Bank stocks edge lower as RBI tightens liquidity further

Key benchmark indices trimmed losses after a weak start triggered by mostly lower Asian stocks. Bank stocks edged lower after the Reserve Bank of India (RBI) on Tuesday, 23 July 2013 announced more measures to squeeze liquidity from the banking system to stem rupee's decline. The S&P BSE Sensex was down 65.06 points or 0.32%, up about 70 points from the day's low and off close to 10 points from the day's high. The market breadth, indicating the overall health of the market, was weak.

The market may remain volatile in the near future as traders roll over positions in the futures & options (F&) segment from the July 2013 series to August 2013 series. The near month July 2013 derivatives contracts expire tomorrow, 25 July 2013.

At 9:30 IST, the S&P BSE Sensex was down 65.06 points or 0.32% to 20,237.07. The index fell 137.46 points at the day's low of 20,164.67 in early trade. The index declined 53.49 points at the day's high of 20,248.64 in early trade.

The CNX Nifty was down 34.45 points or 0.57% to 6,043.35. The index hit a low of 6,022.30 in intraday trade. The index hit a high of 6,047.25 in intraday trade.

The market breadth, indicating the overall health of the market, was weak. On BSE, 525 shares declined and 343 shares rose. A total of 34 shares were unchanged.

Among the 30-share Sensex pack, 18 stocks rose and rest of them fell.

Bank stocks edged lower after the RBI's latest measures to squeeze liquidity from the banking system to stem rupee fall. ICICI Bank (down 2.97%), HDFC Bank (down 2.55%) and State Bank of India (down 2.15%), edged lower.

Housing finance major HDFC dropped 1.78%.

The Reserve Bank of India took new steps on Tuesday to support the rupee, signalling it will stay the course with its defence of the currency despite the risks to economic growth. The central bank tightened liquidity further and made it even harder for lenders to access funds with measures including lowering the amount banks can borrow or lend under its daily liquidity window. The RBI lowered the overall limit for borrowing under the daily liquidity adjustment facility (LAF) -- which offers funds in exchange for collateral -- for each bank to 0.5% of deposits from 1%. The central bank also said banks now needed to maintain 99 percent of their daily cash reserve ratio requirements -- the deposits they must set aside -- with the RBI, compared with 70% now. The change takes effect from the two-weekly period starting July 27. The RBI also announced the sale of short end cash management bills of Rs 6000 crore to drain out more cash from the banking system.

Ambuja Cements declined 2.64% ahead of its Q2 results today, 24 July 2013.

Cairn India rose 0.39% ahead of its Q1 results today, 24 July 2013.

Hero MotoCorp shed 0.84% ahead of its Q1 results today, 24 July 2013.

Asian stocks fell on Wednesday, 24 July 2013, after a private survey showed manufacturing weakened further in July in China. Key benchmark indices in China, Hong Kong, Indonesia, Japan, and Taiwan were down by 0.2% to 1.27%. Key benchmark indices in Singapore and South Korea rose by 0.13% to 0.16%.

China's manufacturing weakened further in July, signaling the worst of the nation's slowdown has yet to be reached, according to a preliminary survey of purchasing managers. The reading of 47.7 for an index released today by HSBC Holdings Plc and Markit Economics, was less than estimated and if confirmed in the final report Aug. 1, would be the lowest in 11 months. Readings below 50 indicate contraction.

Japan's exports rose for a fourth straight month in June as a weak yen made the nation's products more competitive and shipments to the European Union rebounded. Exports gained 7.4% from a year earlier, the Finance Ministry said in Tokyo today.

US stocks ended mostly lower on Tuesday after a decline in a regional manufacturing gauge prompted concern, but the Dow Jones Industrial Average climbed to a record close. The Federal Reserve Bank of Richmond said manufacturing activity in the central Atlantic region weakened.

Powered by Capital Market - Live News