Key benchmark indices extended losses and hit fresh intraday low in early afternoon trade after Federal Reserve Bank of St. Louis President James Bullard said on Friday, 20 September 2013, that the Fed could make a small stimulus reduction at its next meeting in October 2013. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The market sentiment was also hit by the Reserve Bank of India's hawkish tone at its latest monetary policy review on Friday, 20 September 2013. The barometer index, the S&P BSE Sensex once again fell below the psychological 20,000 level after briefly regaining that mark in early afternoon trade. The Sensex was down 353.76 points or 1.75%, off about 290 points from the day's high and up close to 5 points from the day's low. The market breadth, indicating the overall health of the market, was negative.
Index heavyweights Reliance Industries and ITC, both, dropped. Most metal stocks edged lower. Shares of gold jewellery retailers rose on reports that the government and banks have agreed on how new rules on gold imports should work.
A bout of initial volatility was witnessed as key benchmark indices trimmed losses after a weak start. The 50-unit CNX Nifty fell below the psychological 6,000 mark. Volatility continued as key benchmark indices weakened once again and hit fresh intraday low after trimming initial losses. The market extended losses and hit fresh intraday low in mid-morning trade. The Sensex fell below the psychological 20,000 level. The market extended losses and hit fresh intraday low in early afternoon trade. The barometer index, the S&P BSE Sensex once again fell below the psychological 20,000 level after briefly regaining that mark in early afternoon trade.
The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month September 2013 series to October 2013 series. The September 2013 F&O contracts expire on Thursday, 26 September 2013.
At 12:20 IST, the S&P BSE Sensex was down 353.76 points or 1.75% to 19,908.76. The index declined 356.15 points at the day's low of 19,907.56 in early afternoon trade, its lowest level since 18 September 2013. The index fell 63.90 points at the day's high of 20,199.81 in early trade.
The CNX Nifty was down 107.75 points or 1.79% to 5,904.35. The index hit a low of 5,899.90 in intraday trade, its lowest level since 18 September 2013. The index hit a high of 5,989.40 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,177 shares fell and 794 shares rose. A total of 144 shares were unchanged.
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Among the 30-share Sensex pack, 22 stocks fell and rest of them rose. State Bank of India (down 4.59%), HDFC (down 3.56%) and ICICI Bank (down 3.89%), declined.
Lupin declined 0.86% to Rs 860. A block deal of 3.21 lakh shares was executed on the counter on BSE at Rs 860.50 per share at 11:42 IST
Index heavyweight Reliance Industries declined 1.17%.
Index heavyweight and cigarette maker ITC dropped 0.86%.
Most metal stocks edged lower. Hindustan Zinc (down 2.61%), JSW Steel (down 2.33%), Jindal Steel & Power (down 1.44%), Tata Steel (down 1.1%), NMDC (down 0.89%) and Bhushan Steel (down 0.82%), edged lower.
Hindalco Industries rose 0.57% to Rs 114.90. The company after market hours on Friday, 20 September 2013, said that the committee of the board of directors of the company at its meeting held on Friday, 20 September 2013, has allotted 15 crore equity shares of Re 1 each at a premium of Rs 143.35 per share to the promoter group companies subsequent to the promoters exercising warrants and paid the balance 75% of the purchase price.
It may be recalled that the company's board had on 22 March 2012 allotted 15 crore warrants on preferential basis to promoters group companies under Sebi (Issue of Capital & Disclosure Requirements) Regulations 2009 at Rs 144.35 per share. As per Sebi Regulation, the promoters had paid 25% of the purchase price at the time of allotment of warrants.
Mahindra & Mahindra (M&M) fell 1.44%. The company said during market hours today, 23 September 2013, that the board of directors of the company has appointed Dr. Pawan Goenka as an Additional Director and also as an Executive Director of the company for a period of 5 years with effect from 23 September 2013, subject to the approval of the shareholders.
Shares of gold jewellery retailers rose on reports that the government and banks have agreed on how new rules on gold imports should work. Titan Industries (up 1.85%), Rajesh Exports (up 1.42%), and Gitanjali Gems (up 6.25%), gained. Banks and other importers had halted gold imports because there was no clarity despite attempts by the central bank and customs authorities to ease confusion. India, the world's largest gold consumer, imports nearly all the gold it consumes.
Apollo Tyres (down 4.68%), Oriental Bank of Commerce (down 4.36%), Indiabulls Housing Finance (down 4.11%), Lanco Infratech (down 3.83%) and HPCL (down 3.76%), were among the biggest losers from the BSE Mid-Cap index.
In the foreign exchange market, the rupee dropped against the dollar. The partially convertible rupee was hovering at 62.50, weaker than its close of 62.23/24 on Friday, 20 September 2013. 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.
Economic affairs secretary Arvind Mayaram today, 23 September 2013, said that the intrinsic value of the rupee is between 58 and 60 against the dollar. He said that overseas speculators were partly responsible for the sharp fall in the currency over the past few months. He also said that a fall in bulk diesel demand this fiscal year will save the government about $1 billion. Mayaram said he expected foreign direct investment (FDI) flows of about $36 billion for the fiscal year ending on 31 March 2014 if the current trend continues. Net FDI in the first quarter of this fiscal year rose to $9 billion from $5 billion in the same period a year earlier, Mayaram said last week.
Asian stocks were mixed on Monday, 23 September 2013. Key benchmark indices in Indonesia, Hong Kong and Singapore were off 0.73% to 1.1%. Key benchmark indices in South Korea, China and Taiwan rose 0.19% to 1.26%. Japanese markets were closed for a holiday.
A Chinese manufacturing index rose to a six-month high in September, signaling that a rebound in the world's second-largest economy is gaining steam. The preliminary reading of 51.2 for a Purchasing Managers' Index released today by HSBC Holdings Plc and Markit Economics. The gauge was at 50.1 in August.
Trading in US index futures indicated that the Dow could gain 36 points at the opening bell on Monday, 23 September 2013. US stocks fell on Friday, 20 September 2013, after Federal Reserve Bank of St. Louis President James Bullard said that the Fed could make a small stimulus reduction at its next meeting in October. Bullard said tapering is more likely if the labor market continues to improve. The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013.
On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus. Kansas City Fed President Esther George on Friday, 20 September 2013, said markets were ready for reduced stimulus to begin, and the central bank's failure to follow through on expectations hurt its credibility on Wall Street.
In Europe, Chancellor Angela Merkel's conservative party won Germany's election, but finished just short of an absolute majority. Merkel's Christian Democrats (CDU) bloc took about 42% of the vote. But she might yet have to seek a grand coalition with the Social Democrats (SPD) who won about 26% of the vote. Mrs Merkel's preferred liberal partners have not made it into parliament. The results showed that the liberal Free Democrats (FDP) won only 4.8%, leaving it with no national representation in parliament for the first time in Germany's post-war history. Mrs Merkel has made clear she would be prepared to work with the Social Democrats (SPD) in a grand coalition, as she did in 2005-09.
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