Key benchmark indices edged lower after witnessing high intraday volatility. Index heavyweight Reliance Industries (RIL) dropped. The S&P BSE Sensex was provisionally down 38.64 points or 0.2%, off close to 265 points from the day's high and up about 135 points from the day's low. The market breadth, indicating the overall health of the market, was weak. FMCG major Hindustan Unilever (HUL) rose on bargain hunting after the recent steep losses.
Mahindra & Mahindra (M&M) dropped after the company said that as part of aligning its production with sales requirements, the company would be observing no production days at its automotive plants for a period ranging from 0 to 6 days in the forthcoming months. Shares of two wheeler makers were mixed after PSU OMCs hiked petrol price. Bank of Baroda declined after the state-run bank reported rise in sticky loans at the time of announcing Q1 results today, 1 August 2013. Shares of Financial Technologies crashed after the National Spot Exchange, a commodities exchange, on Wednesday, 31 July 2013, said it has suspended trading of contracts, other than e-Series contracts till further notice. Shares of Multi Commodity Exchange of India (MCX), a commodity futures exchange promoted by Financial Technologies, fell by the maximum permissible level of 20% for the day.
The market surged in early trade on firm Asian stocks. A bout of volatility was witnessed as key benchmark indices trimmed initial gains in morning trade. High volatility was witnessed as key benchmark indices reversed strong initial gains after the results of a private survey data showed that slowdown in factory activity deepened last month. Immense volatility was witnessed as key benchmark indices regained positive terrain in early afternoon trade. The BSE Sensex pared gains while the CNX Nifty slipped into the red in afternoon trade. Key benchmark indices alternately moved hovered between positive and negative terrain in mid-afternoon trade. Intraday volatility continued in late trade.
As per provisional figures, the S&P BSE Sensex was down 38.64 points or 0.2% to 19,307.06. The index jumped 223.50 points at the day's high of 19,569.20 in early trade, its highest level since 30 July 2013. The index fell 175.24 points at the day's low of 19,170.46 in early afternoon trade.
The CNX Nifty was down 17.25 points or 0.3% to 5,724.75, as per provisional figures. The index hit a high of 5,808.50 in intraday trade, its highest level since 30 July 2013. The index hit a low of 5,676.85 in intraday trade.
The total turnover on BSE amounted to Rs 2238 crore, lower than Rs 2372.69 crore on Wednesday, 31 July 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,429 shares fell and 786 shares rose. A total of 140 shares were unchanged.
Among the 30-share Sensex pack, 17 stocks fell and rest of them rose. Coal India (down 4.42%), ONGC (down 3.33%) and Tata Steel (down 2.74%), declined.
Lupin rose 0.25%. The company announced during market hours today, 1 August 2013, that its US subsidiary Lupin Pharmaceutical, Inc (LPI) has received approval for its Ranolazine Extended release tablets, 500 mg and 1000 mg from the United States Food & Drug Administration (USFDA). The drug is a generic version of Gilead Sciences, Inc's Ranexa Extended-release tablets, 500 mg and 1000 mg strengths. The drug is indicated for the treatment of chronic angina. The drug had US sales of about $443.40 million for twelve months ended March 2013.
Private sector Bank HDFC Bank rose 3.92%.
FMCG major Hindustan Unilever (HUL) rose 2.94% on bargain hunting after the recent steep losses triggered by the company reporting a muted growth in bottom line in Q1 June 2013. The company's net profit declined 23.43% to Rs 1019.25 crore on 5.88% increase in total income to Rs 6985.79 crore in Q1 June 2013 over Q1 June 2012. The result was announced on 26 July 2013.
Index heavyweight Reliance Industries (RIL) declined 2.74%.
Shares of power equipment major Bharat Heavy Electricals (Bhel) declined 4.55% to Rs 151.05. The stock had hit a 52-week low of Rs 148.35 in intraday trade on Wednesday, 31 July 2013.
Bank of Baroda fell 8.3% to Rs 514 as sticky loans rose in Q1. The stock hit 52-week low of Rs 512.10 in intraday trade today, 1 August 2013. The bank's ratio of gross non-performing assets (NPA) to gross advances increased to 2.99% as on 30 June 2013, from 2.4% as on 31 March 2013 and 1.84% as on 30 June 2012. The ratio of net NPA to net advances increased to 1.69% as on 30 June 2013, from 1.28% as on 31 March 2013 and 0.65% as on 30 June 2012.
