Weakness continued on the domestic bourses as stocks fell across Asia 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 BSE Sensex, was down 373.68 points or 1.94%, off close to 200 points from the day's high and up about 50 points from the day's low. The market breadth, indicating the overall health of the market, was extremely weak. Except BSE IT index all the other sectoral indices on BSE were in the red. Metal stocks extended initial losses after a survey showed further slowdown in China's manufacturing sector in June 2013. Wipro extended initial gain. Infosys reversed initial losses.
Bank stocks edged lower. MMTC was locked at 5% lower circuit at Rs 139.70 on BSE, 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 last week.
The market tumbled in early trade on weak Asian stocks. The Sensex hit one-week low below the psychological 19,000 level. The 50-unit CNX Nifty also hit one-week low. Weakness continued on the bourses in morning trade.
Data showing that foreign funds remained net sellers of Indian stocks on Wednesday, 19 June 2013, affected market 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.
The rupee recovered after hitting record low against the dollar in early trade. The rupee was currently trading at 59.62, sharply weaker that Wednesday's close of 58.71/72. The Reserve Bank of India (RBI) on Monday, 17 June 2013, refrained from cutting its key policy rate further despite sluggish economic growth due to the recent steep slide in rupee against the dollar. The central bank after a monetary policy review said that the weakness in rupee could adversely impact inflation which has been slowing in the past few months. A weak rupee makes the cost of oil and other imported goods higher in rupee terms, adding to inflationary pressure.
At 10:20 IST, the S&P BSE Sensex was down 373.68 points or 1.94% to 18,872.02. The index tumbled 423.05 points at the day's low of 18,822.65 in early trade, its lowest level since 13 June 2013. The index fell 176.50 points at the day's high of 19,069.20 in opening trade.
The CNX Nifty was down 122.30 points or 2.1% to 5,699.95. The index hit a low of 5,686.60 in intraday trade, its lowest level since 13 June 2013. The index hit a high of 5,755 in intraday trade.
The market breadth, indicating the overall health of the market, was extremely weak. On BSE, 1,175 shares fell and 385 shares rose. A total of 74 shares were unchanged.
Among the 30-share Sensex pack, 28 stocks fell and only one of them rose.
Wipro rose 1.01%, with the stock extending initial gain. Infosys rose 0.25%, with the stock reversing initial losses.
Bank stocks edged lower. State Bank of India (down 1.78%), HDFC Bank (down 2.44%) and ICICI Bank (down 3.77%), edged lower.
Bank of India fell 4.57% 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 6.94% 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 fell 4.37% as the stock turned ex-dividend today, 20 June 2013, for dividend of Rs 8 per share for the year ended 31 March 2013.
Metal stocks extended initial losses after a survey showed further slowdown in China's manufacturing sector in June 2013. Sterlite Industries (down 3.58%), Hindalco Industries (down 4.03%), Tata Steel (down 4.37%) and Jindal Steel & Power (down 5.45%), edged lower. China is the world's largest consumer of copper and aluminum.
Ranbaxy Laboratories rose 0.18%. The company said during market hours today, 20 June 2013, that it is disappointed with the decision by the European Commission to rule its patent settlement agreement with Lundbeck, covering the molecule Citalopram, anti competitive and intends to appeal the decision to the general court of the European Union. These events took place over ten years ago, and the company considers that the Commission has misunderstood the facts and misapplied the law. It believes it has strong grounds of appeal. Ranbaxy said it is committed to conducting its business in compliance with the European law and is dedicated to offering high quality, affordable medicines for the benefit of patients, prescribers, customers and the European healthcare system.
European antitrust regulators had imposed a fine of a total of 146 million euros on nine drugmakers, including Denmark's Lundbeck and Ranbaxy, for blocking the supply of a cheaper anti-depressant to the market, the first EU sanction against such deals.
MMTC was locked at 5% lower circuit at Rs 139.70 on BSE, 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 last week. The government last week 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.
Sintex Industries fell 4.22% after the National Stock Exchange said it will exclude the stock from the futures and options segment. NSE said futures and options (F&O) contracts for new expiry months in Sintex Industries will not be issued on expiry of existing contract months. However, the existing unexpired contracts of expiry months June 2013, July 2013 and August 2013 will continue to be available for trading till their respective expiry and new strikes will also be introduced in the existing contract months. Accordingly, no contracts shall be available for trading in Sintex Industries with effect from 30 August 2013.
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 1.33% to 2.81%.
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 60 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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