Weakness continued on the bourses in afternoon trade. The market breadth, indicating the overall health of the market, was weak. The barometer index, the S&P BSE Sensex, was down 217.96 points or 1.06%, off 72.58 points from the day's high and up 30.10 points from the day's low. The market sentiment was hit adversely by the US Federal Reserve's decision of a further reduction in its monthly bond purchases and Fed's indication that it is likely to keep reducing its purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market. The BSE Small-Cap and Mid-Cap indices were off more than 1% each.
Hero MotoCorp fell ahead of its Q3 results today, 30 January 2014. IT shares edged lower.
Key benchmark indices edged lower in early trade on weak Asian stocks. Key benchmark indices extended initial losses and to hit fresh intraday low in morning trade. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than nine weeks. Key benchmark indices extended losses and hit fresh intraday low in mid-morning trade. Key benchmark indices trimmed losses in early afternoon trade after the Finance Ministry said in a statement that India's economy is better prepared for the consequences, if any, of reduction in bond purchases by the US Federal Reserve and that the Government of India and the Reserve Bank of India will continue to remain vigilant and will take whatever steps are necessary to ensure that there is stability in the financial markets. Weakness continued on the bourses in afternoon trade
The market may remain volatile during the remaining part of the trading session 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 today, 30 January 2014.
Foreign institutional investors (FIIs) bought shares worth a net Rs 250.48 crore on Wednesday, 29 January 2014, as per provisional data from the stock exchanges.
Asian stocks dropped on Thursday, 30 January 2014, after the US Federal Reserve pressed on with cuts to US economic stimulus and as a report showed China's manufacturing industry contracted.
After a monetary policy review, the Federal Open Market Committee (FOMC) on Wednesday, 29 January 2014, announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in economic activity and improvement in the labor market. In emerging markets, the reduction in bond purchases by the Fed has triggered worries of slowdown in capital inflows and fears of capital outflows. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets in recent years.
Investors pulled out more than $7 billion from exchange-traded funds (ETFs) investing in developing-nation assets this month, according to reports.
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The South Africa Reserve Bank unexpectedly raised the repurchase rate to 5.5% from 5% on Wednesday, 29 January 2014, following Turkey's decision early this week to more than double its benchmark rate amid a rout in its currency.
At 13:15 IST, the S&P BSE Sensex was down 217.96 points or 1.06% to 20,429.34. The index lost 248.06 points at the day's low of 20,399.24 in mid-morning trade, its lowest level since 27 November 2013. The index fell 145.38 points at the day's high of 20,501.92 in early trade.
The CNX Nifty was down 68.20 points or 1.11% to 6,052.05. The index hit a low of 6,044.40 in intraday trade, its lowest level since 27 November 2013. The index hit a high of 6,072.95 in intraday trade.
The BSE Small-Cap index was 90.36 points or 1.44% at 6,183.59. The BSE Mid-Cap index was off 78.18 points or 1.24% at 6,204.32. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,657 shares declined and 644 shares rose. A total of 137 shares were unchanged.
Among the 30 Sensex shares, 26 fell and only 4 rose. Sesa Sterlite (down 4.72%), Hindalco Industries (down 3%), Tata Steel (down 2.88%), ICICI Bank (down 2.46%), State Bank of India (down 2.46%), Axis Bank (down 1.99%), HDFC Bank (down 1.87%), Tata Power (down 1.85%) and ITC (down 1.72%), edged lower from the Sensex pack.
GAIL (India) (up 1.65%), Bharti Airtel (up 1.36%), Tata Motors (up 0.65%) and M&M (up 0.38%), edged hgiher from the Sensex pack.
Auto stocks were mixed. Escorts (down 2.12%), Maruti Suzuki India (down 1.7%), Ashok Leyland (down 1.23%), Bajaj Auto (down 0.91%) and Eicher Motors (down 0.39%), edged lower.
TVS Motor Company (up 2.89%) and M&M (up 0.38%), edged higher.
Hero MotoCorp fell 2.27% to Rs 2,023.90 ahead of its Q3 results today, 30 January 2014. The stock had risen on Wednesday, 29 January 2014, after the company showcased five new products: 150-cc Hero Xtreme, 110-cc Hero Dash, 250-cc sports bike Hero HX250R, electric scooter Hero Leap and Hero RNT concept.
Hero Dash is a standard scooter powered by a 110-cc engine. Hero Xtreme motorcycle is powered by a single-cylinder 150-cc air-cooled engine. HX250R is Hero MotoCorp's first 250-cc sports bike.
Hero Leap is India's first series hybrid scooter. The Leap is powered by lithium-ion batteries and an electric-traction motor with an onboard generator powered by an all-new 124-cc engine.
