Market drops for the 3rd day in a row

Key benchmark indices dropped for the third day in a row on rising expectations that the US Federal Reserve will soon start withdrawing its monetary stimulus to the US economy. But, the market trimmed losses after an initial sharp slide. The S&P BSE Sensex lost 61.48 points or 0.34%, up 275.06 points from the day's low and off 60.42 points from the day's high. The Sensex settled at its lowest level in over 18 weeks. The 50-unit CNX Nifty settled at over 11-month low. Intraday volatility was high. The market breadth, indicating the overall health of the market, was positive.

Stocks fell across emerging markets as investors prepare for a winding down of the Federal Reserve's easy money policies. The rupee hit record low against the dollar and many other Asian currencies fell on concern capital outflows will accelerate.

Indian stocks declined for the third straight trading session today, 20 August 2013. The Sensex has lost 1,121.55 points or 5.79% in three trading sessions from a recent high of 19,367.59 on 14 August 2013. The Sensex has fallen 1,099.66 points or 5.68% in this month so far (till 20 August 2013). The Sensex has declined 1,180.67 points or 6.08% in calendar 2013 so far (till 20 August 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 2,197.58 points or 10.75%. From a 52-week low of 17,250.80 on 5 September 2012, the Sensex has surged 995.24 points or 5.77%.

Coming back to today's trade, Vedanta group metal stocks rallied on reports that the legal hurdle has been cleared for government's stake sale in Hindustan Zinc and BALCO. Other metal stocks also gained. Shares of basmati rice exporters rallied. Auto stocks dropped. Telecom major Bharti Airtel rose on bargain hunting.

IT stocks declined on profit booking after recent gains. Many capital goods stocks fell on worries the ongoing slowdown in the economy could restrict new orders. Shares of L&T and Bhel hit 52-week low. Shares of Jaypee Group companies were mostly higher. Realty stocks were in demand. Bank stocks trimmed intraday losses.

Intraday volatility on the bourses was high today, 20 August 2013. The market edged lower in early trade as the rupee slumped to record low below 64 against the dollar. The Sensex regained the psychological 18,000 mark after falling below that level at the onset of the trading session. The market trimmed losses to hit fresh intraday high in morning trade as the rupee trimmed losses after a sharp initial slide. The intraday recovery gathered steam in mid-morning trade. The market weakened once again after paring almost entire intraday losses to hit fresh intraday high in early afternoon trade. A bout of volatility was witnessed in afternoon trade as key benchmark indices trimmed intraday losses after the rupee trimmed losses from an initial steep slide. High volatility was witnessed as key benchmark indices trimmed losses in mid-afternoon trade.

The rupee trimmed losses after hitting record low below 64 against the dollar. The partially convertible rupee was hovering at 63.26, weaker than its close of 63.13/14 on Monday, 19 August 2013. The rupee has declined sharply over the past few days on rising expectations that the US Federal Reserve will start withdrawing its monetary stimulus soon.

Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.

The market sentiment was affected adversely by data showing that foreign funds remained net sellers of Indian stocks on Monday, 19 August 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 653.70 crore from the secondary equity markets on Monday, 19 August 2013, as per data from Securities & Exchange Board of India (Sebi).

The S&P BSE Sensex shed 61.48 points or 0.34% to settle at 18,246.04, its lowest closing since 12 April 2013. The index lost 336.54 points at the day's low of 17,970.98 in early trade, its lowest level since 12 September 2012. The index fell 1.06 points at the day's high of 18,306.46 in afternoon trade.

The CNX Nifty was down 13.30 points or 0.25% to 5,401.45, its lowest closing level since 11 September 2012. The index hit a low of 5,306.35 in intraday trade. The index hit a high of 5,417.80 in intraday trade.

The total turnover on BSE amounted to Rs 1936 crore, higher than Rs 1844.66 crore on Monday, 19 August 2013.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,174 shares gained and 1,098 shares fell. A total of 128 shares were unchanged. The breadth alternately swung between positive and negative zone in intraday trade.

The BSE Mid-Cap index fell 0.42%, underperforming the Sensex. The BSE Small-Cap index rose 0.22%, outperforming the Sensex.

Among the sectoral indices on BSE, the S&P BSE Metal index (up 4.84%), the S&P BSE Realty index (up 2.49%), the S&P BSE Bankex (up 0.75%) and the S&P BSE PSU index (up 0.52%), the S&P BSE Oil & Gas index (up 0.25%), the S&P BSE FMCG index (up 0.08%), the S&P BSE Power index (down 0.25%) outperformed the Sensex.

