Key benchmark indices alternately swung between positive and negative zone near the flat line as investors refrained from building large positions ahead of the outcome of the two-day meeting of the Federal Open Market Committee which begins today, 17 September 2013, and also ahead of the mid-quarter monetary policy review by the Reserve Bank of India (RBI) later this week. The barometer index, the S&P BSE Sensex, was up 9.07 points or 0.05%, off close to 55 points from the day's high and up about 115 points from the day's low. The market breadth, indicating the overall health of the market, was negative.
Shares of gold financing firms declined after the Reserve Bank of India (RBI) tightened rules for finance companies which lend against gold. IT stocks extended intraday gains on weak rupee.
The market edged lower after oscillating between positive and negative zone in early trade. Volatility continued as key benchmark indices trimmed losses after hitting fresh intraday low in morning trade. The market hovered in the negative terrain in mid-morning trade. The Sensex regained positive terrain and hit fresh intraday high in early afternoon trade. A bout of volatility was witnessed as key benchmark indices once again slipped into the red in afternoon trade as European markets edged lower in early trade there ahead of the US Federal Reserve kicking of its two-day policy meeting, at which the central bank could decide to scale back its stimulus program. The Sensex alternately moved between positive and negative zone near the flat line in mid-afternoon trade.
In the foreign exchange market, the rupee trimmed intraday losses against the dollar. The partially convertible rupee was hovering at 63.09, weaker than its close of 62.83/84 on Monday, 16 September 2013. The rupee hit hit a low of 63.6450 early in session.
The domestic currency has declined against the dollar this year due to fears that India will struggle to fund its current account gap if the US starts to wind down its easy-money policies that have fueled global liquidity in recent years. The rupee has, however, made a strong rebound after hitting record low of 68.85 in intraday deals on 28 August 2013. The recovery in the rupee materialized after new Reserve Bank of India Governor Raghuram Rajan on 4 September 2013 announced plans to bolster the financial industry and stabilize the rupee.
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.
More From This Section
At 14:20 IST, the S&P BSE Sensex was up 9.07 points or 0.05% to 19,751.54. The index rose 66.81 points at the day's high of 19,809.28 in early afternoon trade. The index declined 107.03 points at the day's low of 19,635.44 in morning trade.
The CNX Nifty was down 5.35 points or 0.09% to 5,835.20. The index hit a high of 5,853.95 in intraday trade. The index hit a low of 5,804.90 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,206 shares fell and 992 shares rose. A total of 140 shares were unchanged.
Among the 30-share Sensex pack, 16 stocks declined and rest of them rose. Dr Reddy's Laboratories (up 4%), Sesa Goa (up 2.4%) and Coal India (up 1.19%), gained.
IT stocks extended intraday gains on weak rupee. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. Wipro (up 4.22%), TCS (up 1.03%), and Infosys (up 0.46%), gained.
HCL Technologies rose 3.33%. HCL Infosystems declined 1.79%. HCL Technologies and HCL Infosystems on Monday, 16 September 2013, clarified that no proposal to merge HCL Infosystems or its systems integration and services business with HCL Technologies is under consideration. The two companies issued the clarification after media reports suggested that HCL Infosystems is working towards the goal of merging its system integration and services business with HCL Technologies. HCL Tech and HCL Infosystems have been teaming on specific opportunities in India and for this purpose the two companies have been cross selling each other's services over the last 2 years, HCL Tech said after trading hours on Monday, 16 September 2013. HCL Tech said that the company derived about 5% of its revenue from India during FY 2013. It is expected that the revenue from India during FY 2014 would remain at similar level, the company said. The arrangement with HCL Infosystems did not have any impact on the margins in the past and it is not expected to have any impact on the margins going forward, HCL Technologies said. HCL Technologies is a software firm.
HCL Infosystems also said that HCL Infosystems and HCL Technologies have been collaborating together under teaming agreements to address business opportunities in India. These agreements are on arms length basis in the best interest of HCL and its customers and not margin dilutive to HCL Infosystems, the company said.
