Key benchmark indices slumped as European and Asian markets dropped after the Federal Reserve signaled that it may reduce the amount of monetary stimulus it provides as early as this year and on weak reading for manufacturing activity in China this month. The barometer index, the S&P BSE Sensex, hit over 9-week low below the psychological 19,000 level. The 50-unit CNX Nifty also hit its lowest level in more than 9 weeks. The Sensex was provisionally down 539.71 points or 2.8%, off close to 365 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. All the 13 sectoral indices on BSE were in the red.
The Fed's asset purchases, known more popularly as quantitative easing (QE), are regarded as a key source of global liquidity that helps support an array of assets, including equities.
Metal stocks slumped after a survey showed further slowdown in China's manufacturing sector in June 2013. Realty stocks declined, with realty major DLF hitting 52-week low. Bank stocks dropped as the yields on government bonds surged. Index heavyweight Reliance Industries (RIL) declined. NTPC dropped on reports that the state-run power equipment major scrapped its bond sale after a sell-off in government bonds caused worries about the pricing of its debt. Bhel hit 52-week low.
The market tumbled in early trade on weak Asian stocks. The Sensex hit one-week low below the psychological 19,000 level. Weakness continued on the bourses in morning trade. The market remained weak in mid-morning trade. The Sensex hit fresh intraday low in early afternoon trade. Weakness persisted on the bourses in afternoon trade. The market extended losses to hit fresh intraday low in mid-afternoon trade. The market weakened further to hit fresh intraday low in late trade.
Data showing that foreign funds remained net sellers of Indian stocks on Wednesday, 19 June 2013, affected market investor sentiment adversely. Foreign institutional investors (FIIs) sold shares worth a net Rs 544.97 crore on Wednesday, 19 June 2013, as per provisional data from the stock exchanges.
A setback was witnessed across the financial markets as the rupee hit record low against the dollar and yields on government bonds surged. The rupee was currently trading at 59.97, sharply weaker than Wednesday's close of 58.71/72.
The yields on government bonds rose sharply after trading resumed after a halt triggered by a breach in an indicative daily band. The daily cap on yield fluctuations was lifted for today by the Fixed Income Money Market and Derivatives Association of India, which sets the limit. The yield on the most traded paper -- 8.33% GS 2026 -- was up more than 16 basis points at 7.6082 per cent from Wednesday's close of 7.4458 per cent.
As per provisional figures, the S&P BSE Sensex was down 539.71 points or 2.8% to 18,705.99. The index tumbled 558.51 points at the day's low of 18,687.19 in late trade, its lowest level since 17 April 2013. The index fell 176.50 points at the day's high of 19,069.20 in opening trade.
The CNX Nifty was down 173.35 points or 2.98% to 5,648.90, as per provisional figures. The index hit a low of 5,645.65 in intraday trade, its lowest level since 16 April 2013. The index hit a high of 5,755 in intraday trade.
The total turnover on BSE amounted to Rs 1765 crore, higher than Rs 1657.56 crore on Wednesday, 19 June 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,666 shares fell and 639 shares rose. A total of 107 shares were unchanged.
Among the 30-share Sensex pack, 28 stocks fell and only two of them rose. Sun Pharmaceutical Industries rose 0.72% on defensive buying.
Bhel fell 4.94% to Rs 171.40. The stock hit 52-week low of Rs 170.65 in intraday today, 20 June 2013.
Index heavyweight Reliance Industries (RIL) dropped 3.68% to Rs 800.55. The stock hit a high of Rs 821 and low of Rs 794.80.
Bank stocks dropped as the yields on government bonds surged. Lower bond prices will result in diminution in value of bond holdings by banks. Bond yields and bond prices are inversely related. HDFC Bank (down 4.37%), ICICI Bank (down 3.82%) and State Bank of India (down 2.24%) edged lower.
Bank of India fell 7.55% as the stock turned ex-dividend today, 20 June 2013, for dividend of Rs 10 per share for the year ended 31 March 2013.
Dena Bank tumbled 9.43% as the stock turned ex-dividend today, 20 June 2013, for dividend of Rs 4.70 per share for the year ended 31 March 2013.
Union Bank of India dropped 7.94% as the stock turned ex-dividend today, 20 June 2013, for dividend of Rs 8 per share for the year ended 31 March 2013.
NTPC dropped 3.35% on reports that the state-run power equipment major scrapped its bond sale after a sell-off in government bonds caused worries about the pricing of its debt. NTPC was reportedly planning to raise up to Rs 1000 crore through an issue of dual tranche bonds on Thursday, 20 June 2013.
Metal stocks tumbled after a survey showed further slowdown in China's manufacturing sector in June 2013. Sterlite Industries (down 4.69%), Hindalco Industries (down 6.29%), Tata Steel (down 6.68%), and Jindal Steel & Power (down 10.52%), edged lower. China is the world's largest consumer of copper and aluminum.
Realty stocks declined. HDIL (down 5.84%), Unitech (down 5.39%), and D B Realty (down 5.23%), edged lower.
DLF fell 7.22% to Rs 175.40. The stock hit 52-week low of Rs 173.50 in intraday trade today, 20 June 2013.
European stock markets dropped on Thursday, 20 June 2013, after Federal Reserve Chairman Ben Bernanke said late the prior day the central bank may scale back its bond purchases this year, depending on the economic outlook. Key benchmark indices in UK, France and Germany were down by 2.35% to 2.73%.
UK retail sales rose more than economists forecast in May as consumers spent more online and food sales increased at their fastest pace for more than two years. Sales including auto fuel jumped 2.1% from April, when they fell 1.1%, the Office for National Statistics said today in London.
Asian stocks slumped on Thursday after Federal Reserve Chairman Ben Bernanke said the central bank may reduce bond purchases later this year should the US economy strengthen. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, Taiwan and South Korea fell by 1.35% to 3.68%.
Activity in China's vast manufacturing sector weakened further in June to a 9-month low as new orders faltered, a preliminary survey of purchasing managers showed on Thursday, reinforcing signs of tepid economic growth in the second quarter. The flash HSBC Purchasing Managers' Index fell to 48.3 in June from May's final reading of 49.2, drifting further away from the 50-point level demarcating expansion from contraction. It was the weakest level since September 2012.
Trading in US index futures indicated that the Dow could fall 121 points at the opening bell on Thursday, 20 June 2013. US stocks fell sharply on Wednesday after Federal Reserve Chairman Ben Bernanke said the central bank may scale back its bond purchases this year, depending on the economic outlook.
Bernanke said yesterday the central bank may start dialing down its unprecedented bond-buying program this year and end it entirely in mid-2014 if the economy finally achieves the sustainable growth the Fed has sought since the recession ended in 2009. In its announcement, the Federal Reserve after a two day policy meeting on Wednesday said it would continue to purchase $85 billion in bond purchases each month, but noted that the outlook for the economy and the labor market has improved since the fall. The Federal Open Market Committee (FOMC) reiterated that it was ready to hike or cut the pace of its asset buys, depending on the labor market and inflation.
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