A bout of volatility was witnessed as key benchmark indices weakened once again after trimming losses in mid-afternoon trade. The barometer index, the S&P BSE Sensex, was down 191.89 points or 0.92%, up close to 20 points from the day's low and off about 130 points from the day's high. The market breadth, indicating the overall health of the market, was weak. The market sentiment was affected adversely as a sharp uptick in consumer price inflation in November 2013 raised the likelihood of the Reserve Bank of India (RBI) hiking its main lending rate viz. the repo rate at a monetary policy review next week. The rupee fell and bonds yields rose after retail inflation spiked, raising bets of a rate hike at the RBI's policy meeting next week.
Bank stocks extended initial losses as a sharp uptick in consumer price inflation raised the likelihood of the Reserve Bank of India (RBI) hiking its main lending rate viz. the repo rate at a monetary policy review next week.
The market edged lower in early trade after weak macroeconomic data announced after trading hours on Thursday, 12 December 2013. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than a week. A bout of volatility was witnessed as key benchmark indices weakened once again after trimming initial losses in morning trade. The Sensex extended losses and hit fresh intraday low in early afternoon trade. Weakness continued on the bourses in afternoon trade. A bout of volatility was witnessed as key benchmark indices weakened once again after trimming losses in mid-afternoon trade.
At 14:20 IST, the S&P BSE Sensex was down 191.89 points or 0.92% to 20,733.72. The index fell 210.11 points at the day's low of 20,715.50 in afternoon trade, its lowest level since 4 December 2013. The index declined 58.44 points at the day's high of 20,867.17 in opening trade.
The CNX Nifty was down 59.70 points or 0.96% to 6,177.35. The index hit a low of 6,169.85 in intraday trade, its lowest level since 4 December 2013. The index hit a high of 6,208.60 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,506 shares fell and 827 shares rose. A total of 143 shares were unchanged.
From the 30-share Sensex pack, 22 stocks fell and rest rose. Bhel (down 4.03%), GAIL (India) (down 3.48%) and Hero MotoCorp (down 2.57%) declined from the Sensex pack.
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Bank stocks extended initial losses as a sharp uptick in consumer price inflation raised the likelihood of the Reserve Bank of India (RBI) hiking its main lending rate viz. the repo rate at a monetary policy review next week. AXIS Bank (down 1.02%), ICICI Bank (down 3.21%), HDFC Bank (down 0.46%), and Yes Bank (down 3.06%), dropped.
Syndicate Bank fell 1.9% to Rs 87.80. The bank after market hours on Thursday, 12 December 2013, said it has fixed minimum issue price at Rs 88.36 per share for the proposed issue of 2.26 crore equity shares of face value of Rs 10 each aggregating to Rs 200 crore to Government of India (GoI) by way of preferential allotment basis. The bank will hold an Extraordinary General Meeting of the shareholders on 10 January 2014. The Government of India (GoI) currently holds 66.17% stake in Syndicate Bank (as per the shareholding pattern as on 30 September 2013).
State-run Oriental Bank of Commerce declined 1.76% to Rs 211.50. The bank today, 13 December 2013, said that the bank has allotted 80.87 lakh equity shares at issue price (including premium) of Rs 185.47 per share aggregating about Rs 150 crore to Government of India on preferential basis. As a result, the Government of India's holding in the bank has increased to 59.13% from 58%.
State Bank of India (SBI) shed 1.88% to Rs 1745. The bank after market hours on Thursday, 12 December 2013, said that the Executive Committee of Central Board (ECCB) of the bank at its meeting held on Thursday, 12 December 2013, has accorded its approval to fix the issue price at Rs 1,782.74 per share of face value of Rs 10, including a premium of Rs 1772.74 per share, and accordingly, to issue 1.12 crore equity shares on preferential basis to Government of India (Gol) for a consideration of about Rs 2000 crore.
The price for preferential issue has been arrived at in accordance with the Sebi (Issue of Capital and Disclosure Requirements) Regulations, 2009, taking into consideration 29 November 2013 as the relevant date, SBI said.
The GoI currently holds 62.31% stake in SBI (as per the shareholding pattern as on 30 September 2013).
Among other PSU bank stocks, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank dropped 2% to 3.37%.
Elder Pharmaceuticals and Torrent Pharmaceuticals, both, dropped in choppy trade after the two pharmaceutical companies announced separately that Torrent Pharmaceuticals has entered into a definitive binding agreement with Elder to acquire Elder's branded domestic formulations business in India, and Nepal (India business) for a consideration of Rs 2004 crore. Shares of Elder Pharmaceuticals were off 6.5% at Rs 303.50. Shares of Torrent Pharmaceuticals were off 4.5% at Rs 476.90. The announcement was made during trading hours today, 13 December 2013.
Elder's India business comprises a portfolio of over 30 brands with market leading products across the women's healthcare, pain management, wound care and neutraceuticals therapeutic segments.