A bulk of HCL Infosystems' revenues comes from selling computing hardware to government and by acting as a national distributor for mobile phones, computers, laptops and printers.
Shares of gold financing firms declined after the Reserve Bank of India (RBI) tightened rules for finance companies which lend against gold. Muthoot Finance shed 6.37% and Manappuram Finance dropped 4%. Magma Fincorp dropped 1.57%. The RBI on Monday, 16 September 2013, said lenders need to value the pledged gold at the average closing price of 22-carat gold for the preceding 30 days as quoted by the Bombay Bullion Association to arrive at the loan-to-value ratio. The ratio would remain at 60% for loans against jewellery. Currently, there is no standard method for arriving at the value of gold accepted as collateral and valuation is arbitrary and opaque, the central bank said in a notification issued late on Monday.
The central bank also streamlined the process by which lenders auction gold when a borrower defaults, saying lenders need to declare a reserve price for the pledged ornaments. Lenders would also need RBI approval to open branches exceeding 1,000. No new ones would be allowed without adequate storage facility for gold. Unbridled growth may not be in the overall interests of the concerned NBFC or the sector and there is a need for consolidation of the existing network, the central bank said.
GMR Infrastructure rose 1.64% to Rs 19.25 after the company said GMR Highways has signed a definitive agreement with India Infrastructure Fund (IIF) to divest 74% stake in GMR Ulundurpet Expressways (GUEL). The transaction is subject to closing conditions customary to such transactions, the company said. IIF emerged as successful bidder in buying majority stake in GUEL, which attracted strong interest from several major investors from India and abroad. This is a second major divestment in GMR's roads portfolio in less than 6 months, GMR Infrastructure said.
GUEL operates the highway stretch of about 73 km, from Tindivanam to Ulundurpet on National Highway 45 in the state of Tamil Nadu. The project commenced commercial operations in July 2009. GMR Group will receive a consideration of about Rs 222 crore for the sale of 74% equity stake.
Commenting on the development, Mr. Madhu Terdal, Group CFO of GMR Group said: "This transaction signifies GMR Group's ability to successfully implement its "Asset-Light-Asset-Right" strategy under challenging market conditions. We at GMR Group, continue to focus on creating liquidity and reducing our leveraged position, as part of the strategy of churning of assets. Divestment of this asset will also reduce the debt as on 31 August 2013, by about Rs 459 crore on a fully consolidated basis, in addition to infusing equity funds of Rs 222 crore. The GMR Group will continue to focus in adopting this approach in other businesses as well. This partnership will also strengthen the relationship with IDFC.
Mr. M. K. Sinha, Managing Partner and CEO of IDFC Alternatives said: "This investment is our first major acquisition and a step in the direction of implementing our road sector strategy of acquiring control of operational projects with proven traffic history. Given the uncertainty and delays in implementing under construction projects, we will continue our focus on acquisition of operating road assets. This investment also reinforces our desire to stick to partners with whom IDFC has proven and long standing relationships like the GMR Group and we look forward to continue working with GMR in building and operating quality infrastructure assets in India".
Zensar Technologies jumped 4.75% after the company after market hours on Monday, 16 September 2013, announced a unique initiative to encourage product start-ups in India and to help take their products global. These start-ups are in the new age technology area of SMAC (Social, Mobility, Analytics and Cloud).
Dr. Ganesh Natarajan, Vice Chairman and CEO, Zensar Technologies said: "This initiative is a reiteration of our commitment to building an ecosystem for technology innovation, by helping program manage and showcase quality assured solutions from India's best start-ups."
Mr. Kumar Gaurav, Head of Consulting & SMAC Portfolio, Zensar Technologies said: "With the emergence of new technologies across the areas of Cloud, Social Media, Mobile and Analytics, organizations today are looking at integrating applications across the enterprise seamlessly, with the ability to dashboard and allow for easy anywhere-anytime accessibility. The move from systems of record to systems of engagement is now imminent. The customer is the centre of focus across the enterprise, constantly driving demand for intelligence, insights, ideas and collaboration across organizational boundaries. Digital Transformation will also focus around experience creation through a combination of efforts across customer intimacy, product innovation, organizational agility and intelligence driven processes."
