Key benchmark indices extended losses and hit fresh intraday low in mid-morning trade. The barometer index, the S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their lowest level in over one week. The Sensex was down 161.50 points or 0.77%, off close to 100 points from the day's high and up about 5 points from the day's low. The market breadth, indicating the overall health of the market, was negative. The market sentiment was hit adversely by two sets of economic data released after market hours on Thursday, 12 December 2013, which showed a spike in consumer price inflation in November and a worse-than-expected contraction in industrial production in October. Sharp uptick in consumer price inflation raised the likelihood of the Reserve Bank of India (RBI) hiking its main lending rate viz. the repo rate at a monetary policy review next week. The rupee fell and bonds yields surged after retail inflation spiked, raising bets of a rate hike at the RBI's policy meeting next week.
Mahindra & Mahindra (M&M) reversed intraday losses after the company raised the prices of its products. Shares of two wheeler makers declined. IT stocks edged higher as rupee edged lower against the dollar.
The market edged lower in early trade after weak macroeconomic data announced after trading hours on Thursday, 12 December 2013. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than a week. A bout of volatility was witnessed as key benchmark indices weakened once again after trimming initial losses in morning trade. It extended losses and hit fresh intraday low in mid-morning trade.
At 11:20 IST, the S&P BSE Sensex was down 161.50 points or 0.77% to 20,764.11. The index fell 164.25 points at the day's low of 20,761.26 in mid-morning trade, its lowest level since 4 December 2013. The index declined 58.44 points at the day's high of 20,867.17 in opening trade.
The CNX Nifty was down 53.10 points or 0.85% to 6,183.95. The index hit a low of 6,183.70 in intraday trade, its lowest level since 4 December 2013. The index hit a high of 6,208.60 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 949 shares fell and 708 shares rose. A total of 110 shares were unchanged.
From the 30-share Sensex pack, 23 stocks fell and rest rose. BHEL (down 3.19%), ICICI Bank (down 3.01%) and Tata Power Company (down 2.13%) declined from the Sensex pack.
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IT stocks edged higher as rupee edged lower against the dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. Infosys (up 0.07%), HCL Technologies (up 0.17%) and Wipro (up 1.16%) gained. TCS fell 0.3%.
Tata Motors rose 2.38% to Rs 369.20 on bargain hunting after the stock fell 8.19% in the preceding three trading sessions to Rs 360.60 on Thursday, 12 December 2013, from a recent high of Rs 392.75 on 9 December 2013.
Shares of Tata Motors fell 4.55% to Rs 360.60 on Thursday, 12 December 2013, on reports that the company's British luxury car unit Jaguar Land Rover (JLR) has increased its capital expenditure and R&D spends guidance for the year ending 31 March 2015 (FY 2015).
JLR has reportedly indicated an investment of 3.5 to 3.7 billion pounds in R&D and capital expenditure for FY 2015, which is substantially higher than the company's guidance of investment of 2.7 billion pounds for the current financial year ending March 2014. The increased capital investment would be towards development of new products in new and existing segments and investment in new powertrains and technologies to meet customer and regulatory requirements.
Meanwhile, JLR said its retail sales jumped 25% to 37,403 units in November 2013 over November 2012. Retail sales of the Jaguar brand jumped 55% to 6,244 units in November 2013 over November 2012. Retail sales of the Land Rover brand rose 20% to 31,159 units in November 2013 over November 2012. JLR announced the retail sales data on Wednesday, 11 December 2013.
Mahindra & Mahindra (M&M) rose 0.71%, with the stock reversing intraday losses after the company raised the prices of its products. The company after market hours on Thursday, 12 December 2013, announced that it would be raising the prices of its passenger as well as its commercial vehicles by up to 2%. The price hike will be effective from 1 January 2014. The price increase is primarily due to rising materials, input and freight costs, M&M said.
Commenting on the price hike, Pravin Shah, Chief Executive, Automotive Division, M&M, said: "We have been holding back prices for a while but now it has become necessary to raise them to partly compensate the increase in materials, input and freight costs. As always, Mahindra remains committed to its customers".
Shares of two wheeler makers declined. Bajaj Auto (down 1.52%) and Hero MotoCorp (down 1.31%) declined.
In the foreign exchange market, the rupee edged lower against the dollar and fell below 62 level after two sets of economic data released after market hours on Thursday, 12 December 2013, which showed a spike in consumer price inflation in November and a worse-than-expected contraction in industrial production in October. The partially convertible rupee was hovering at 62.15, compared with its close of 61.81/82 on Thursday, 12 December 2013.
Provisional annual inflation rate based on all India general consumer price index (CPI) (combined) rose 11.24% in November 2013 as compared to 10.17% (final) in October 2013. The data was announced after market hours on Thursday, 12 December 2013.
Index of industrial production (IIP) declined 1.8% in October 2013, against 2% growth in the previous month September 2013. The decline in the output of manufacturing sector at 2% and mining sector at 3.5% mainly led to decline in IIP for October 2013. Meanwhile, the marginal 1.3% growth in the electricity generation restricted further dip in industrial production during October 2013.
The IIP growth for the month of September 2013 has been retained unchanged at 2%, while the growth for the month of July 2013 has been scaled down to 2.6% from 2.8% reported at first revision. However, the final growth rate for July 2013 is similar to the provisional level of 2.6%. The data was announced after market hours on Thursday, 12 December 2013.
The government will unveil data on inflation based on the wholesale price index (WPI) for November 2013 on 16 December 2013. WPI is seen easing a bit at 6.9% in November 2013, from 7% in October 2013, as per the median estimate of a poll of economists carried out by Capital Market.
The Reserve Bank of India (RBI) announces next Mid-Quarter Review of Monetary Policy for 2013-14 on 18 December 2013. The Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
Most Asian markets lower in choppy trade on Friday, 13 December 2013. Key benchmark indices in China, Hong Kong, South Korea, Indonesia, and Singapore were off 0.08% to 0.43%. Key benchmark indices in Taiwan and Japan were up 0.2% to 0.73%.
Trading in US index futures indicated that the Dow could gain 30 points at the opening bell on Friday, 13 December 2013. US stocks fell a third day on Thursday, 12 December 2013, sending the Standard & Poor's 500 Index to a one-month low, as improving economic data spurred speculation the Federal Reserve will cut stimulus as early as next week.
Data showed retail sales rose more than forecast in November as Americans bought cars and took advantage of discounts going into the holiday-shopping season. A separate report indicated applications for unemployment benefits jumped last week from an almost three-month low.
The US House of Representatives on Thursday passed the first bipartisan federal budget in four years, which would ease $63 billion in automatic spending cuts and avert another government shutdown. The legislation now heads to the Senate. The House voted 332-94 for the $1.01 trillion compromise budget crafted by Senator Patty Murray and Representative Paul Ryan, the chairman of a special bipartisan panel. President Barack Obama said he'll sign the final measure.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.
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