The bank's net profit rose 2.54% to Rs 1167.87 crore on 14.89% rise in total income to Rs 10717.49 crore in Q1 June 2013 over Q1 June 2012. The bank announced Q1 result during market hours today, 1 August 2013.
Tata Motors declined 0.53%. Tata Motors' total sales (including exports) of Tata commercial and passenger vehicles in July 2013 were 51,468 vehicles. The company's domestic sales of Tata commercial and passenger vehicles for July 2013 were 47,191 units. The company's sales from exports were 4,277 units in July 2013.
Mahindra & Mahindra (M&M) dropped 4.07% after the company said that as part of aligning its production with sales requirements, the company would be observing no production days at its automotive plants for a period ranging from 0 to 6 days in the forthcoming months. Mahindra Vehicle Manufacturers, a wholly owned subsidiary of the company, would also be observing similar no production days for its plant at Chakan. The management would be having a close watch on the market conditions and would from time to time be reviewing such no production days to adjust production in line with the demand, M&M said.
M&M during market hours today, 1 August 2013, said its auto sales fell 21% to 37,096 units in July 2013 over July 2012.
Speaking on the monthly performance, Pravin Shah, Chief Executive, Automotive Division, M&M said: "Over the last few months, the auto industry has been going through one of its worst phases of the last decade with planned shutdowns being taken by companies to correct demand-supply mismatch. The industry is in desperate need for an immediate stimulus from the government. With interest rates remaining unchanged and the rupee plunging to new lows, lowering of excise duty is the need of the hour which will rev up demand for auto products, leading up to the festive season".
M&M separately also said that its total tractor sales rose 12% to 18,469 units in July 2013 over July 2012. Its domestic tractor sales rose 15% to 17,771 units in July 2013 over July 2012. Exports declined 32% to 698 units in July 2013 over July 2012.
Speaking on the monthly performance, Rajesh Jejurikar, Chief Executive, Tractor and Farm Mechanization, M&M said: "The second quarter of FY 2014 has begun well and we are happy with our domestic volume of 17,771 units and 15% growth achieved in July 2013. The monsoon this year has been normal, which augurs well for the farm sector. A revival in agri-production will provide greater impetus to the economy amidst the overall slowdown".
Shares of two wheeler makers were mixed after PSU OMCs hiked petrol price by 70 paise per litre. The increase in rates, which are excluding local sales tax or VAT, will be effective from Thursday, 1 August 2013. Bajaj Auto rose 0.48%. Hero MotoCorp declined 0.67%.
Financial Technologies lost a staggering 66.10% to Rs 183.60 after the National Spot Exchange (NSEL), a commodities exchange, on Wednesday, 31 July 2013, said it has suspended trading of contracts, other than e-Series contracts till further notice. Financial Technologies is one of the two promoters of the National Spot Exchange.
In a clarification the stock exchanges, Mr. Jignesh Shah, Chairman & Managing Director of Financial Technologies (India) (FTIL) said that this action of NSEL does not entail any financial liability on FTIL and that the business of FTIL is as usual. "We are confident that NSEL will resolve the situation within the contours of its Bye-laws and Rules," Shah said.
The National Spot Exchange (NSEL) said it has also decided to merge the delivery and settlement of all pending contracts and deferred the same for a period of 15 days. Consequently, the positions outstanding in the contracts will be settled by way of delivery and payment after expiry of 15 days. The exchange will announce a revised settlement calendar and contracts due for settlement after this 15 days period, it said.
The National Spot Exchange said that following the directions issued by the Department of Consumer Affairs, Government of India on 12 July 2013, the exchange had given an undertaking to the Government and simultaneously introduced T+10 contracts with Trade for Trade settlements. This was done with a view to ensure orderly participation without creating any negative sentiments in the market, it said. Such structural change has disrupted the market equilibrium as volumes on the exchange have gone down significantly. It created conflicting views in the minds of large number of members that there are certain regulatory issues pertaining to the contracts running on the exchange in view of the government's direction dated 12 July 2013, which has been widely reported in media. This abrupt action has created uncertainty and doubt about continuity of trading on the exchange and hence most of the participants started withdrawing from the market, the National Spot Exchange said. While the exchange has run successfully without any disruption since last five years, such structural change has created market disequilibrium, leading to this scenario, it said.
