Trading for the week started on a weak note as key benchmark indices dropped after data showing a muted 0.5% growth in industrial production in July 2014 raised doubts about economic recovery. Key indices extended losses in late trade after remaining in red throughout the trading session. The Sensex fell below the psychological 27,000 mark. The market breadth indicating the overall health of the market was positive. The Sensex was provisionally off 238.76 points or 0.88% at 26,822.28. The BSE Mid-Cap and Small-Cap indices were, both, in green. Metal and mining stocks declined as a batch of weak data out of China raised concern of a sharp slowdown in the world's second-biggest economy. Among pharma pack, Cipla and Lupin scaled record high.
Key indices extended losses in late trade after remaining in red throughout the trading session after a lower opening triggered by data showing muted industrial production growth in July 2014 and weak Asian stocks.
In overseas markets, Asian and European stocks fell as a batch of weak data out of China raised concern of a sharp slowdown in the world's second-biggest economy.
In the foreign exchange market, the rupee weakened past 61 against the dollar as key equity benchmark indices dropped.
Brent crude oil prices dropped amid concerns that new sanctions against Russia will weaken oil demand amid ample supplies and a strong dollar.
As per provisional figures, the S&P BSE Sensex was down 238.76 points or 0.88% at 26,822.28. The index dropped 261.30 points at the day's low of 26,799.74 in late trade, its lowest level since 1 September 2014. The index fell 62.97 points at the day's high of 26,998.07 in opening trade.
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The CNX Nifty was down 68.95 points or 0.85% at 8,036.55, as per provisional figures. The index hit a low of 8,030 in intraday trade, its lowest level since 1 September 2014. The index hit a high of 8,077.30 in intraday trade.
The total turnover on BSE amounted to Rs 3446 crore, lower than Rs 3722.60 crore on Friday, 12 September 2014.
The market breadth indicating the overall health of the market was positive. On BSE, 1,734 shares rose and 1,327 shares fell. A total of 99 shares were unchanged.
The BSE Mid-Cap index was up 13.39 points or 0.13% at 9,996.47. The BSE Small-Cap index was up 68.02 points or 0.61% at 11,234.81. Both these indices outperformed the Sensex.
Metal and mining stocks declined as a batch of weak data out of China raised concern of a sharp slowdown in the world's second-biggest economy. China is the world's largest consumer of steel, copper and aluminum. Hindalco Industries (down 3.32%), Jindal Steel & Power (down 4.91%), Sesa Sterlite (down 1.55%), JSW Steel (down 1.24%), NMDC (down 1.13%), Bhushan Steel (down 5%), Tata Steel (down 2.14%), National Aluminum Company (down 0.31%) and Hindustan Copper (down 1.37%) declined. Hindustan Zinc (up 0.47%) and Steel Authority of India (Sail) (up 0.75%) gained.
Cipla rose 2.55% to Rs 628.20 after hitting record high of Rs 634 in intraday trade.
Lupin jumped 4.18% to Rs 1,416, with the stock extending Friday's gains. The stock hit a record high of Rs 1,422 in intraday trade. Lupin at fag end of trading session on Friday, 12 September 2014, announced that the company and Salix Pharmaceuticals, Inc. have entered into a definitive distribution agreement, under which Salix has granted Lupin the exclusive right to market, distribute and sell certain Salix products in Canada. Lupin will promote the Salix products through its own sales force in Canada, the company said. Under the agreement terms, Salix will receive an upfront payment and distribution fees, and is eligible for additional pre-commercial and sales milestone payments. Salix will supply the products to Lupin under separate supply agreements, the company said.
In the foreign exchange market, the rupee weakened past 61 against the dollar as key equity benchmark indices dropped. The partially convertible rupee was hovering at 61.05, compared with its close of 60.66 during the previous trading session.
The annual rate of inflation based on the monthly wholesale price index (WPI) decelerated to 3.74% in August 2014, from 5.19% in July 2014. The inflation reading in August 2014 was lowest since 1.79% posted in October 2009. The inflation eased for all three major product groups contributing to the overall decline in inflation. The data was released at noon today, 15 September 2014.
The deceleration in inflation based on the wholesale price index (WPI) was sharper than market expectations. The WPI data comes after another data released by the government after trading hours on Friday, 12 September 2014, showed that the annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India eased to 7.8% in August 2014, from 7.96% July 2014. The rate of inflation based on the combined consumer food price indices (CFPI) for urban and rural India accelerated to 9.42% in August 2014, from 9.36% in July 2014, the data showed. Core CPI inflation which excludes food and energy prices, eased to 6.9% in August 2014, from 7.4% in July 2014.
Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said at a banking conference today, 15 September 2014, that inflation was still high and there was no point in cutting interest rates to see inflation pick up again. The RBI wants to bring down interest rates when it is "feasible", Rajan said. His comments came before the release of WPI data.
The Reserve Bank of India (RBI) is targeting CPI inflation at 8% by January 2015 and 6% by January 2016.
Meanwhile, industrial production (IIP) growth moderated to 0.5% in July 2014, from a revised 3.9% growth recorded in June 2014, data released by the government after trading hours on Friday, 12 September 2014, showed. The moderation in the IIP growth in July was mainly contributed by 1% decline in the manufacturing sectors output. On the other hand, the mining sector output increased 2.1%, while the electricity generation posted double-digit growth for second straight month at 11.7%.
Today is the due date for the second installment of advance tax payment by corporates. The advance tax data could provide cues about Q2 September 2014 corporate earnings. Advance taxes are collected in four installments -- 15% by 15 June; 40% by 15 September; 75% by 15 December and 100% by 15 March.
Brent crude oil futures edged lower amid concerns that new sanctions against Russia will weaken oil demand amid ample supplies and a strong dollar. Brent for October settlement was down 41 cents at $96.70 a barrel. The contract fell 97 cents to settle at $97.11 on Friday, 12 September 2014. The more active contract Brent for November settlement was down 28 cents at $97.68 a barrel.
On Friday, 12 September 2014, the United States reportedly imposed sanctions on Gazprom, Gazprom Neft, Lukoil, Surgutneftegas and Rosneft, banning Western firms from supporting their activities in exploration or production from deep water, Arctic offshore or shale projects following similar sanctions by the European Union (EU) earlier on that day. The new measures, designed to put further pressure on President Vladimir Putin over Russia's actions in Ukraine, are a major broadening of the previous sanctions, which only banned the export of high technology oil equipment into Russia.
Meanwhile, in its quarterly report released yesterday, 14 September 2014, the Bank for International Settlements (BIS) has reportedly warned that international borrowing and low volatility are increasing risk for emerging-market assets. International borrowing by companies in some emerging markets now matches the output of their economies, leaving bondholders more vulnerable to interest rate or currency shocks, the BIS has said, according to reports. The BIS, known as the central bankers' bank, hosts the Basel Committee on Banking Supervision which sets global capital standards.
European stocks retreated today, 15 September 2014, after Chinese factory and retail data added to evidence of a slowdown in the world's second-biggest economy. Key benchmark indices in UK, France and Germany were off 0.02% to 0.35%.
Asian stocks fell today, 15 September 2014, after a batch of weak data out of China raised concern of a sharp slowdown in the world's second-biggest economy. Key benchmark indices in Indonesia, South Korea, Taiwan, Singapore and Hong Kong were off 0.06% to 0.97%. China's Shanghai Composite was up 0.31%.
Factory production in China rose 6.9% in August from a year earlier, the statistics office reported on 13 September 2014, down from 9% in July. It was the slowest pace outside the Lunar New Year holiday period of January and February since December 2008. Growth in fixed-asset investment slowed to 16.5% in August, while retail sales expanded 11.9% in August, easing from 12.2% in July.
Trading in US index futures indicated that the Dow could fall 35 points at the opening bell on Monday, 15 September 2014. US stocks edged lower on Friday, 12 September 2014, as investors looked ahead to a Federal Reserve meeting due on 16-17 September 2014.
Investors will look to Federal Open Market Committee (FOMC) meeting for fresh guidance on US interest rates. A policy meeting of the Federal Open Market Committee (FOMC) will be held on 16 and 17 September 2014. At the end of a two-day meeting, the FOMC is widely expected to announce cut in Fed's monthly bond-buying program by another $10 billion to $15 billion, staying on track to end the program at its October meeting. The Fed is likely to raise short-term interest rates next year from their current near-zero levels, where they have been since December 2008.
The Fed will also announce US economic projections after the policy meet. Fed now releases economic projections four times a year (March, June, September, and December). Traditionally, the Fed forecasts covered GDP, the PCE price index, and the civilian unemployment rate. However, the forecast report additionally now includes forecasts for the appropriate timing of the next change in the fed funds rate and the expected fed funds rate at the end of the next two years. The policy meet will be followed by a press conference by Federal Reserve Chairwoman Janet Yellen on 17 September 2014.
The Federal Reserve after two-day policy meeting on 30 July 2014, said it would reduce its purchases of mortgage and Treasury bonds by $10 billion to $25 billion monthly from $35 billion earlier, as widely expected.
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