Key benchmark indices cut steep intraday losses in early afternoon trade on recovery in Asian stocks. Sentiment was hit as bond prices fell after the Reserve Bank of India (RBI) after market hours on Monday, 15 July 2013, announced measures to tighten liquidity in the banking system to prevent a sharp depreciation of the rupee against the dollar. While the rupee surged after the RBI measures, bond prices declined sharply. The barometer index, the S&P BSE Sensex was down 246.01 points or 1.23%, up 138.89 points from the day's low and off 23 points from the day's high. The market breadth, indicating the overall health of the market, was weak. Investor sentiment was also hit adversely after South Korean steel major Posco scrapped a large steel project in Karnataka.
Index heavyweight and cigarette major ITC scaled record high. Shares of public sector oil marketing companies gained for second day in a row following a petrol price hike announced over the weekend. Bank stocks slumped as RBI's latest measures to tighten liquidity in the banking system will make it costlier for banks and financial companies to raise short-term funds. Interest rate sensitive auto stocks also declined. Steel stocks declined South Korean steel major Posco scrapped a large steel project in Karnataka. Other metal stocks declined.
Key benchmark indices dropped amid initial volatility as the yields on government bonds rose after the Reserve Bank of India (RBI) after market hours on Monday, 15 July 2013, announced a slew of measures to address exchange rate volatility. The BSE Sensex, fell below the psychological 20,000 mark. The 50-unit CNX Nifty fell below the psychological 6,000 mark. Weakness continued on the bourses in morning trade. Key benchmark indices weakened further in mid-morning trade. Key benchmark indices cut steep intraday losses in early afternoon trade on recovery in Asian stocks.
The Reserve Bank of India (RBI) after market hours on Monday, 15 July 2013, announced a slew of measures to address exchange rate volatility. RBI raised the Marginal Standing Facility (MSF) rate and Bank Rate each by 200 bps to 10.25% while capped the amount up to which banks can borrow or lend under its daily liquidity window at Rs 75000 crore. Furthermore, RBI will additionally sell Rs 12000-crore of government bonds on Thursday, 18 July 2013, to mop up liquidity from the system, it said.
The RBI said it will continue to closely monitor the markets, the liquidity situation and the macroeconomic developments and will take such other measures as may be necessary, consistent with the growth-inflation dynamics and macroeconomic stability.
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Finance Minister P. Chidambaram today, 16 July 2013, said RBI's steps to curb rupee liquidity are aimed at quelling excessive speculation and volatility in the forex market and should not be read as a prelude to policy rate changes.
While the rupee surged after the RBI measures, bond prices fell. The rupee was hovering at 59.3850 versus dollar, against Monday's close of 59.89/90. In the debt market, the yield on the most traded 8.33 GS 2026 was hovering at 8.2281%, sharply higher than its close at 7.6656% on Monday. Bond yield and bond prices are inversely related.
Foreign institutional investors (FIIs) sold shares worth a net Rs 227.26 crore on Monday, 15 July 2013, as per provisional data from the stock exchanges.
At 12:20 IST, the S&P BSE Sensex was down 246.01 points or 1.23% to 19,788.47. The index lost 384.90 points at the day's low of 19,649.58 in early trade, its lowest level since 11 July 2013. The index fell 223.01 points at the day's high of 19,811.47 in morning trade.
The CNX Nifty was down 86.90 points or 1.44% to 5,943.90. The index hit a low of 5,910.95 in intraday trade, its lowest level since 11 July 2013. The index hit a high of 5,954 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,269 shares declined and 630 shares gained. A total of 106 shares were unchanged.
The total turnover on BSE amounted to Rs 924 crore by 12:20 IST compared to Rs 759 crore by 11:20 IST.
Among the 30-share Sensex pack, 23 stocks declined and rest of them gained.
Index heavyweight and cigarette major ITC rose 1.05% to Rs 355.75 after striking a record high of Rs 357.10 in intraday trade today, 16 July 2013.
