Market ekes out small gains

Key benchmark indices eked out small gains as index heavyweight and cigarette major ITC rose. The barometer index, the S&P BSE Sensex, was provisionally up 36.30 points or 0.18%, off about 105 points from the day's high and up close to 65 points from the day's low. The market breadth, indicating the overall health of the market, was positive.

Most metal stocks rose. Two wheeler makers declined. Index heavyweight Reliance Industries dropped. Shares of state-run power equipment major Bhel surged. IT stocks were mixed. Wipro rose ahead of its inclusion in 50-unit CNX Nifty index tomorrow, 27 September 2013. Coal India extended intraday gains in late trade. Shares of Oberoi Realty jumped on the back of strong response to the Offer for Sale of the company's shares by a promoter.

Stock prices were volatile as traders rolled 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 expired today, 26 September 2013.

As per provisional figures, the S&P BSE Sensex was up 36.30 points or 0.18% to 19,892.54. The index jumped 141.04 points at the day's high of 19,997.28 in late trade, its highest level since 24 September 2013. The index declined 29.25 points at the day's low of 19,826.99 in early trade.

The CNX Nifty was up 5.75 points or 0.1% to 5,879.60, as per provisional figures. The index hit a high of 5,917.65 in intraday trade, its highest level since 24 September 2013. The index hit a low of 5,864.10 in intraday trade.

The total turnover on BSE amounted to Rs 1597 crore, lower than Rs 1646.37 crore on Wednesday, 25 September 2013.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,183 shares rose and 1,134 shares dropped. A total of 143 shares were unchanged.

Among the 30-share Sensex pack, 15 stocks rose and rest of them fell. Sun Pharmaceutical Industries (up 2.13%), Tata Power Company (up 1.35%) and HDFC (up 1.15%), edged higher from the Sensex pack.

Index heavyweight and cigarette maker ITC rose 1.22% to Rs 349.25. The stock was volatile. The scrip hit high of Rs 349.90 and low of Rs 341.05.

Index heavyweight Reliance Industries declined 1% to Rs 840.25. The stock hit high of Rs 849.45 and low of Rs 835.60.

Tata Motors rose 0.13% in choppy trade. The company today, 26 September 2013, said that its bus- and coach-manufacturing unit in Spain will shut its plant at Zaragoza from October, resulting in the loss of 287 jobs. Tata Hispano Motors Carrocera in Zaragoza announced to the Workers' Committee of Tata Hispano Motors Carrocera that it planned to cease production activities in Zaragoza's factory. The company has invited the workers' representatives to the discussions to formally initiate the consultation period in order to agree on a social plan for the 287 employees working in the factory.

The decision to cease the activity at Tata Hispano Motors Carrocera has been compelled due to economic and business factors, as despite strong investments, there has not been a positive result to reverse the challenging business situation and losses for the plant. In the past five years, Tata Hispano Motors Carrocera operating losses accumulated to over 60 million euros, and there has been a constant decline in its production. These have been a result of consistently falling sales in recent years, primarily due to the worst-ever decline in the bus market, showing a decline of 38% in the number of registrations. Further, all market evaluations do not predict any positive change in the near future, with the growing accumulation of operating losses making the plant production unviable, Tata Hispano Motors Carrocera said in a statement.

Tata Hispano Motors Carrocera has informed the Workers Committee about the company's decision to definitely cease the production of the factory. The production activity is expected to stop in October 2013 after fulfilling the commitments to deliver current orders.

Tata Hispano Motors Carrocera has expressed its willingness to reach an agreement. The company continues to have a tremendous respect for the workers of Tata Hispano Motors Carrocera, and remains committed to an ongoing dialogue that may help achieve a more satisfactory agreement for both parties, with the best possible accompanying social plan to help minimize the effects of the measure. Tata Hispano Motors Carrocera also announced that it had received an offer from the Benseny Group. This proposal, which is not a purchase offer, is being pursued to explore the possibility of achieving continuity of Zaragoza factory.

Metal stocks gained on renewed buying. Tata Steel (up 2.87%), Sail (up 0.48%), Hindalco Industries (up 0.21%) and Hindustan Zinc (up 1.3%), gained.

Jindal Steel & Power fell 3.16%. The stock was the biggest loser from the Sensex pack.