The S&P BSE Capital Goods index (down 0.52%), the S&P BSE Teck index (down 1.13%), the S&P BSE IT index (down 1.4%), the S&P BSE Healthcare index (down 1.59%), the S&P BSE Auto index (down 2.26%) and the S&P BSE Consumer Durables index (down 3.54%) underperformed the Sensex.

Among the 30-share Sensex pack, 19 stocks declined and rest of them gained. Sun Pharmaceutical Industries (down 2.7%), Tata Power Company (down 1.73%) and ONGC (down 1.7%) edged lower from the Sensex pack.

Index heavyweight and cigarette maker ITC rose 0.54% to Rs 316, off the day's low of Rs 303.35.

Reliance Industries fell 0.09% to Rs 818.50. The stock hit a high of Rs 828.70 and low of Rs 806.25.

Coal India (CIL) rose 1.71%. The company during market hours today, 20 August 2013, said that five central trade unions operating in Coal India and its subsidiaries have served strike notice for 3 days from 23 September 2013 to 25 September 2013 against proposed divestment of 5% of CIL shares and other demands. It is understood that All India Coal Workers' Federation (CITU) has decided to withdraw their 3 days strike in CIL and its subsidiaries commencing from 19 September 2013 and join other unions for 3 days strike from 23 September 2013 to 25 September 2013, CIL said.

Indraprastha Gas lost 0.65% as the stock turned ex-dividend today, 20 August 2013, for dividend of Rs 5.50 per share for the year ended 31 March 2013 (FY 2013). Before turning ex-dividend, the stock offered a dividend yield of 2.09% based on the closing price of Rs 262.75 on Tuesday, 19 August 2013.

Auto stocks dropped. Mahindra & Mahindra (M&M) lost 2.69%. The company on 14 August 2013 said it plans to invest Rs 200 crore to strengthen its current product line-up of trucks and buses. The company plans to invest Rs 300 crore to explore new product lines in the LCV, ICV and MCV range, it said.

Maruti Suzuki India dropped 1.15%.

Tata Motors shed 5.07%. The company's global wholesale vehicle sales fell 14% to 87,566 vehicles in July 2013 over July 2012. Global sales of passenger cars fell 13% to 46,684 vehicles in July 2013 over July 2012. Sales of its Jaguar Land Rover brand rose 30.61% to 35,162 units. Sales of its Jaguar cars rose 76.53% to 7,174 vehicles and Land Rover sales were higher by 22.45% at 27,988 vehicles during the month. The company announced the global vehicle sales figures on 14 August 2013.

Shares of two wheeler makers also dropped. Bajaj Auto slipped 0.7%. Bajaj Auto on 13 August 2013 said that the company has received a notice from the workmen's union viz. Vishwa Kalyan Kamgar Sanghatana stating that the stoppage of work at Chakan plant has been withdrawn and all the workmen at Chakan plant will resume their duty in their respective shifts from 14 August 2013. The company had earlier informed on 25 June 2013, that it had received a notice from the workmen's union of its Chakan plant viz., Vishwa Kalyan Kamgar Sanghatana stating that they propose to call for a stoppage of work by all the workmen employed in Chakan plant from the morning shift of 28 June 2013. The workmen at Chakan Plant had however, stopped coming from 25 June 2013 itself, without assigning any reason.

Hero MotoCorp skidded 2.4%.

Many capital goods stocks fell on worries the ongoing slowdown in the economy could restrict new orders.

L&T declined 0.89% to Rs 731.70. The stock had hit a 52-week low of Rs 710.10 in intraday trade on Monday, 19 August 2013. The company announced during market hours today, 20 August 2013, that it has won an order valued around Rs 1500 crore from Petroleum Development Oman LLC (PDO). The engineering, procurement and construction (EPC) order is for the Yibal 3rd stage depletion compression (Y3DC) project at the Yibal-Natih gas reservoir in Oman. The project is scheduled to be completed in 39 months.

Bhel fell 2.66% to Rs 100.60. The stock hit a 52-week low of Rs 100.35 in intraday trade today, 20 August 2013.

Bharat Electronics (down 0.35%), BEML (down 1.12%), and Thermax (down 3.43%) declined.