The exchange will ensure that the process of settlement takes place in orderly manner and all participants get their rightful dues in accordance with Rules and Bylaws of the Exchange keeping in view the interest of the participants, it said.
Shares of Multi Commodity Exchange of India (MCX), a commodity futures exchange promoted by Financial Technologies, fell by the maximum permissible level of 20% of the day to Rs 512.05. In response to the media queries regarding impact of National Spot Exchange (NSEL) circular, if any, on MCX, Mr. Shreekant Javalgekar, MD & CEO, MCX has clarified that there will not be any impact of NSEL's circular on the operations and financials of MCX.
The Reserve Bank of India said on Thursday that foreign institutional investors who have issued a participatory note, can hedge their forex risk in these securities provided they have a mandate from the participatory note holder.
European stock markets edged higher on Thursday, 1 August 2013, after the US Federal Reserve kept its multibillion-dollar bond-buying program in place and China data signaled an improvement in the manufacturing sector. Key benchmark indices in UK, Germany and France were up by 0.41% to 1.18%.
Euro-area manufacturing unexpectedly expanded in July for the first time in two years, led by Germany, adding to signs the currency bloc's economy is emerging from a record-long recession. A manufacturing index based on a survey of purchasing managers rose to 50.1 from 48.8 in June, London-based Markit Economics said today.
The European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions later in the global day today, 1 August 2013.
Asian stocks rose on Thursday, 1 August 2013, after the Federal Reserve maintained its bond-buying program at current levels. Key benchmark indices in Hong Kong, China Japan, Singapore, Indonesia and South Korea rose by 0.35% to 2.47%. Taiwan's Taiwan Weighted fell 0.64%.
A privately compiled gauge of China's manufacturing activity sank to an 11-month low, the index's publishers HSBC and Markit said Thursday. The HSBC manufacturing Purchasing Managers' Index fell to 47.7, down from June's final reading 48.2. The result contrasted with an official version of the manufacturing PMI, which unexpectedly rose to 50.3 from June's 50.1. Any reading above 50 indicates activity is expanding, and the July data marked the third straight month the HSBC registered contraction, and also the third month the two PMIs differed on whether factory activity was rising. HSBC's PMI covers a smaller number of firms and focuses on smaller manufacturers, while the official PMI includes more of the large state-run firms. HSBC's survey also showed new orders falling at their fastest rate in almost a year, though pace of the contraction for new export orders slowed.
China's government pledged to prevent growth from slipping below a reasonable level as manufacturing gauges gave a mixed picture of the strength of the world's second-biggest economy. The nation can't blindly stimulate economic growth, nor can it allow economic growth to decelerate to a level out of the reasonable zone, the State Council Information Office said in Beijing after a Purchasing Managers' Index reading of 50.3 for July, up from 50.1 in June.
Chinese leaders pledged at a Politburo meeting earlier this week to maintain steady second-half growth while pressing on with economic reforms.
Trading in US index futures indicated that the Dow could gain 110 points at the opening bell on Thursday, 1 August 2013. US stocks ended mixed on Wednesday after a busy day of news that included a policy statement from the Federal Reserve and a mixed report on US economic growth. Second-quarter US gross domestic product grew 1.7%, above the 1.1% pace expected. However, the report also included a steep downgrade in first-quarter GDP growth, which is now estimated at 1.1% instead of 1.8%.
The Federal Open Market Committee, which has floated the prospect of reductions to its stimulus program should economic risks abate, said yesterday after a two-day long meet that while growth should pick up, persistently low inflation may hamper the recovery. Policy makers, however, expect inflation to move back toward its 2% objective over the next 18 months. The Fed slightly downgraded its view of economic recovery. The Fed said that that the world's largest economy was expanding at a "modest" pace. It had called the pace "moderate" in June.
The Fed offered no clues as to when it plans to slow the pace of monetary stimulus. 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.
The influential US non-farm payroll data for July 2013 is due tomorrow, 2 August 2013.
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