Hero RNT is a diesel concept bike that features a high torque 150-cc diesel engine that has an optional turbocharger. The RNT gets an option of being attached with an oversize generator, offered as an accessory, to make it a hybrid. Another option is a hub electric motor in the front wheel powered by an electric battery pack, to give the rider a unique two-wheel drive option.
Tata Motors rose 0.78% to Rs 354.60 after a media report suggested that the company is close to winning a Rs 1000 crore defence contract.
According to a media report, Tata Motors is in the final stages of concluding a Rs 1000 crore contract with the Ministry of Defence for the supply of 1,239 heavy duty trucks. The deal for the so-called six-wheel-drive high mobility vehicles (HMV), fitted with material handling cranes, has the option of a follow-on order for 600 more units, the report added.
IT shares edged lower. Hexaware Technologies (down 3.67%), CMC (down 1.91%), Tech Mahindra (down 1.88%), Infosys (down 1.01%), MphasiS (down 0.72%), TCS (down 0.66%), Wipro (down 0.49%), Oracle Financial Services Software (down 0.38%) and HCL Technologies (down 0.34%), edged lower.
In the foreign exchange market, the rupee edged lower against the dollar, tracking weakness in emerging markets after the Federal Reserve further pruned its monetary stimulus. The partially convertible rupee was hovering at 62.7375, compared with its close of 62.41/42 on Wednesday, 29 January 2014.
India has no target for the rupee's exchange rate and the currency will remain rangebound, the economic affairs secretary said, despite recent global market volatility. "We are vigilant...we believe that we are capable of withstanding (the impact of the Fed tapering)," Arvind Mayaram said.
Indian government bond prices dropped after the Federal Reserve further pruned its monetary stimulus. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.8127%, higher than its close of 8.7743% on Wednesday, 29 January 2014. Bond yield and bond price move in opposite direction.
India's economy is better prepared for the consequences, if any, of reduction in bond purchases by the US Federal Reserve, India's Finance Ministry said in a statement issued today, 30 January 2014. "We have added to our foreign exchange reserves which stand at $295 billion. FDI and FII inflows continue to be robust, liquidity is comfortable, stronger regulations have been put in place in the capital markets, the investment cycle appears to have turned positive, credit demand from key sectors is strong, and WPI inflation has moderated. The Current Account Deficit which was earlier estimated at $70 billion is now expected to be below $50 billion in 2013-14. Therefore, there should be no undue concern over external factors", the Finance Ministry said.
Fed's decision on Wednesday, 29 January 2014, to reduce bond purchases by $10 billion a month to $65 billion was expected and should not in any way surprise or affect the Indian markets, the Finance Ministry said. "However, both the Government of India and the Reserve Bank of India will continue to remain vigilant and will take whatever steps are necessary to ensure that there is stability in the financial markets", the Finance Ministry said in a statement.
Asian stocks dropped on Thursday, 30 January 2014, after the US Federal Reserve pressed on with cuts to US economic stimulus and as a report showed China's manufacturing industry contracted. Key benchmark indices in Hong Kong, China, Singapore, Japan and Indonesia fell by 0.48% to 2.45%. Stock markets in South Korea and Taiwan are closed today, 30 January 2014, and Hong Kong and Singapore will shut early for the Chinese New Year holidays. Stock markets in Taiwan are closed until 4 February 2014 for the Lunar New Year holiday.
The final reading on HSBC Holdings Plc and Markit Economics Ltd.'s January purchasing managers' index for Chinese manufacturing was 49.5, the first contraction in six months, from 50.5 in December. Readings above 50 indicate expansion.
China's markets close from tomorrow until 7 February 2014 for the Lunar New Year holiday, while Hong Kong is shut until 4 February 2014.
Trading in US index futures indicated that the Dow could advance 29 points at the opening bell on Thursday, 30 January 2014. US stocks sank on Wednesday, 29 January 2014, as earnings forecasts from Yahoo! Inc. and AT&T Inc. disappointed investors. The Federal Reserve on Wednesday, 29 January 2014, took another gradual step toward exiting its controversial bond-buying program, remaining stoic in the face of market turmoil. As expected, the Fed decided to reduce the pace of monthly asset purchases to $65 billion, from January's $75 billion. The Fed will purchase mortgage-backed securities at a pace of $30 billion per month and add to its holdings of Treasurys at a pace of $35 billion per month beginning in February.
The Fed also signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in economic activity and improvement in the labor market.
In addition to proceeding with plans to scale back its bond buying, the Fed made no changes to its other main policy plank: its pledge to keep interest rates low for some time to come. It has pledged to hold rates steady "well past" the point that the unemployment rate falls below 6.5% as long as inflation remains low.
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