Key benchmark languished in the negative terrain in mid-morning trade after Prime Minister Manmohan Singh said that the growth that India has achieved in the past nine years is the highest that has ever been achieved in a nine year period. The barometer index, the S&P BSE Sensex, was down 98.86 points or 0.47%, up about 30 points from the day's low and off close to 100 points from the day's high. The market breadth, indicating the overall health of the market, turned negative from positive in mid-morning trade. Weakness in Asian shares dampened sentiment on the domestic bourses. The rupee edged lower against the dollar.
IT stocks rose on weak rupee. Tata Power Company and Reliance Infrastructure, both, extended Thursday's losses triggered by the Delhi government on Wednesday, 1 January 2014, ordering CAG audit of their finances. Metal and mining stocks dropped for the second day in a row after a gauge of China's non-manufacturing industries declined.
A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak opening. The Sensex and the 50-unit CNX Nifty, both, hit two-week low at the onset of the trading session. Volatility continued as key benchmark indices hovered in negative zone in morning trade. The Sensex languished in the negative terrain in mid-morning trade after Prime Minister Manmohan Singh said that he will not to seek third term in office and that he will "pass on baton" after Lok Sabha elections.
Foreign institutional investors (FIIs) bought shares worth a net Rs 674.05 crore on Thursday, 2 January 2014, as per provisional data from the stock exchanges.
Asian stocks dropped on Friday, 3 January 2014, after US equities retreated from record highs and a gauge of China's non-manufacturing industries declined. The latest data added to signs of a slowdown in the world's second-largest economy.
At 11:20 IST, the S&P BSE Sensex was down 98.86 points or 0.47% to 20,789.37. The index dropped 130.30 points at the day's low 20,758.03 in morning trade, its lowest level since 20 December 2013. The index fell 31.80 points at the day's high of 20,856.53 in early trade.
The CNX Nifty was down 32.96 points or 0.53% to 6,188.35. The index hit a low of 6,178.85 in intraday trade, its lowest level since 20 December 2013. The index hit a high of 6,209.05 in intraday trade.
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The market breadth, indicating the overall health of the market, turned negative from positive in mid-morning trade. On BSE, 1,036 shares fell and 928 shares rose. A total of 133 shares were unchanged.
Among the 30-share Sensex pack, 20 stocks fell and rest of them rose. M&M (down 2.73%), Tata Motors (down 2.47%) and Bhel (down 2.18%) declined.
IT stocks rose 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 0.5%), TCS (up 2.36%), Tech Mahindra (up 1.31%) and HCL Technologies (up 0.88%) gained.
Infosys rose 1.33%. Infosys unveils Q3 December 2013 results on 10 January 2014. At the time of announcement of Q2 September 2013 results in October 2013, Infosys had forecast 9% to 10% growth in revenue in dollar terms for the year ending 31 March 2014 (FY 2014). At that time, the company had issued a forecast of 21% to 22% growth in revenue in rupee terms based on the assumption of rupee dollar conversion rate of 62.61 for the rest of the fiscal year.
Metal and mining stocks dropped for the second day in a row after a gauge of China's non-manufacturing industries declined. China is the world's largest consumer of copper and aluminum. Sesa Sterlite (down 0.83%), JSW Steel (down 1.51%), Tata Steel (down 1.38%), Hindalco Industries (down 1.82%), National Aluminum Company (down 0.67%), Hindustan Copper (down 1.58%), NMDC (down 1.25%) Sail (down 1.55%) and Jindal Steel & Power (down 0.98%) edged lower.
Tata Power Company dropped 4.12%, with the stock extending Thursday's losses. Reliance Infrastructure lost 1.24%, with the stock extending Thursday's losses. Rejecting the contention of private power distributors, the Delhi government on 1 January 2014 ordered a CAG audit of their finances. Delhi Chief Minister Arvind Kejriwal had early this week announced that the power tariffs in Delhi will be slashed by 50% for up to 400 units. The Delhi government will provide the subsidy and the money will be directly paid to the distribution companies. The cut in electricity tariffs, part of the AAP manifesto for the 4 December state assembly election, will entail a cost of Rs 61 crore over next three months.
Claris Lifesciences rose 2.14% after the company said its board will meet on 7 January 2014, to consider a proposal for buyback of the equity shares. The company made the announcement after market hours on Thursday, 2 January 2014.
Hindustan Construction Company jumped 3.68% after the company won a contract worth Rs 442.52 crore from IRCON International. The company made the announcement after market hours on Thursday, 2 January 2014
In the foreign exchange market, the rupee edged lower against the dollar on global risk off sentiment. The partially convertible rupee was hovering at 62.42, weaker than its close of 62.26/27 on Thursday, 2 January 2014.
In a rare news conference Prime Minsiter Manmohan Singh today, 3 January 2014, took to the stump to defend his economic policies and promised recovery. He also said he would "hand the baton over to a new prime minister," after federal polls this year, ruling out a third term.
The next major trigger for the stock market is Q3 December 2013 corporate earnings. The Q3 earnings season will begin around mid-January 2014 and continue till mid-February 2014. Investors and analysts will closely watch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year and/or the next year.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
Asian stocks dropped on Friday, 3 January 2014, after US equities retreated from record highs and a gauge of China's non-manufacturing industries declined. Key benchmark indices in Hong Kong, Taiwan, Singapore, Indonesia, China and South Korea were off 0.7% to 1.94%. Japanese stock markets were closed for a holiday.
China's non-manufacturing gauge fell to a four-month low in December, after data earlier this week showed two measures of factory output in the world's second-largest economy declined. China's purchasing managers' index for the non-manufacturing sector fell to 54.6, the lowest reading since August, from 56 in November.
Trading in US index futures indicated that the Dow could drop 23 points at the opening bell on Friday, 3 January 2014. Stocks on Wall Street closed sharply lower on the first trading day of 2014 on Thursday, 2 January 2014, after data pointed to a slowdown in manufacturing expansion in China and the United States.
Data indicated applications for US unemployment benefits declined last week to the lowest level in a month. Jobless claims fell by 2,000 to 339,000 in the period ended Dec. 28, Labor Department data showed. A separate report showed the Institute for Supply Management's factory index fell to 57 in December from the prior month's 57.3, which was the highest since April 2011. Readings above 50 indicate expansion.
The US Federal Reserve said after a two-day monetary policy review on 18 December 2013 that it will cut its monthly bond purchases to $75 billion from $85 billion starting in January 2014 amid an improved outlook for the job market in the world's largest economy. The US central bank is poised to continue winding down its stimulus measures gradually over the next year.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014.
In Europe, final readings on Thursday, 2 January 2014, confirmed that manufacturing in the euro zone expanded last month at the fastest pace since May 2011, while output in Germany, the currency bloc's largest economy, expanded for a sixth consecutive month.
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