Sensex slumps as emerging market stocks fall
[Editor: Mr. P Chidambaram hikes import duty in Gold, by 5 times, in around a couple of years and then asks the Jewelers to export through 80:20 scheme......this is Chidambaronomics......Huh!! What a logic? How can the exporters remain competitive in the international market, when they have to take care of a such sudden spike in import duty apart from other burning factors? His policies fails and so his ministry decides to victimize a sector....Wow!! The government raised the import duty on gold to 10% in 2013 from 2% in 2012 to rein in its ballooning current-account deficit. Gold supplies have also dried up because the central bank has mandated that importers prove that they will keep aside 20% of any imported gold for re-export as jewelry. Gold is the country's second-biggest imported commodity after crude oil.
So, the point is that why he does not apply the same logic in case of CRUDE OIL which is the highest import item in India and which is being used by both rich and poor?
The reasons are well known and why he choose Gold over Crude Oil. But there is something called vote bank, and the elections are near---those workers whose livelihood has been spoiled by this mindless act, will perhaps show their anger in ballot boxes all over India. Also, what will the smaller companies who do not have gold refining units like Shree Ganesh Jewellery House (I) Ltd do....? Fortunately, for Shree Ganesh Jewellery House (I) Ltd, their gold refinery unit in Domjur, West Bengal, has started production. The relaxations of import restrictions on DORE GOLD is for whom....? To give more business to the established players or to squeeze the margins of the smaller players....?]
Key benchmark indices slumped on the first trading session of the week as emerging-market stocks fell and currencies weakened amid concern that slower Chinese growth and reduced Federal Reserve stimulus will spark more capital outflows. In recent years, emerging markets have been supported by the Fed's policy of easy money, but any cut could pull more money out of these risky markets and hurt growth. The rupee's weakness against the dollar also hit investor sentiment adversely. The barometer index, the S&P BSE Sensex, fell below the psychological 21,000 mark. The Sensex hit its lowest level in almost 3 weeks. The 50-unit CNX Nifty hit 8-1/2-week low. The Sensex plunged 426.11 points or 2.02%, up close to 20 points from the day's low and off about 190 points from the day's high.
Today's decline on the domestic bourses was broad based. The market breadth indicating the overall health of the market was quite weak with more than three losers for every gainer on BSE. Small-Cap and Mid-Cap indices witnessed an even sharper slide. The BSE Mid-Cap index lost 2.82%. The Small-Cap index shed 2.64%.
Indian stocks fell for the second day in a row today, 27 January 2014. From a recent high of 21373.66 on 23 January 2014, the Sensex has declined 666.21 points or 3.11% in two trading sessions. The Sensex has fallen 463.23 points or 2.18% in this month so far (till 27 January 2014). From a record high of 21,483.74 on 9 December 2013, the Sensex has declined 776.29 points or 3.61%. From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,258.74 points or 18.67%.
Emerging-market stocks fell amid concern that slower Chinese growth and reduced Federal Reserve stimulus will spark more capital outflows. The start of a fresh week offered no reprieve in the shakeouts for key emerging-markets currencies Monday, with the Turkish lira extending its record-breaking slide, South Africa's rand wilting further and other markets caught in the rush to safety. A mix of local emerging-market strains, nerves over the fallout from the US Federal Reserve's plans to reel in monetary stimulus and patches of weak economic data from China have caused investors to pull back from riskier bets in recent trading days. On Friday, that morphed from localized selloffs to a broad flight to safety a pattern that is now persisting.
Shares of FMCG major Hindustan Unilever (HUL) rose after the company announced its Q3 results. Reliance Industries (RIL) dropped in volatile trade. Capital goods stocks edged lower. Bank stocks declined ahead of the Reserve Bank of India (RBI) Third Quarter Review of Monetary Policy for 2013-14 tomorrow, 28 January 2014.
The market sentiment was hit adversely by data showing that foreign funds were net sellers of Indian stocks on Friday, 24 January 2014. Foreign institutional investors (FIIs) sold shares worth a net Rs 200.60 crore into the secondary equity markets on Friday, 24 January 2014, as per the data from the Securities & Exchange Board of India (Sebi).
The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month January 2014 series to February 2014 series. The January 2014 F&O contracts expire on Thursday, 30 January 2014.