The India business is being sold as a going concern on a slump sale basis, and the transaction will also involve the transfer of employees engaged in sales, marketing and operations of the India business. Under the proposed transaction, Elder will continue to manufacture and supply the products at its existing manufacturing facilities for Torrent for a period of three years, the company said in a statement.
Torrent would fund the acquisition value through a mix of internal accruals and bank debt. Elder's existing brand equity in the areas of women healthcare and pain management will help Torrent strengthen its position in the Indian market expanding into these fast growing areas.
"This path breaking domestic consolidation by Torrent addresses our recent challenges and will significantly help Elder de-leverage its balance sheet. We will now focus and grow our in-licensing, anti-infectives and exports business." said Alok Saxena, Managing Director and CEO, Elder.
"The transaction is a strategic fit for Torrent and will strengthen its core prescription-based business. This acquisition strengthens our position in the women healthcare, pain-management and vitamins/nutrition segments by enhancing and accelerating market access. It is also expected to enable cost and revenue synergies in Torrent's domestic formulations business." said Mr. Sudhir Mehta, Chairman, Torrent Group.
The transaction has been approved by the boards of directors of both companies. The transaction is subject to customary conditions precedent including shareholder approval and applicable regulatory approvals and is expected to close in the first half of 2014, the companies said.
In the foreign exchange market, the rupee edged lower against the dollar and fell below 62 level after two sets of economic data released after market hours on Thursday, 12 December 2013, which showed a spike in consumer price inflation in November and a worse-than-expected contraction in industrial production in October. The partially convertible rupee was hovering at 62.10, compared with its close of 61.81/82 on Thursday, 12 December 2013.
Bond prices fell as a sharp uptick in consumer price inflation in November 2013 raised the likelihood of the Reserve Bank of India (RBI) hiking its main lending rate viz. the repo rate at a monetary policy review next week. The yield on 10-year federal paper 8.83% GS 2023 was hovering at 8.9053%, higher than its close of 8.8498% on Thursday, 12 December 2013. Bond yield and bond prices are inversely related.
Provisional annual inflation rate based on all India general consumer price index (CPI) (combined) rose 11.24% in November 2013 as compared to 10.17% (final) in October 2013. The data was announced after market hours on Thursday, 12 December 2013.
Index of industrial production (IIP) declined 1.8% in October 2013, against 2% growth in the previous month September 2013. The decline in the output of manufacturing sector at 2% and mining sector at 3.5% mainly led to decline in IIP for October 2013. Meanwhile, the marginal 1.3% growth in the electricity generation restricted further dip in industrial production during October 2013.
The IIP growth for the month of September 2013 has been retained unchanged at 2%, while the growth for the month of July 2013 has been scaled down to 2.6% from 2.8% reported at first revision. However, the final growth rate for July 2013 is similar to the provisional level of 2.6%. The data was announced after market hours on Thursday, 12 December 2013.
The government will unveil data on inflation based on the wholesale price index (WPI) for November 2013 on 16 December 2013. WPI is seen easing a bit at 6.9% in November 2013, from 7% in October 2013, as per the median estimate of a poll of economists carried out by Capital Market.
The Reserve Bank of India (RBI) announces next Mid-Quarter Review of Monetary Policy for 2013-14 on 18 December 2013. The Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
European stocks were little changed on Friday, 13 December 2013, ahead of next week's US Federal Reserve meeting. UK's FTSE fell 0.11%. Germany's DAX rose 0.06%. UK France's CAC 40 was flat.
Asian markets edged higher in choppy trade on Friday, 13 December 2013, after a report showed US retail sales in November 2013 beat market expectations and after US House of Representatives on Thursday, 12 December 2013, passed a federal budget plan. Key benchmark indices in Hong Kong, Japan, Singapore and Taiwan were up 0.12% to 0.4%. Key benchmark indices in China, Indonesia and South Korea were off 0.26% to 0.81%.
The Bank of Japan (BoJ), which buys more than 7 trillion yen ($67.6 billion) of Japanese Government Bonds (JGBs) every month in its bid to stoke inflation, holds a two-day monetary policy meeting on 19 and 20 December 2013.
Trading in US index futures indicated that the Dow could advance 39 points at the opening bell on Friday, 13 December 2013. US stocks dropped on Thursday, 12 December 2013, sending the Standard & Poor's 500 Index to a one-month low, as improving economic data spurred speculation the Federal Reserve will cut stimulus as early as next week.
Data showed retail sales rose more than forecast in November as Americans bought cars and took advantage of discounts going into the holiday-shopping season. Sales increased 0.7 percent in November from the previous month, the most since June, the Commerce Department figures showed. A separate report indicated applications for unemployment benefits jumped last week from an almost three-month low.
The US House of Representatives on Thursday passed the first bipartisan federal budget in four years, which would ease $63 billion in automatic spending cuts and avert another government shutdown. The legislation now heads to the Senate. The House voted 332-94 for the $1.01 trillion compromise budget crafted by Senator Patty Murray and Representative Paul Ryan, the chairman of a special bipartisan panel. President Barack Obama said he'll sign the final measure.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.
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