Mr. Kumar added, "This initiative of partnering with SMAC product companies is in sync with our strategy of delivering integrated and innovative SMAC solutions to our clients. We are delighted to be a part of this initiative and look forward to partner with these final few SMAC product start-up companies and take their offerings across globally to our clients."
PI Industries rose 2.57% to Rs 133.75, with the stock extending Monday's gains triggered by the company's announcement that the ceiling on investment in the company's shares by foreign institutional investors (FIIs) has been raised to 40% of the company's equity from 24% earlier.
Fresenius Kabi Oncology rose 3.82% to Rs 133.10 after the company's promoter announced delisting offer to the public shareholders of the company. The announcement was made after market hours on Monday, 16 September 2013. Fresenius Kabi Oncology said that its promoter, Fresenius Kabi (Singapore), has made a public announcement to the public shareholders of the company in respect of the proposed acquisition and consequent delisting of the fully paid-up equity shares of the company from the BSE and the NSE.
Fresenius Kabi (Singapore) is seeking to acquire up to 3 crore shares of the company, representing 19% of the total share capital, from the public shareholders. The floor price of the reverse book-building process is fixed at Rs 116.10 per share.
Fresenius Kabi (Singapore) will announce the discovered price and its decision to accept or reject the discovered price by 28 October 2013.
Fresenius Kabi (Singapore) had announced delisting plan in April 2013. The foreign promoter had then expressed its intention to pay an indicative price of up to Rs 130 per share to acquire the shares offered to it in the delisting offer. As on 30 June 2013, Fresenius Kabi (Singapore) held 81% stake in the company.
At its upcoming mid-quarter monetary policy review on Friday, 20 September 2013, the Reserve Bank of India will have to decide whether to give in to industry demands and lower interest rates in order to boost slowing economic growth, or leave interest rates unchanged for the third straight policy review as it guards against risks of a fresh rise in inflationary pressures.
European stock markets pulled back from multi-year highs on Tuesday, 17 September 2013, ahead of the US Federal Reserve kicking of its two-day policy meeting, at which the central bank could decide to scale back its stimulus program. Key benchmark indices in UK, France and Germany were down by 0.28% to 0.5%.
Asian stocks fell on Tuesday, 17 September 2013, as the Federal Reserve begins a two-day policy meeting at which it is forecast to reduce the pace of its US bond buying. Key benchmark indices in China, Japan, Taiwan, Hong Kong, Indonesia and South Korea fell by 0.07% to 2.05%. Singapore's Straits Times rose 0.05%.
Trading in US index futures indicated that the Dow could slide 14 points at the opening bell on Tuesday, 17 September 2013. Most US stocks rose on Monday, 16 September 2013, after former US Treasury secretary Larry Summers removed himself from consideration to run the Federal Reserve. Summers was seen as relatively hawkish.
Investors across the globe are eyeing the two-day policy meeting of the Federal Open Market Committee (FOMC), considered by many to provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program. The FOMC's two-day policy meeting on interest rates in the United States begins today, 17 September 2013. 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. Investors are also eyeing Fed's forward guidance on policy.
UN chemical investigators on Monday confirmed the use of sarin nerve agent in an August 21 poison gas attack outside the Syrian capital in a long-awaited report that the United States, Britain and France said proved government forces were responsible. Syria and Russia have blamed the August 21 attack on the rebels. The rebels, the United States and other Western powers blame forces loyal to Assad for the Ghouta attack. The UN confirmation of sarin gas use on August 21 comes as France, Britain and the United States agreed in Paris to seek a strong and robust UN resolution that sets binding deadlines on removal of chemical weapons. Those talks followed a weekend deal on Syria's chemical weapons reached by the United States and Russia that could avert US military action.
Powered by Capital Market - Live News