ABB rose 0.06% to Rs 469.85. The stock reversed direction after hitting a 52-week low of Rs 453.30 in intraday trade today, 20 August 2013.

McNally Bharat Engineering Company jumped 5.29% after the company said it has received an order worth Rs 973 crore for supply of equipment, civil work, structural work, erection and commissioning of balance of plant package for a thermal power project.

Gujarat Apollo Industries lost 13.84% as the stock turned ex-dividend today, 20 August 2013, for dividend of Rs 10 per share for the year ended 31 March 2013 (FY 2013). Before turning ex-dividend, the stock offered a dividend yield of 9.89% based on the closing price of Rs 101.15 on Tuesday, 19 August 2013.

IT stocks declined on profit booking after recent gains. HCL Technologies (down 3.83%), Wipro (down 1.66%) and TCS (down 2.24%), declined. Infosys was unchanged at Rs 3005.90.

A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

Telecom major Bharti Airtel rose 1.21% to Rs 321.20 in volatile trade on bargain hunting. The stock had lost 8.39% in three trading days to Rs 317.35 on 19 August 2013 from a recent high of Rs 346.40 on 13 August 2013.

Metal stocks gained across the board. Jindal Steel & Power (up 0.39%), Tata Steel (up 3.83%), JSW Steel (up 4%), and Sail (up 7.2%), edged higher.

Vedanta group stocks rallied. Hindustan Zinc jumped 11.9% on reports that the legal hurdle has been cleared for government's stake sale in the company and BALCO. Government of India holds 29.54% stake in Hindustan Zinc while Sterlite Industries (India) has 64.92% stake as of 30 June 2013.

Sesa Goa rallied 14.02%. Sterlite Industries (India) galloped 8.39%. Sesa Goa on Monday, 19 August 2013, said that the merger of Sterlite Energy (SEL) with Sesa Goa and the demerger of the aluminium business undertaking of Vedanta Aluminium (VAL) into Sesa Goa pursuant to the Scheme of Amalgamation and Arrangement have become effective. The company's wholly owned subsidiary, Bloom Fountain, would acquire 38.68% stake in Cairn India together with the associated debt, effective 26 August 2013. Further, the company has also approved the acquisition of 1,215 MW thermal power plants situated at Jharsuguda and 90 MW co-generation facility at Lanjigarh, from its wholly owned subsidiary, VAL, on a going concern basis.

Sesa Goa (Sesa Goa) and Sterlite Industries (India) (Sterlite) in a joint statement issued on Saturday, 17 August 2013, said that the merger of Sterlite and The Madras Aluminium Company (MALCO) with Sesa Goa and transfer of MALCO power plant to Vedanta Aluminium (VAL) pursuant to the Scheme of amalgamation and arrangement amongst Sterlite, MALCO, Sterlite Energy (SEL), VAL and Sesa Goa and their respective Shareholders and Creditors (Composite Scheme) and the Scheme of Amalgamation of Ekaterina (Ekaterina) with Sesa Goa and their respective Shareholders and Creditors (Ekaterina Scheme) has become effective. The companies have fixed 28 August 2013 as the record date for determining the list of the shareholders of Sterlite, MALCO and Ekaterina to whom the equity shares of the Sesa Goa will be allotted as per terms of the scheme as already announced on 25 February 2012.

As per the swap ratio, every equity shareholder of Sterlite holding 5 equity shares of the company will be entitled to be issued 3 shares of the Sesa Goa.

Cairn India rose 3.48%.

Bank stocks trimmed initial losses. HDFC Bank dropped 0.34% to Rs 582, with the stock trimming losses after hitting a 52-week low of Rs 566 in intraday trade today, 20 August 2013.

ICICI Bank rose 1.58% to Rs 827.95. The stock reversed direction after hitting a 52-week low of Rs 790 in intraday trade today, 20 August 2013.

Axis Bank declined 1.52%. The bank said before market hours today, 20 August 2013, that it has filed an application with Foreign Investment Promotion Board for increasing the foreign shareholding limit in the bank. The RBI had issued press release on 14 August 2013, notifying that the foreign share holding by Global Depository Receipt (GDR)/American Depository Receipts (ADR)/Foreign Direct Investment (FDI)/Non Resident Indian (NRI)/Persons of Indian Origin (PIO)/Foreign Institutional Investors (FIIs) in Axis Bank has crossed the overall limit of 49% of its paid-up capital and that no further purchases of shares of the bank would be allowed through stock exchanges in India on behalf of GDR/AD/FDI/NRI/PIO/FIIs. The foreign shareholding in the bank as on 30 June 2013 was 48.96% and this includes investments through the FDI route in the form of Global Depository Receipts of 8.08% and other foreign holdings including FIIs of 40.88%.