The S&P BSE Sensex plunged 426.11 points or 2.02% to settle at 20,707.45, its lowest closing level since 7 January 2014. The index plunged 445.53 points at the day's low of 20,688.03 in late trade. The index fell 234.53 points at the day's high of 20,899.03 in early trade.
The CNX Nifty plunged 130.90 points or 2.09% to settle at 6,135.85, its lowest closing level since 28 November 2013. The index hit a low of 6,130.25 and a high of 6,188.55 in intraday trade.
The BSE Mid-Cap index shed 181.82 points or 2.82% to settle at 6,273.44. The Small-Cap index lost 170.06 points or 2.64% at 6,274.40. Both these indices underperformed the Sensex.
Jaiprakash Power Ventures (down 13.06%), HDIL (down 12.9%), GMR Infrastructure (down 11.65%), IRB Infrastructure Developers (down 10.34%), Dewan Housing Finance Corporation (down 10.3%), Indiabulls Real Estate (down 8.82%), Allahabad Bank (down 8.52%), UCO Bank (down 8.23%), Coromandel International (down 8.44%), Unitech (down 8.21%), TV 18 Broadcast (down 7.95%) and JSW Energy (down 8.04%) were among the major losers from the BSE Mid-Cap index.
Dishman Pharmaceuticals and Chemicals (down 13.63%), Astra Microwave Products (down 13.61%), HeidelbergCement India (down 10.28%), ABG Shipyard (down 9.32%), REI Agro (down 9.1%), Gujarat Natural Resources (down 8.44%), Eros International Media (down 8.64%), Suven Life Sciences (down 7.71%), Infinite Computer Solutions (India) (down 7.74%) and JSW Holdings (down 8.14%) were among the major losers from the BSE Small-Cap index.
All the sectoral indices on BSE were in the red. The S&P BSE Realty index (down 6.82%), the S&P BSE Capital Goods index (down 2.7%), the S&P BSE Power index (down 3.01%), the S&P BSE Bankex index (down 3.97%), the BSE PSU index (down 2.71%), the S&P BSE Oil & Gas index (down 2.37%), the S&P BSE Metal index (down 3.81%) and the S&P BSE Auto index (down 3.33%) underperformed the Sensex.
The S&P BSE Consumer Durables index (down 1.9%), S&P BSE FMCG index (down 0.18%), the S&P BSE Healthcare index (down 0.9%), the S&P BSE IT index (down 0.64%), the S&P BSE Teck index (down 1.16%), outperformed the Sensex.
The market breadth indicating the overall health of the market was quite weak with more than three losers for every gainer on BSE. On BSE, 1,976 shares declined and 616 shares gained. A total of 122 shares were unchanged.
Bank stocks declined ahead of the Reserve Bank of India (RBI) Third Quarter Review of Monetary Policy for 2013-14 tomorrow, 28 January 2014.
Among private bank stocks, ICICI Bank (down 4.53%), AXIS Bank (down 3.89%), HDFC Bank (down 3.6%) and Kotak Mahindra Bank (down 3.82%), declined.
Among PSU bank stocks, State Bank of India (down 1.69%), Union Bank of India (down 4.7%), Bank of India (down 7.55%), Bank of Baroda (down 5.41%), Punjab National Bank (down 5.84%) and Canara Bank (down 5.81%) declined.
Steel major Tata Steel slumped 5.96% to Rs 354, with the stock extending intraday decline in late trade. The stock hit a high of Rs 370 and low of Rs 352.20.
Shares of FMCG major Hindustan Unilever (HUL) rose after the company announced its Q3 results. The stock rose 2.46% to Rs 579.80. HUL said its profit after tax before exceptional items, PAT (bei), rose 9% to Rs 955 crore in Q3 December 2013 over Q3 December 2012. Total income from operations (net) rose 8.54% to Rs 7223.35 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours today, 27 January 2014.
During the quarter, the domestic consumer business grew ahead of market, at 10%, with 4% underlying volume growth, HUL said in a statement. The operating context during the quarter remained challenging with market growth under pressure, firm input costs given the rupee depreciation, an uncertain media environment and the high competitive intensity. HUL said that the cost inflation was managed through a combination of judicious pricing action, unwinding of promotions and substantial cost savings. Investment behind brands was sustained at competitive levels; overall A&P was up by Rs 107 crore (+40 bps) in the quarter, HUL said.
