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Thursday, August 22, 2013

Market may extend recent losses

The market may extend recent steep losses on weak Asian stocks. Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could fall 51.50 points at the opening bell. Asian stocks dropped after minutes of the Federal Reserve's last meeting signaled the central bank was on course to pare bond purchases this year.

Asian Paints said after market hours on Wednesday, 21 August 2013, that Asian Paints (International) (APIL), a wholly owned subsidiary of the company has on 21 August 2013 acquired additional 25.72% stake in Berger International, Singapore (BIL), an indirect subsidiary of Asian Paints, through an off-market transaction. As a result, the shareholding of APIL has increased to 75.82% in BIL. Further, APIL has also announced its intention to come out with a voluntary unconditional cash offer to acquire the balance 24.18% shares of BIL with an intention to make BIL a wholly owned subsidiary of APIL and delist from Singapore Exchange Securities Trading (SGX-ST).

NMDC after market hours on Wednesday, 21 August 2013, said a wholly owned subsidiary of NMDC namely NMDC Power (NPL) has signed a Memorandum of Understanding (MoU) with IL&FS Energy Development Company (IEDCL), a subsidiary of IL&FS to set up a 500 megawatts (2x250 MW) thermal power plant under joint venture at Gonda in Uttar Pradesh. The project is estimated to be completed within three years at an approximate cost of around Rs 3000 crore.

Metal stocks may gain after a report showed China's manufacturing unexpectedly expanded in August. China is the world's largest consumer of copper and aluminum.

IT stocks will be in focus as rupee closed at a record low against the dollar on Wednesday, 21 August 2013. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

Key benchmark indices erased sharp initial gains and ended sharply lower in choppy trade on Wednesday, 21 August 2013, as the rupee hit record low below 64 against the dollar on rising expectations that the US Federal Reserve will soon start withdrawing its monetary stimulus to the US economy. The S&P BSE Sensex lost 340.13 points or 1.86% to 17,905.91 on that day, its lowest closing level since 11 September 2012.

Foreign institutional investors (FIIs) sold shares worth a net Rs 792.11 crore on Wednesday, 21 August 2013, as per provisional data from the stock exchanges.

Asian stocks dropped on Thursday, 22 August 2013, after minutes of the Federal Reserve's last meeting signaled the central bank was on course to pare bond purchases this year. Key benchmark indices in Singapore, Hong Kong, Japan, Taiwan, Indonesia and South Korea were down by 0.29% to 0.99%.

China's Shanghai Composite rose 0.16% after a report showed China's manufacturing unexpectedly expanded this month. A Chinese manufacturing index rose in August from the lowest level in 11 months, adding to signs the world's second-biggest economy is strengthening after a two-quarter slowdown. The preliminary reading of 50.1 for a Purchasing Managers' Index released today by HSBC Holdings Plc and Markit Economics compares with a final figure of 47.7 in July.

US stocks dropped on Wednesday, 21 August 2013, as investors weighed the Federal Reserve's signaling that it remained on course to curb its monthly bond purchases by the end of the year.

Federal Reserve policy makers were broadly comfortable with Chairman Ben S. Bernanke's plan to start reducing bond buying later this year if the economy improves, with a few saying tapering might be needed soon, minutes of their last meeting showed on Wednesday. Almost all committee members agreed that a change in the purchase program was not yet appropriate, and a few said it might soon be time to slow somewhat the pace of purchases as outlined in that plan, according to the record of the Federal Open Market Committee's July 30-31 gathering released Wednesday in Washington. A few members emphasized the importance of being patient and evaluating additional information on the economy before deciding on any changes to the pace of asset purchases, the minutes show. Almost all participants confirmed that they were broadly comfortable with the committee moderating the pace of its securities purchases later this year.

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.