Key benchmark indices trimmed losses after an initial sharp slide triggered by continued expectations that the US Federal Reserve will start withdrawing its monetary stimulus soon to US economy. The intraday recovery on the bourses materialised as the rupee trimmed losses after a sharp initial slide took the Indian currency to record low against the dollar. The S&P BSE Sensex was down 159.06 points or 0.87%, up about 175 points from the day's low and off close to 30 points from the day's high. The market breadth, indicating the overall health of the market, was negative.
All the thirteen sectoral indices on BSE were in the red. Pharma stocks edged lower. Sun Pharmaceutical Industries extended initial losses. Auto stocks declined.
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 rupee trimmed losses after hitting record low below 64 against the dollar. The partially convertible rupee was hovering at 63.71, weaker than its close of 63.13/14 on Monday, 19 August 2013.
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.
Bond prices declined. The yield on the benchmark federal paper 7.16 GS 2023 was hovering at 9.3093%, higher than its close of 9.2278% on Monday, 19 August 2013. Bond yield and bond prices are inversely related.
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 680.08 crore on Monday, 19 August 2013, as per provisional data from the stock exchanges.
The current sell-off on the domestic bourses has been part of a decline across emerging markets triggered by rising expectations that the US Federal Reserve will start withdrawing its monetary stimulus soon.
At 10:20 IST, the S&P BSE Sensex was down 159.06 points or 0.87% to 18,148.46. 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 129.16 points at the day's high of 18,178.36 in morning trade.
The CNX Nifty was down 53.75 points or 0.99% to 5,361. The index hit a low of 5,306.35 in intraday trade, its lowest level since 5 October 2012. The index hit a high of 5,370.95 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 861 shares declined and 614 shares rose. A total of 88 shares were unchanged.
Among the 30-share Sensex pack, 25 stocks declined and rest of them gained. M&M (down 3.48%), Maruti Suzuki India (down 2.01%) and Tata Motors (down 2.52%), edged lower.
Pharma stocks edged lower. Dr Reddy's Laboratories (down 1.15%), Cipla (down 1.99%), and Lupin (down 3.95%), declined.
Sun Pharmaceutical Industries fell 5.24%, with the stock extending initial losses.
L&T declined 1.88% to Rs 724.40. 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.
Sesa Goa fell 0.42%. Sterlite Industries (India) declined 0.13%. 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.
Axis Bank declined 2.76%. 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%.
Gujarat Apollo Industries lost 12.8% to Rs 98.20 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.
Indraprastha Gas lost 2.38% to Rs 256.50 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.
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 Indonesia, Singapore, Hong Kong, Japan, South Korea and Taiwan were down by 0.76% to 4.66%. China's Shanghai Composite rose 0.08%.
Trading in US index futures indicated that the Dow could fall 15 points at the opening bell 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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