Key benchmark indices weakened once again after trimming initial losses in morning trade. The S&P BSE Sensex was down 162.74 points or 0.85%, off close to 35 points from the day's high and up about 65 points from the day's low. The market breadth, indicating the overall health of the market, was weak. Weakness in Asian stocks weighed on sentiment. Bharti Airtel extended initial gains. Other telecom stocks were in red. Metal stocks extended recent losses, with Tata Steel and Sterlite Industries hitting 52-week low. State Bank of India (SBI) and ICICI Bank reversed initial losses.
Sun Pharmaceutical Industries trimmed initial losses triggered by the company announcing large lump-sum payment of $550 million as a part of a settlement of an ongoing patent litigation pending in the United States regarding Sun Pharma subsidiary's generic pantoprazole.
The market edged lower in early trade on weak Asian stocks. The barometer index, the S&P BSE Sensex, hit 8-week low below the psychological 19,000 mark. The 50-unit CNX Nifty also hit 8-week low. The market weakened once again after trimming initial losses in morning trade.
The market sentiment was affected adversely by data showing that foreign funds remained net sellers of Indian stocks on Wednesday, 12 June 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 1060.17 crore on Wednesday, 12 June 2013, as per provisional data from the stock exchanges.
Finance Minister P Chidambaram speaking on the state of the economy today, 13 June 2013, said he expects decisions to be announced in June that will accelerate economic reforms and spur investments in critical sectors and that steps government had taken in the last nine months have yielded results.
At 10:20 IST, the S&P BSE Sensex was down 162.74 points or 0.85% to 18.878.39. The index declined 225.56 points at the day's low of 18,815.57 in early trade, its lowest level since 18 April 2013. The index fell 127 points at the day's high of 18,914.13 in morning trade.
The CNX Nifty was down 31.55 points or 0.55% to 5,728.65. The index hit a low of 5,697.45 in intraday trade, its lowest level since 18 April 2013. The index hit a high of 5,729.85 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 674 shares fell and 373 shares rose. A total of 67 shares were unchanged.
Among the 30-share Sensex pack, 24 stocks fell and the rest of them rose. Tata Motors (down 2.4%), Wipro (down 2.18%) and Maruti Suzuki India (down 1.34%), edged lower.
Bharti Airtel 2.28%, with the stock extending initial gains.
Other telecom stocks declined. Idea Cellular (down 0.56%), Reliance Communications (down 1.36%), MTNL (down 3.43%) and Tata Teleservices (Maharashtra) (down 8.68%), edged lower.
Metal stocks extended recent losses. Sail (down 0.64%) and Hindalco industries (down 0.16%), edged lower.
Jindal Steel & Power fell 2.38% to Rs 229.35. The stock had recovered on Wednesday after Tuesday's steep slide triggered by the Central Bureau of Investigation (CBI) registering an FIR against Congress MP and company's Chairman Naveen Jindal in the coal scam case. The FIR has accused Navin Jindal and Jindal Power and Steel of misrepresentation of networth and concealing previous coal allotment. They are also charged with cheating and forgery. The Naveen Jindal group was allotted a total of 11 blocks, making it the single largest beneficiary of the controversial coal block allotment.
Tata Steel lost 0.55% to Rs 272.65, with the stock extending recent slide. The stock hit 52-week low of Rs 269.50 in intraday trade today, 13 June 2013.
Sterlite Industries fell 0.84% to Rs 82.90. The stock hit 52-week low of Rs 82.40 in intraday trade today, 13 June 2013.
Sun Pharmaceutical Industries (Sun Pharma) fell 2.6% to Rs 955.50, off the day's low of Rs 916. The company announced after market hours on Wednesday, 12 June 2013, that the company together with its subsidiaries, has settled an ongoing litigation pending in the United States District Court, District of New Jersey (Court) regarding Sun Pharma subsidiary's generic pantoprazole. Under the terms of the litigation settlement between Sun Pharma, and Wyeth, (now a division of Pfizer Inc.,) and Altana Pharma AG, (now known as Takeda GmbH) the parties have dismissed all their claims. Sun Pharma will pay a lump-sum $550 million as a part of this settlement.
