June 2012. Exports rose 4% to 1.20 lakh units in June 2013 over June 2012.
Bank stocks fell across the board after Reserve Bank of India (RBI) on Tuesday, 2 July 2013, issued draft guidelines that would require banks to make higher provisions and increase risk weights on exposure to companies that have unhedged foreign-currency exposure.
Among private sector banks, HDFC Bank (down 0.99%), Yes Bank (down 0.93%), ICICI Bank (down 1.46%), Kotak Mahindra Bank (down 2.49%), and Axis Bank (down 2.65%), edged lower.
Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Punjab National Bank, and Bank of Baroda shed by 4.46% to 7.83%.
Bank of India fell 6.23%. The bank said after market hours today, 3 July 2013, that the bank has decided to reduce its base rate from the existing 10.25% per annum to 10% per annum with effect from 8 July 2013.
RBI said in its draft guidelines issued on Tuesday, 2 June 2013, that unhedged foreign currency exposures of the corporate are an area of concern not only for individual corporates but also to the entire financial system. Corporates who do not hedge their foreign currency exposures can incur significant losses due to exchange rate movements. These losses may reduce their capacity to service the loans taken from the banking system and thereby affect the health of the banking system, it added.
RBI said that it had issued various guidelines advising banks to closely monitor the unhedged foreign currency exposures of their corporate clients and also factor this risk into the pricing. However, the extent of unhedged foreign currency exposures of the corporate continues to be significant and increases the probability of default in an environment of high currency volatility. RBI, therefore, decided to introduce incremental provisioning and capital requirements for bank exposures to corporates having unhedged foreign currency exposures.
Starting 1 October 2013, banks will have to monitor unhedged foreign currency exposure of borrowers at monthly intervals.
As per the new guidelines, for likely loss of 15-30%, the incremental provisioning over and above the existing standard provisioning will be 20 basis points (bps); for loss of 30-50%, it will be 40 bps; for loss of 50-75%, the provisioning will be 60 bps and above 75%, it will be 80 bps.
There is no provisioning for loss up to 15%. Besides, for a loss of 75% and above, there is a 25% increase in risk weight, the RBI said in its draft guidelines.
The draft guidelines advised banks to ensure that their policies and procedures for management of credit risk factor their exposure to currency-induced credit risks and are calibrated towards borrowers whose capacity to repay is sensitive to changes in the exchange rate and other market variables.
Power finance stocks declined sharply. REC (down 5.56%) and Power Finance Corporation (down 8.59%), fell.
Telecom stocks were mostly lower. Idea Cellular (down 1.02%), MTNL (down 2.04%), and Bharti Airtel (down 2.81%), edged lower. Tata Teleservices (Maharashtra) (up 1.87%) and Reliance Communications (up 0.15%) gained.
The Telecom Commission on Tuesday reportedly approved the enhancement of the foreign direct investment (FDI) limit in the telecom sector to 100% from 74%, where 49% of investment in an entity can be done through automatic route and FIPB's (Foreign Investment Promotion Board) approval will be required to raise further stake. The Telecom Commission's decision will now be submitted to the Union Cabinet for its approval.
MMTC declined by the maximum permissible level of 5% for the day at Rs 88.30, also its 52-week low, with the stock extending recent steep slide triggered by government concluding the divestment of 9.33% stake in the firm at a huge discount to the stock's ruling market price. On 13 June 2013, the Government of India (GoI) sold 9.33% stake in MMTC via Offer for Sale (OFS) through stock exchanges mechanism at an indicative price of Rs 60.86 per share, at a discount of 71.21% to the closing price of the stock of Rs 211.45 on 12 June 2013.
Shares of diamond jewellery maker Gitanjali Gems declined by the maximum permissible level of 5% for the day at Rs 202.85, also its 52-week low. The stock has witnessed a steep slide recently.
Indian services firms lost momentum in June as new business trickled in at the slowest pace in nearly two years, dashing hopes of a sustained pick-up in economic growth, a survey showed on Wednesday. The HSBC Markit Services Purchasing Managers' Index fell to 51.7 in June from May's three-month high of 53.6.
European stocks dropped on Wednesday, 3 July 2013, with banks and resource stocks coming under pressure. A growing crisis in Egypt, political turmoil in Portugal and downbeat data from China weighed on sentiment. Key benchmark indices in France, Germany and UK shed by 1.57% to 1.78%.
Fears of a government collapse in Portugal weighed on sentiment. The country's Prime Minister Pedro Passos Coelho said he will not step down after Foreign Minister Paulo Portas resigned on Tuesday afternoon in protest over the country's austerity policies. On Monday, the country's finance minister, Vitor Gaspar, stepped down.
Investors were also keeping a close eye on turmoil in Egypt. Egyptian President Mohammed Morsi refused to step down, as clashes amid protests over his rule turned deadly on Tuesday. Morsi has just a few hours to go to a deadline imposed by the military, which called on him to resolve the country's political crisis or the army will step in.
Meanwhile, the European Central Bank is widely expected to keep interest rates on hold after a monetary policy review tomorrow, 4 July 2013. The Bank of England also holds its monetary policy review tomorrow, 4 July 2013.
Asian stocks fell on Wednesday, 3 July 2013, as concerns about growth in China's services sector added to the selling pressure amid caution ahead of US jobs data later in the week. Key benchmark indices in China, Hong Kong, Indonesia, South Korea, Taiwan, Singapore and Japan were down 0.31% to 3.2%.
A pair of surveys monitoring China's services sector released Wednesday showed weak growth for June. The government-sponsored version of China's services Purchasing Managers' Index fell to 53.9 for June from May's 54.3, though it remained above the 50 level dividing expansion from contraction.
The services PMI in a separate survey by HSBC ticked up to 51.3 from 51.2 in May, but HSBC chief China economist Hongbin Qu said growth in the sector is expected to slow in coming months as the effect of value-added-tax reforms filter through.
Trading in US index futures indicated that the Dow could fall 69 points at the opening bell on Wednesday, 3 July 2013. US stocks edged lower on Tuesday, 2 July 2013, losing steam gained from reports showing solid growth for car sales and factory orders as investors anticipated the jobs report at the end of the week. The US government will unveil the influential nonfarm payrolls data for June 2013 on Friday, 5 July 2013.
The US stock market is open for a short duration today, 3 July 2013, and remains closed tomorrow, 4 July 2013, for Independence Day holiday.
Among US data due later on Wednesday, ADP is slated to release private-sector payroll projections for June, and the Labor Department is scheduled to publish weekly jobless-claims numbers. Also, the Institute for Supply Management is due to report on activity at service-sector companies in June.
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