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Market in recovery mode on strong European cues

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Key benchmark indices pared intraday losses in afternoon trade after European market opened higher. The S&P BSE Sensex was down 165.71 points or 0.85%, up close to 144 points from the day's low and off about 93 points from the day's high. The market breadth, indicating the overall health of the market, was negative. Page Industries, Bajaj Finance, Alembic Pharmaceuticals, NTPC and Reliance Power saw a surge in volumes on BSE today, 8 July 2013.

Investor sentiment was affected adversely as the rupee hit record low below 61 a dollar as stronger than expected US job data fuelled expectations the US Federal Reserve will slow the pace of monetary stimulus later this year. The Fed's bond-buying program which has flooded global markets with liquidity has helped support an array of assets, including equities in recent years. The weakness on the domestic bourses today, 8 July 2013, was a part of a weakness across Asian markets.

 

The market edged lower in early trade as Asian stocks fell after stronger than expected US job data fuelled expectations the US Federal Reserve will slow the pace of monetary stimulus later this year. Weakness continued in morning trade. The Sensex continued to hover in negative terrain in mid-morning trade. The market trimmed intraday losses in early afternoon trade. Key benchmark indices pared intraday losses in afternoon trade after European market opened higher.

The Indian rupee sank to a record low against the US dollar on Monday, 8 July 2013, mirroring losses in most emerging market currencies after strong US employment data raised fears that the US Federal Reserve would roll back its monetary stimulus. The rupee was trading at 61.0825 versus dollar, compared with Friday's close of 60.225/235.

Indian government bonds also came under selling pressure on fears that foreign investors would continue to pull out of Indian debt to chase higher bond yields in the US. The yield on the most traded 8.2% GS 2025 was hovering at 7.7222%, higher that its close at 7.6731% on Friday, 5 July 2013. Bond prices and yields move in opposite directions. The Fixed Income Money Market and Derivatives Association of India, which along with the RBI oversees bond markets, said on its website that it had removed price filters on bonds for Monday's session.

At 13:15 IST, the S&P BSE Sensex was down 165.71 points or 0.85% to 19,330.11. The index declined 309.90 points at the day's low of 19,185.92 in early trade, its lowest level since 3 July 2013. The index fell 73.13 points at the day's high of 19,422.69 in early trade.

The CNX Nifty was down 57.50 points or 0.98% to 5,810.40. The index hit a low of 5,775.55 in intraday trade, its lowest level since 3 July 2013. The index hit a high of 5,833.85 in intraday trade.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1189 shares fell and 852 shares rose. A total of 99 shares were unchanged.

From the 30-share Sensex pack, 24 stocks fell and rest of them rose. Wipro (up 1.77%), Dr Reddy's Laboratories (up 1.16%), Infosys (up 0.83%), Sun Pharmaceutical Industries (up 0.83%), Bharti Airtel (up 0.44%) and Hero MotoCorp (up 0.28%), edged higher from the Sensex pack.

HDFC (down 3.04%), ONGC (down 2.62%), Coal India (down 2.54%), ICICI Bank (down 2.24%), Bhel (down 1.57%), Tata Steel (down 1.45%) and M&M (down 1.39%), edged lower from the Sensex pack.

Tata Motors declined 3.27% on reports that the production line at Jaguar Land Rover (JLR) facilities in the UK may get impacted after delivery workers from DHL voted for a strike demanding a large pay rise and similar terms and conditions on par with the JLR staff. The staff of logistics giant DHL, which has about 1,800 workers at JLR's three main factories -- 1,000 between Castle Bromwich and Solihull in the Midlands and 800 at Halewood, Merseyside, perform a key role in managing warehouse operations and bringing parts to production lines. Reports suggested that production could stop soon without parts reaching the production line. Any shutdown could potentially dent JLR's position as the biggest exporter of manufactured goods in the UK, reports added.

Page Industries clocked volume of 46,000 shares, a 21.24-times surge over two-week average daily volume of 2,000 shares. The stock fell 1.08% to Rs 4,271.55.

Bajaj Finance notched up volume of 64,000 shares, a 8.28-fold surge over two-week average daily volume of 8,000 shares. The stock fell 1.53% to Rs 1,390.

Alembic Pharmaceuticals saw volume of 4.17 lakh shares, a 3.47-fold surge over two-week average daily volume of 1.20 lakh shares. The stock surged 8.24% to Rs 158.90.

NTPC clocked volume of 10.81 lakh shares, a 3.08-fold surge over two-week average daily volume of 3.51 lakh shares. The stock fell 2.06% to Rs 140.55.

Reliance Power saw volume of 33.89 lakh shares, a 1.68-fold rise over two-week average daily volume of 20.18 lakh shares. The stock jumped 4.94% to Rs 71.10.

European market was trading higher in early trade. Key benchmark indices in UK, France and Germany were up by 0.06% to 1.49%.

Asian stocks dropped on Monday, 8 July 2013, after a better-than-forecast monthly US jobs report fueled speculation that the Federal Reserve may begin reducing stimulus this year. Key benchmark indices in China, Hong Kong, Indonesia, Singapore, Japan, South Korea and Taiwan shed by 0.52% to 3.06%.

Chinese stocks were also hit by concerns that Beijing won't ease policies despite slowing growth. In a statement issued on Friday, 5 July 2013, elaborating on its pursuit of economic restructuring and reforms, the State Council -- China's cabinet -- indicated it would strengthen supervision of wealth-management products and emphasized financial-market stability, but it also hinted it would loosen controls on banks' interest rates only gradually. The State Council also suggested tighter controls over credit to industries with excess production capacity.

Trading in US index futures indicated that the Dow may rise 28 points at opening bell on Monday, 8 July 2013. US stocks surged on Friday, 5 July 2013, after government data showed the nation added more jobs than forecast last month. The non-farm payrolls increased by 195,000 in June and the unemployment rate held steady at 7.6% as more people entered the workforce. Job growth in previous months also was revised higher.

Federal Reserve Chairman Ben Bernanke on 19 June 2013 said that the central bank may taper the pace of its bond purchases, currently set at $85 billion a month, as early as this year if the economy continues to improve in line with its forecasts.

The minutes of Federal Open Market Committee's (FOMC) policy meeting held on 19 June 2013, will be released on Wednesday, 10 July 2013. The minutes may provide more insight into the Fed's outlook on monetary stimulus. Bernanke is also due to deliver a speech on that day.

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First Published: Jul 08 2013 | 1:22 PM IST

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