Commenting on the Q3 results, Harish Manwani, Chairman, HUL, said: "Our growth has been competitive and profitable and the results are a reflection of how we dynamically managed the business despite the headwinds in the environment. Looking forward, we are conscious of the uncertain macro context but remain positive on the mid to long term opportunities in our sector. We are determined to stay the course on our strategy and will continue to invest in the business for the long term".
Reliance Industries (RIL) dropped 2.48% at Rs 845.50. The stock was volatile. The scrip hit high of Rs 860.55 and low of Rs 840.10.
Telecom stocks declined. Bharti Airtel (down 1.99%), Tata Teleservices (Maharashtra) (down 2.98%) and Reliance Communications (down 5.07%) declined.
Idea Cellular declined 4.72%. Idea Cellular's consolidated net profit jumped 104.63% to Rs 467.73 crore on 18.54% rise in total income to Rs 6613.06 crore in Q3 December 2013 over Q3 December 2012. The result was announced after market hours.
Telecommunication companies buying airwaves in an Indian auction next month will pay 5% of their revenue as an annual fee, a ministerial panel decided on Monday, 27 January 2014, a move that means lower payments for bigger carriers Bharti Airtel and the Indian unit of Vodafone. The move scraps the 3-8 percent fee range the country currently levies in an effort to coax previously reluctant operators into taking part in India's third attempt at auctioning two frequency bands for billions of dollars. The government may lose some revenue it collects as annual fees due to the new rate, Telecommunications Minister Kapil Sibal said after the meeting of the ministerial group, but expects it to help companies buy more spectrum in the auction starting 3 February 2014. "A successful auction means greater investment in the sector," he said, explaining the rationale for the new rate. The total spectrum fee for carriers' existing spectrum and new spectrum from the February auction will be calculated based on a weighted average of the old and new fee, Sibal said.
Sibal said companies like Reliance Industries, which bought 4G spectrum in a 2010 auction, will continue to pay 1 percent of their revenue as annual fee for that spectrum.
Capital goods stocks edged lower. ABB (down 2.26%), Bharat Heavy Electricals (Bhel) (down 1.79%), BEML (down 5.87%), Bharat Electronics (down 5.87%), Crompton Greaves (down 6.35%), L&T (down 2.56%), Siemens (down 7.23%) declined.
Auto stocks dropped ahead of the Reserve Bank of India (RBI) Third Quarter Review of Monetary Policy for 2013-14 tomorrow, 28 January 2014. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Tata Motors slumped 5.65%. The company before market hours today, 27 January 2014, announced the demise of its Managing Director, Karl Slym. "Tata Motors deeply regrets to announce the untimely and tragic demise of its Managing Director, Karl Slym, in Bangkok on Sunday, 26 January 2014. Karl Slym was in Bangkok to attend a meeting of the Board of Directors of Tata Motors Thailand. Karl Slym joined Tata Motors in October 2012, and was providing leadership to the company through a challenging market environment. The company shares in the grief of Karl Slym's wife and family at their irreparable loss," Tata Motors said in a statement.
Maruti Suzuki India shed 4.02% ahead of its Q3 results tomorrow, 28 January 2014.
M&M (down 2.03%) and Ashok Leyland (down 3.23%) dropped.
Shares of two wheeler companies also declined. Hero MotoCorp (down 0.43%), Bajaj Auto (down 1.09%) and TVS Motor Company (down 0.74%) declined.
Mining and metal stocks dropped on concerns about slower Chinese growth. Factory output may shrink this month, a preliminary survey from HSBC Holdings Plc and Markit Economics indicated last week, as the People's Bank of China injected more funds into the financial system to ease a cash shortage. China is the world's largest consumer of copper and aluminum. Hindustan Copper (down 4.11%), Hindalco Industries (down 2.5%), Hindustan Zinc (down 2.44%), Steel Authority of India (down 2.6%), NMDC (down 2.23%), JSW Steel (down 5.54%), Bhushan Steel (down 0.52%) and National Aluminum Company (down 2.76%), declined.
Sesa Sterlite lost 3.77% ahead of its Q3 results tomorrow, 28 January 2014.
Jindal Steel & Power dropped 3.15% ahead of its Q3 results tomorrow, 28 January 2014.