Yes Bank fell 0.31% to Rs 240.60. The stock had lost as much as 8.76% at the day's low of Rs 220.20, also its 52-week low.

State Bank of India (SBI) rose 1.28% to Rs 1,550. The stock reversed direction after hitting a 52-week low of Rs 1,488.80 in intraday trade today, 20 August 2013.

Bank of Baroda lost 0.33% to Rs 450 after hitting a 52-week low of Rs 429.25 in intraday trade today, 20 August 2013.

Other PSU bank stocks were mixed. Canara Bank (up 3.33%) and Union Bank of India (up 6.47%) gained. Bank of India (down 1.94%) and Punjab National Bank (down 0.81%) declined.

Titan Industries lost 6.88%, with the stock extending recent losses triggered by Reserve Bank of India's measures to curb gold imports.

Videocon Industries rose 1.08%. MIRC Electronics surged 4.12%. The government on Monday, 19 August 2013, banned duty-free import of flat screen television by air travellers in its latest effort to narrow the country's current-account deficit. The government on Monday, 19 August 2013, decided to disallow the import of flat panel (LCD/LED/Plasma) televisions as part of free baggage allowance with effect from 26 August 2013.

Currently, air travellers can bring a flat screen television for personal use without paying any duty.

In effect, come 26 August 2013, travellers bringing in LCD/LED/Plasma TV as part of baggage will have to pay customs duty at 35% plus an education cess of 3% to take the total import duty to 36.05%.

Realty stocks advanced. DLF (up 2.9%), HDIL (up 1.77%), D B Realty (up 2.32%), Indiabulls Real Estate (up 4.91%) edged higher.

Unitech spurted 7.1% on reports the company has shortlisted US-based private equity firm Blackstone and Singapore's sovereign wealth fund GIC to bid for its IT special economic zone (SEZ) in Gurgaon. The SEZ is likely to be sold for more than Rs 2700 crore, reports suggested, adding that the final buyer of SEZ will be decided by mid-September 2013.

Unitech Corporate Parks (UCP), a Unitech group firm listed on London's Alternative Investment Market and set up to invest in commercial real estate of India, has 60% stake in the Gurgaon SEZ comprising 3.6 million square feet commercial space. Unitech has remaining 40% stake in the SEZ.

According to reports, Unitech is expected to get around Rs 1100 crore from the transaction. The company will reportedly use the proceeds to reduce its debt.

Shares of Jaypee Group companies were mostly higher. Jaiprakash Associates advanced 4.22%. Jaypee Infratech shed 0.95%.

Jaiprakash Power Ventures rose 3.7% on reports the company is looking to sell stake in its two hydro power projects, namely, the 300 megawatts (MW) Baspa stage II project and the 1000 MW Karcham-Wangtoo hydroelectric project.

Shares of basmati rice exporters rallied. L T Foods rose by maximum permissible limit for the day of 20%. KRBL rose 4.54%. Kohinoor Foods gained 4.91%.

European stock markets edged lower on Tuesday, 20 August 2013, with investors cautious of placing any new positions ahead of the release of minutes from the latest US Federal Reserve meeting, due on Wednesday. Key benchmark indices in UK, France and Germany were down by 0.61% 1.35%.

Asian stocks retreated on Tuesday, 20 August 2013, following a fourth straight day of losses on the Wall Street on Monday, 19 August 2013. Key benchmark indices in China, Indonesia, Singapore, Hong Kong, Japan, South Korea and Taiwan were down by 0.62% to 3.21%.

Trading in US index futures indicated a flat opening of US stocks on Tuesday, 20 August 2013. US stocks edged lower on Monday after the yield on the 10-year Treasury bond hit fresh two-year highs, raising worries about what impact higher rates will have on the US economic recovery.

The Federal Open Market Committee (FOMC) will tomorrow, 21 August 2013, issue minutes of its recent policy meeting held on 30 and 31 July 2013. The minutes of FOMC meet may help provide clues about the future of Fed's bond-buying program.

The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.

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