In 2005, Wyeth and Altana had filed a patent infringement suit against Sun Pharma after Sun Pharma filed its abbreviated new drug application for pantoprazole. Sun Pharma launched its generic pantoprazole in the US on 30 January 2008. In April 2010, a jury had determined that Altana's patent is not invalid. On 3 June 2013, the Court began a jury trial to assess the amount of past damages that Sun Pharma owed for infringing Altana's now expired patent. This settlement now culminates the ongoing litigation, Sun Pharma said in a statement. Sun Pharma can continue to sell its generic pantoprazole in the US, it said.
State Bank of India (SBI) rose 0.84%, with the stock reversing initial losses.
ICICI Bank rose 0.07%, with the stock reversing initial losses.
In a strong measure aimed at defending the rupee, the Centre on Wednesday announced a hike in the foreign investment limits in government debt by $5 billion. The measure aims at reversing the outflow of FII funds from debt instruments, one of the reasons for the depreciation in the rupee in recent weeks. Currently, the government debt limit stands at $25 billion. The move comes a day after the Chief Economic Advisor to the finance ministry Raghuram Rajan had said the government will be announcing measures to ensure that portfolio investor inflows are enabled and encouraged.
A committee set up by the Securities and Exchange Board of India on Wednesday, 12 June 2013, recommended the market regulator to simplify rules on foreign portfolio investments in the country. Among the major recommendations, the committee has suggested that existing foreign institutional investors (FIIs), Sub Accounts and Qualified Foreign Investors (QFI) categories be merged into a new investor class to be termed as "Foreign Portfolio Investor" (FPI). The committee has also suggested allowing foreign venture-capital funds to invest in more sectors. Foreign venture funds are currently allowed to invest in only nine sectors including biotechnology, nanotechnology and information technology.
According to the panel, foreign institutional investors should be allowed to register with local depositories recommended by Sebi. Currently, FIIs that want to invest in the Indian market must register directly with the regulator. The committee has also asked Sebi to simplify verification processes -- also called know-your-customer documentation
Global credit rating agency, Fitch Ratings on Wednesday raised its outlook on India's sovereign debt to stable from negative. Fitch cited the government's steps to contain its budget deficit despite the economic slowdown as the main reason for raising the outlook. India also made progress in addressing structural issues such as regulatory uncertainties, delays in government approvals for industrial projects and problems in sectors such as power and mining, it said.
Fitch acknowledged challenges, noting a recovery would remain slow until a healthier investment climate is created, and warning the rupee drop would limit the scope for RBI rate cuts.
Fitch expects the government to meet its deficit target of 4.8% for this fiscal year. It also expects India's economic growth to accelerate to 5.7% in the current fiscal year from last year's decade-low of 5%, and improve further to 6.5% next year. But, a stronger recovery would require more measures to boost investment, it said.
Asian equities dropped on Thursday after the World Bank cut its global growth forecast amid concern central banks may pare monetary stimulus. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, Taiwan and South Korea shed by 0.73% to 4.37%.
The World Bank cut its global growth forecast for this year after emerging markets from China to Brazil slowed more than projected, while budget cuts and slumping investor confidence deepened Europe's contraction. The world economy will expand 2.2%, less than a January forecast for 2.4% growth and slower than last year's 2.3%, the bank said in a report. It lowered its prediction for developing economies and sees the euro region's gross domestic product shrinking 0.6%. In contrast, forecasts were raised for the US and Japan, which was helped by fiscal and monetary stimulus.
Trading in US index futures indicated that the Dow could fall 53 points at the opening bell on Thursday, 13 June 2013. US stocks fell on Wednesday as traders extended a selloff driven by concern about central banks winding down their stimulus measures. The Federal Open Market Committee meets next week after the Bank of Japan this week left its lending program unchanged.
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