Shares of jewellery retailers declined after Finance Minister P. Chidambaram said that the restrictions on gold imports will remain intact at least until the end of this financial year to keep a lid on the country's current-account deficit. Gitanjali Gems (down 4.35%), Tribhovandas Bhimji Zaveri (TBZ) (down 1.89%), Titan Company, (down 1.28%), PC Jeweller (down 4.44%), Rajesh Exports (down 2.81%), Shree Ganesh Jewellery House (down 5.6 4%) edged lower.
The government raised the import duty on gold to 10% in 2013 from 2% in 2012 to rein in its ballooning current-account deficit. Gold supplies have also dried up because the central bank has mandated that importers prove that they will keep aside 20% of any imported gold for re-export as jewelry. Gold is the country's second-biggest imported commodity after crude oil. "We can revisit the curbs on gold by the end of the year. But let me hasten to add, this will happen only when we get a firm grip on the current-account deficit," Mr. Chidambaram told reporters today, 27 January 2014.
Last week, Congress party chief Sonia Gandhi asked the Ministry of Commerce to consider easing tough restrictions on gold imports, which have triggered a surge in gold prices and smuggling in India. The finance ministry makes all final decisions on taxation issues but takes advice about such issues from the commerce ministry. India's gem and jewelry industry has been lobbying for removing the import barriers as the cost of gold has risen, pushing up costs for making jewelry. Mr. Chidambaram said gold smuggling is estimated at 1-3 tons a month due to the import curbs, but added that the curbs are needed to keep control over the trade deficit.
Shree Cement fell 1.11% after net profit fell 46.89% to Rs 115.49 crore on 7.22% decline in total income to Rs 1328.03 crore in Q2 December 2013 over Q2 December 2012. The result was announced during trading hours today, 27 January 2014.
Realty stocks dropped ahead of the Reserve Bank of India (RBI) Third Quarter Review of Monetary Policy for 2013-14 tomorrow, 28 January 2014. Purchases of both residential and commercial property are largely driven by finance.
DLF (down 8.34%), HDIL (down 12.9%), Unitech (down 8.21%), D B Realty (down 4.81%), and Sobha Developers (down 0.85%) declined.
Fiem Industries rose 3.17% to Rs 367.40 after hitting record high of Rs 372.60 in intraday trade. The company said it has signed an MoU with two Japanese companies for a joint venture proposal in India for manufacturing of key sets, door mirrors and outside handles. The announcement was made after market hours on Friday, 24 January 2014.
Fiem Industries said that the company has signed a memorandum of understanding (MoU) with two Japanese companies namely, Honda Lock Mfg. Co., Japan and Toyota Tsusho Corporation, Japan for a joint venture (JV) proposal in India for manufacturing of key sets, door mirrors and outside handles. The Japanese companies are group companies of Japanese conglomerates Honda and Toyota, respectively.
Fiem Industries said that the Management considers it a major breakthrough in diversification of the product line as well as enhancing the presence of the company in four-wheel segment and being a new product line for the company, will add new dimensions to the growth of the company. The key sets will be for four-wheel as well as for two-wheel vehicles also, the company said.
Sabero Organics Gujarat rose 2.44%. Coromandel International declined 7.36%. Sabero Organics Gujarat said that the board of directors of the company and Coromandel International have approved the merger of the company with Coromandel International. The announcement was made after market hours on Friday, 24 January 2014.
Sabero Organics Gujarat (SOGL) said that the board of directors of Coromandel International (Coromandel) and SOGL, a subsidiary of Coromandel, at their respective meetings held on Friday, 24 January 2014, have approved merger of SOGL with Coromandel through a scheme of amalgamation, subject to approval of the stock exchanges, shareholders, creditors, concerned High Courts/Tribunal, and other regulators as applicable. As per the scheme, the public shareholders of SOGL will be issued shares in Coromandel in the ratio of five equity shares of Re 1 each of Coromandel for every eight equity shares of Rs 10 each of SOGL. The shares held by Coromandel and its wholly owned subsidiary Parry Chemicals (PCL) in SOGL shall get extinguished. In terms of the scheme, amalgamation of SOGL with Coromandel will be followed by the dissolution of SOGL.
Coromandel, along with PCL, holds 74.9% equity stake in SOGL.
