Intraday recovery gathered steam towards the close of the trading session, with the barometer index, the S&P BSE Sensex, recouping almost entire intraday losses as European stocks reversed initial losses. The 50-unit CNX Nifty moved into positive zone from negative zone at the fag end of the trading session. The market breadth, indicating the overall health of the market, turned positive from negative in late trade. The Sensex was provisionally down 6.03 points or 0.03%, up about 150 points from the day's low.
Index heavyweight Reliance Industries trimmed intraday losses in late trade. Shares of public sector oil refining-cum-marketing companies (PSU OMCs) fell on reports that the government is considering a proposal to raise the quota of subsidized LPG cylinders to 12 per household in a year from the current limit of 9. 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 early afternoon trade. Key benchmark indices extended losses and hit fresh intraday low in afternoon trade. The Sensex hit its lowest level in more than two weeks. The Sensex trimmed losses in mid-afternoon trade. Intraday recovery gathered steam towards the close of the trading session, with the Sensex recouping almost entire intraday losses as European stocks reversed initial losses. The 50-unit CNX Nifty moved into positive zone from negative zone at the fag end of the trading session.
Foreign institutional investors (FIIs) bought shares worth a net Rs 726.60 crore from the secondary equity markets on Thursday, 2 January 2014, as per data from Securities & Exchange Board of India.
As per provisional figures, the S&P BSE Sensex was down 6.03 points or 0.03% at 20,882.30. The index fell 3.15 points at the day's high of 20,885.18 in late trade. The index dropped 157 points at the day's low 20,731.33 in afternoon trade, its lowest level since 19 December 2013.
The CNX Nifty was up 0.45 points or 0.007% at 6,221.60, as per provisional figures. The index hit a high of 6,221.70 in intraday trade. The index hit a low of 6,171.25 in intraday trade, its lowest level since 20 December 2013.
The total turnover on BSE amounted to Rs 2178 crore, lower than Rs 2636.11 crore on Thursday, 2 January 2014.
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The market breadth, indicating the overall health of the market, turned positive from negative in late trade. On BSE, 1,274 shares rose and 1,182 shares fell. A total of 168 shares were unchanged. Earlier, the breadth had turned negative from positive earlier in mid-morning trade.
Among the 30-share Sensex pack, 16 stocks fell and rest of them rose. M&M (down 3.73%), Tata Power Company (down 3.95%) and Tata Motors (down 2.68%) declined.
Reliance Communications (RCom) rose 1.08% after the company said that it has fully repaid another syndicated external commercial borrowing (ECB) loan of $500 million (about Rs 3100 crore) on the scheduled due date today, 3 January 2014. RCom had earlier this year made full scheduled repayment of 2 other syndicated ECB loans aggregating $1 billion (Rs 6200 crore), and bilateral ECB loans of more than $310 million (about Rs 1900 crore). With these repayments RCom has now fully liquidated the borrowings from 23 foreign banks and financial institutions.
Shares of public sector oil refining-cum-marketing companies (PSU OMCs) fell on reports that the government is considering a proposal to raise the quota of subsidized LPG cylinders to 12 per household in a year from the current limit of 9. HPCL (down 1.98%), BPCL (down 2.81%) and Indian Oil Corporation (down 1.02%) declined.
The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas on 1 January 2014 said that the under-recovery on High Speed Diesel (HSD) applicable for first fortnight of January 2014 fell to Rs 9.74 per/litre, from Rs 10.48 per litre during the second fortnight of December 2013.
The under-recovery on PDS Kerosene rose to Rs 37.33 per litre for the month of January 2014, from 36.20/litre for December 2013. The under-recovery on Domestic LPG rose to Rs 762.70 per cylinder for January 2014, from Rs 542.71/cylinder for December 2013. PSU OMCs are now incurring combined daily under-recovery of about Rs 481 crore on the sale of Diesel, PDS Kerosene and Domestic LPG at government controlled prices. This is a higher than the Rs 434-crore daily under-recoveries during the second fortnight of December 2013.
PSU OMCs reported a total of Rs 60907 crore as under-recoveries during first half of 2013-14 on Diesel, PDS Kerosene and Domestic LPG, the Ministry of Petroleum and Natural Gas said.
PSU OMCs suffer under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.
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 0.55%), JSW Steel (down 1.46%), Tata Steel (down 1.64%), Hindalco Industries (down 1.7%), National Aluminum Company (down 0.8%), Hindustan Copper (down 0.5%), NMDC (down 1.28%) Sail (down 0.56%), Bhushan Steel (down 0.93%) and Jindal Steel & Power (down 1.39%) edged lower.
Index heavyweight Reliance Industries fell 1.18% to Rs 865. The stock hit a high of Rs 873.45 and low of Rs 856.40.
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 general elections this year, ruling out a third term.
Dr. Singh said that the country is set for better times ahead in terms of economic growth. The cycle of global economic growth is turning for the better, he said. "Many of the steps we have taken to address our domestic constraints are coming into play", he said. India's own growth momentum will revive, Dr. Singh said.
"As we enter the New Year we will continue to implement our policies, with vigor and commitment, aiming to revive growth, promote enterprise, generate employment, eliminate poverty and ensure the safety and security of all our people, particularly women and children. Our Government will work ceaselessly till its last day", Dr. Singh said.
Dr. Singh said that he is concerned that the government has not been as successful to the extent required in generating employment in the manufacturing sector. "This is an aspect of performance which we are working hard to correct. We need a much stronger effort in support of small and medium enterprises which can be a major source of good quality employment. Our Manufacturing Strategy gives high priority to this objective for the future", Dr. Singh said.
He also expressed concern about the failure in controlling persistent inflation. Dr. Singh said that the Food Security Act will to some extent shield the common man from rising food prices. "The worry about inflation is legitimate but we should also recognize that incomes for most people have increased faster than inflation. I have already mentioned that real wages in rural areas have increased faster than before. Per-capita consumption in both rural and urban areas has increased significantly", Dr. Singh said.
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.
European stocks reversed initial losses on Friday, 3 January 2014, after Next Plc -- UK's second-largest clothing retailer -- raised its full-year forecast and announced a special dividend after holiday sales exceeded the company's expectations. Key benchmark indices in Germany, France and UK were up 0.07% to 0.44%.
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.
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 0.77% to 2.24%. 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 advance 16 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.
Federal Reserve Chairman Ben Bernanke, who is slated to leave his post at the end of the month, is scheduled to speak later today, 3 January 2014, at an economics conference in Philadelphia.
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.
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