Bhel jumped 6.33%, with the stock extending Wednesday's 7.69% gain.

Two wheeler makers declined. Bajaj Auto dropped 0.48%. Hero MotoCorp shed 0.98%.

IT stocks were mixed. HCL Technologies was off 0.48%. The company announced on Wednesday, 25 September 2013, that its wholly-owned subsidiary, HCL America Inc (HCLA), has won a multi-year, multi-million dollar deal with the WyCAN Consortium, a group of states including Arizona, Colorado, North Dakota and Wyoming. HCLA will enable WyCAN to significantly improve services for its Unemployment Insurance (UI) modernization program, which is one of the largest such programs in the US providing critical income to millions of unemployed Americans.

The deal will give the consortium states a configurable, intuitive Government-to-Citizen (G2C) system aimed at consolidating and replacing existing legacy systems to allow easier adaptation to changing legislation, HCL Technologies said in a statement.

Infosys gained 0.24%. TCS declined 0.87%.

Wipro rose ahead of its inclusion in 50-unit CNX Nifty index tomorrow, 27 September 2013. The stock was up 0.07%, with the stock extending intraday gain. The IT major replaces Reliance Infrastructure in Nifty.

BPCL gained 2.18% to Rs 311.75. Two block deals were executed in the counter on BSE, with one block deal of 1 lakh shares at Rs 310 at 13:07 IST and another block deal of 1 lakh shares at Rs 310 at 14:09 IST.

Sun TV Network rose 0.55% to Rs 400.15. A block deal of 1.62 lakh shares was executed in the counter on BSE at Rs 398 per share at 13:52 IST.

Indian Hotels rose 3.36% to Rs 47.70. The stock witnessed high intraday volatility. The stock hit high of Rs 52.25 and low of Rs 45.90.

Oberoi Realty jumped 4.29% to Rs 174 on the back of strong response to the Offer for Sale (OFS) of the company's shares by a promoter. The OFS got bids for 1.85 crore shares, compared with 1.14 crore shares on offer, data from the stock exchanges showed. The OFS was subscribed 162.39% at an indicative price of Rs 166.93 per share, compared with floor price of Rs 158.

Vikas Oberoi, the promoter of Oberoi Realty, had put on block 1.14 crore equity shares, representing 3.47% of the equity share capital of the company, via Offer for Sale (OFS) on the separate windows provided by the stock exchanges today, 26 September 2013.

Bond prices rose after the Reserve Bank of India on Wednesday, 25 September 2013, said that it is closely and continuously monitoring liquidity conditions in the banking system and will take actions as appropriate, including open market operations, to ensure that adequate liquidity is available to support the flow of credit to productive sectors of the economy. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.6978%, lower than its close of 8.7862% on Wednesday, 25 September 2013. Bond prices and bond yields are inversely related.

The RBI said that liquidity conditions in the banking system have been tightening due to uncertainties around the government borrowing programme for the second half of 2013-14 as well as the prospective effects of banks' half-yearly account closure, the seasonal pick-up in credit demand, festival-related demand for currency and sluggish deposit growth. The RBI last week began a calibrated unwinding of the exceptional measures undertaken since July so as to restore normalcy to financial flows. Currently, the RBI is injecting about Rs 1.5 lakh crore into the system on a daily basis through the liquidity adjustment facility (LAF), the export credit refinance facility (ECR) and the marginal standing facility (MSF) taken together, the RBI said.

In the foreign exchange market, the rupee edged higher against the dollar after the RBI eased norms for providing swaps to banks that are borrowing funds overseas. The partially convertible rupee was hovering at 62.16, compared with its close of 62.44/45 on Wednesday, 25 September 2013.

The Reserve Bank of India on Wednesday relaxed the minimum maturity tenure for banks' foreign currency borrowings' to one year from three years, in order to use the central bank's swap facility which was set up to support the ailing rupee. The RBI, however, said the relaxation is only applicable while the swap window remains open until November 30. After that, banks' overseas borrowings above 50% of their Tier I capital will have to be of minimum maturity of three years, it said. The RBI set up the swap window for banks earlier this month saying they can borrow overseas up to 100% of their Tier 1 capital level, although any loan over 50% of that level must be for at least three years. Under the plan, the central bank will offer to exchange foreign currency for rupees at a rate below market rates for banks who raise these funds through overseas borrowings.