Meanwhile, SOGL during trading hours today, 27 January 2014, said that the appointed date for the scheme of amalgamation is 1 April 2014.
In the foreign exchange market, the rupee edged lower against the dollar in choppy trade as equities fell sharply. A broad fall in other regional currencies also weighed on the domestic currency which extended Friday's steep slide. The partially convertible rupee was hovering at 63.10, compared with its close of 62.66/67 on Friday, 24 January 2014.
India's record high foreign exchange reserves and "strong" fundamentals should reduce concerns about the rupee currency, Economic Affairs Secretary Arvind Mayaram said on Monday, 27 January 2014. "Today, our current account deficit is going to be below $50 billion, foreign exchange reserves are (at an) all-time high, and we believe that we have very strong fundamentals in place," Mayaram told reporters in New Delhi. Mayaram added he did not believe the rupee would tumble and track steep falls in the Argentina peso. "There is no reason why we should believe that if Argentina is in trouble today, that the Indian rupee should follow," he said.
The Ministry of Consumer Affairs, Food & Public Distribution on Friday, 24 January 2014, said that as per data monitored by the Ministry of Consumer Affairs and Food, prices of rice, wheat and sugar during the week -- 16 January 2014 to 23 January 2014 -- remained steady in wholesale markets across the country. The Price Monitoring Cell of the Ministry monitors prices of twenty two essential commodities regularly at 55 wholesale centers. During the period, prices of rice remained steady at all wholesale centers and decreased at one center (Aizwal). Prices of wheat also were steady at all wholesale centers except one centre at Ludhiana. While sugar prices decreased at eight centers and remain steady at rest of the reporting centers, the Ministry of Consumer Affairs and Food said in a statement.
Prices of twenty two essential commodities are regularly monitored by Department of Consumer Affairs for taking suitable action to keep the prices under check. Price data is collected on daily basis from the State Civil Supplies Departments of the respective State Governments.
The Reserve Bank of India announces Third Quarter Review of Monetary Policy for 2013-14 at 11:00 IST tomorrow, 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
European stocks edged lower on Monday, 27 January 2014, after a rout in emerging-market currencies spurred concern the global economic recovery is faltering. Key benchmark indices in UK, France and Germany were off 0.26% to 1.38%.
German business confidence rose to the highest level in more than two years and beat economists' forecasts in a signal that the expansion in Europe's largest economy may be accelerating. The Ifo institute's business climate index, based on a survey of 7,000 executives, climbed to 110.6 in January from 109.5 in December.
Asian stocks slumped on Monday, 27 January 2014, as concern that the global economic recovery is faltering spurred investors to sell riskier assets. Key benchmark indices in Taiwan, Hong Kong, China, Singapore, Japan, Indonesia and South Korea were off 1.03% to 2.58%.
Emerging-market stocks fell amid concern that slower Chinese growth and reduced Federal Reserve stimulus will spark more capital outflows. In recent years, emerging markets have been supported by the Fed's policy of easy money, but any cut could pull more money out of these risky markets and hurt growth.
Japan reported a record annual trade deficit for last year as energy shipments and weakness in the yen pumped up the nation's import bill. The shortfall was 11.5 trillion yen ($113 billion), almost double the previous year's 6.9 trillion yen, a finance ministry report showed in Tokyo today, 27 January 2014. Imports rose 25% in December from a year earlier and exports gained 15%, leaving a monthly deficit of 1.3 trillion yen.
South Korea has accepted the North Korea's offer to renew reunions of families separated by the Korean War, a move that may signal thawing tensions between the two nations.
Trading in US index futures indicated that the Dow could gain 5 points at the opening bell today, 27 January 2014. US stocks tumbled on Friday, 24 January 2014, as investors fled equities and emerging-markets currencies on concerns about a contagion effect from China's manufacturing slowdown. The CBOE Volatility Index, known as the Vix, surged 32%, its steepest rise since the April 15 Boston Marathon bombings.
A two-day monetary policy meeting of the Federal Open Market Committee (FOMC) begins tomorrow, 28 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
Global stocks tumbled the most since June on Friday, 24 January 2014, as a sell-off in emerging-market currencies prompted investors to seek havens in Treasuries, gold and the yen.
Courtesy:
The Business Standard
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