Bank stocks slumped as RBI's latest measures to tighten liquidity in the banking system will make it costlier for banks and financial companies to raise short-term funds. ICICI Bank (down 5.54%), HDFC Bank (down 2.39%) and State Bank of India (down 4.65%) declined.
Shares of public sector oil marketing companies gained for second day in a row following a petrol price hike announced over the weekend.
BPCL (up 1.87%), HPCL (up 0.97%) and Indian Oil Corporation (up 1.01%), edged higher.
On Monday, 15 July 2013, Indian Oil Corporation (up 1.7%) and HPCL (up 0.19%), edged higher. However, BPCL fell 0.83%.
Public sector oil marketing companies (PSU OMCs) announced hike in price of petrol by Rs 1.55 a litre as the falling rupee made imports costlier. Actual increase will be higher and will vary from city to city depending on local taxes. The new price was effective from midnight Sunday, 14 July 2013. Meanwhile, the price of diesel was kept unchanged.
Public sector oil marketing companies (PSU OMCs) suffer under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.
Interest rate sensitive auto stocks declined. Maruti Suzuki India (down 2.59%) and Mahindra & Mahindra (M&M) (down 1.43%) declined.
Tata Motors shed 1.66%. Tata Motors Group's global wholesales in June 2013, including Jaguar Land Rover, were 84,458 units. Global wholesales of all commercial vehicles -- Tata, Tata Daewoo and the Tata Hispano Carrocera range -- were 41,577 units in June 2013. Global wholesales of all passenger vehicles in June 2013 were 42,881 units. Global wholesales of Tata passenger vehicles in June 2013 were 12,345 units. Global wholesales for Jaguar Land Rover were 30,536 vehicles. Jaguar wholesales for the month were 6,182 vehicles while Land Rover wholesales for the month were 24,354 vehicles. Tata Motors announced the data on global wholesales after market hours on Monday, 15 July 2013.
Two wheeler stocks declined. Bajaj Auto fell 1.39%. Hero MotoCorp declined 2.3%.
Steel stocks declined after South Korean steel major Posco on Tuesday it is no longer pursuing plans to build a steel plant in Karnataka after failing to secure land and infrastructure due to local opposition. "Since signing the memorandum of understanding in June 2010, we have been in talks with Karnataka state to secure mining rights, land, and infrastructure. But we have agreed to drop the project given a delay in (acquiring mining rights) and opposition by local people," Posco, the world's fourth-largest steelmaker by output, said in a filing to the Korea Exchange.
JSW Steel (down 3.06%), Tata Steel (down 2.06%), Sail (down 2.58%), Jindal Steel & Power (down 2.41%) edged lower.
Other metal stocks declined. Sterlite Industries (India) (down 3.78%), Hindustan Zinc (down 1.87%), Sesa Goa (down 3.14%), NMDC (down 1.71%), Hindalco Industries (down 1.9%), and Hindustan Copper (down 1.96%) edged lower.
Asian shares edged higher on Tuesday, taking their cue from US stocks after weaker-than-forecast US retail sales growth backed the view that the Federal Reserve will hold off reducing its bond-buying stimulus anytime soon. Key benchmark indices in Hong Kong, Taiwan, Indonesia and Japan were up 0.07% to 0.64%. Key benchmark indices in China, South Korea and Singapore were down 0.23% to 0.47%.
Trading in US index futures indicated a flat opening of US stocks on Tuesday, 16 July 2013. US stocks climbed modestly on Monday, with the S&P 500 and the Dow industrials rising to record closing highs again, after Citigroup Inc. reported better-than-expected earnings.
Federal Reserve Chairman Ben Bernanke is due to deliver testimony on monetary policy in Washington on 17 and 18 July 2013. The minutes of the Fed's June meeting released on 10 July 2013 showed that while "several members judged that a reduction in asset purchases would likely soon be warranted," many want to see further improvement in the labor market before reducing the central bank's $85 billion-a-month quantitative easing program. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth. At a press conference following the June 18-19 meeting, Bernanke said the central bank could start reducing its $85 billion in monthly bond purchases later this year if the economy continues to improve in line with its forecasts.
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