The report of the Dr. Raghuram Rajan Committee for Evolving a Composite Development Index of States has been submitted to the Union Finance Minister P. Chidambaram. The committee was asked to suggest methods for identifying backwardness of states using a variety of criteria and also to recommend how the criteria may be reflected in future planning and devolution of funds from the Central Government to the states. The Finance Minister said in a statement that the committee has proposed a general method for allocating funds from the Centre to the States based on both a state's development needs as well as its development performance. The committee has recommended that each state may get a fixed basic allocation of 0.3% of overall funds, to which will be added its share stemming from need and performance to get its overall share.

Chidamabaram further said that the committee has come-up with a Multi dimensional Index of backwardness based on per capita consumption as measured by the NSSO, the poverty ratio, and a number of other measures which correspond to the multi dimensional approach to defining poverty outlined in the Twelfth Plan. The committee has recommended that states that score 0.6 and above on the index may be classified as "Least Developed"; states that score below 0.6 and above 0.4 may be classified as "Less Developed"; and states that score below 0.4 may be classified as "Relatively Developed".

Chidamabaram also stated in his statement that the committee has observed that the demand for funds and special attention of different states will be more than adequately met by the twin recommendations of the basic allocation of 0.3% of overall funds to each state and the categorisation of states that score 0.6 and above as "Least Developed" states. According to the committee, these two recommendations, along with the allocation methodology, effectively subsume what is now "Special Category". Using the index, the committee has identified the "Least Developed" states as Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Meghalaya, Odisha, Rajasthan and Uttar Pradesh.

Chidamabaram further informed that the Prime Minister has directed that the recommendations of the committee may be examined and necessary action in this behalf may be taken. The Ministry of Finance, Department of Economic Affairs has been asked to examine the report and take necessary action, the Finance Minister added.

European stocks edged lower on Thursday, 26 September 2013, as investors awaited US jobs and housing data, amid worries over budget wrangling and debt-ceiling negotiations in Washington. Key benchmark indices in UK, France and Germany were off 0.09% to 0.4%.

Asian stocks were mixed on Thursday. Key benchmark indices in China, Hong Kong and Taiwan were off 0.36% to 1.94%. Key benchmark indices in Indonesia, Japan, and South Korea rose 0.46% to 1.22%.

China's local markets will be shut from 1 to 7 October 2013 for National Day holidays.

Trading in US index futures indicated that the Dow could gain 26 points at the opening bell on Thursday, 26 September 2013. US stocks dropped on Wednesday, with the S&P 500 index recording its longest decline since December, as a possible government shutdown overrode better-than-forecast economic reports. The Senate voted 100-0 on Wednesday to pass a stopgap spending measure, with Democrats planning to get rid of language from the House version that would remove funding of the 2010 Affordable Care Act. Without an accord to hasten Senate consideration of the bill, a vote on its passage could come as late as Sunday, giving the House one day to move before spending authority lapses. Separately, Treasury Secretary Jacob Lew said Wednesday that emergency measures to keep the government from hitting the debt ceiling will run out on Oct. 17.

A report from the Commerce Department showed that new-home sales rose last month after an unexpected drop in July. Another data showed that orders for US durable goods unexpectedly bounced back last month on the back of demand for autos.

Federal Reserve Bank of Richmond President Jeffrey Lacker, a critic of the Fed's third round of asset purchases, said on Thursday that the central bank will face several risks when it pursues its exit strategy from recent unconventional policies. Speaking at the Swedbank Economic Outlook Seminar in Stockholm, Lacker said that the "combination of a very large balance sheet and forward guidance raises the potential of a timing error when it becomes appropriate to raise rates, as well as the consequences of such an error." As part of the third round of quantitative easing, the Fed buys $40 billion a month of mortgage-backed securities, but those purchases endangers the bank's independence Lacker said. "By purchasing MBS, the Fed has targeted a specific private-sector asset and engaged in credit policy. Such actions could invite pleading from other sectors and entangle the Fed in distributional politics and threaten its independence," he said in the speech. Lacker isn't a voting member of the Fed's policy-making committee this year.

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 amid concerns about the strength of the economic recovery.

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