Weakness continued on the bourses in afternoon trade. The barometer index, the 30-share S&P BSE Sensex, was down 353.16 points or 1.74%, up close to 35 points from the day's low and off about 289 points from the day's high. The market breadth, indicating the overall health of the market, was negative. The market sentiment was hit adversely after Federal Reserve Bank of St. Louis President James Bullard said on Friday, 20 September 2013, that the US Federal Reserve could make a small stimulus reduction at its next meeting in October 2013. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The market sentiment was also hit by the Reserve Bank of India's hawkish tone at its latest monetary policy review on Friday, 20 September 2013.
Shares of public sector oil marketing companies (PSU OMCs) declined as the weakness of the rupee against the dollar could raise cost of crude oil imports. Tata Motors declined after block deal. Among pharma stocks, Glenmark Pharmaceuticals slipped over 6%.
A bout of initial volatility was witnessed as key benchmark indices trimmed losses after a weak start. The 50-unit CNX Nifty fell below the psychological 6,000 mark. Volatility continued as key benchmark indices weakened once again and hit fresh intraday low after trimming initial losses. The market extended losses and hit fresh intraday low in mid-morning trade. The Sensex fell below the psychological 20,000 level. The market extended losses and hit fresh intraday low in early afternoon trade. The barometer index, the S&P BSE Sensex once again fell below the psychological 20,000 level after briefly regaining that mark in early afternoon trade. Weakness continued on the bourses in afternoon trade.
The market may remain volatile this week as traders roll 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 expire on Thursday, 26 September 2013.
At 13:16 IST, the S&P BSE Sensex was down 353.16 points or 1.74% to 19,910.55. The index declined 388.46 points at the day's low of 19,875.25 in early afternoon trade, its lowest level since 18 September 2013. The index fell 63.90 points at the day's high of 20,199.81 in early trade.
The CNX Nifty was down 115.75 points or 1.93% to 5,896.35. The index hit a low of 5,883.85 in intraday trade, its lowest level since 18 September 2013. The index hit a high of 5,989.40 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,235 shares fell and 835 shares rose. A total of 149 shares were unchanged.
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Among the 30-share Sensex pack, 23 stocks fell and rest of them rose. Wipro (up 2.24%), Sesa Goa (up 1.88%), Hero MotoCorp (up 0.9%), Infosys (up 0.82%), Hindalco Industries (up 0.44%), TCS (up 0.38%) and Coal India (up 0.23%), edged higher from the Sensex pack.
State Bank of India (down 4.81%), Maruti Suzuki India (down 3.78%), ONGC (down 3.75%), HDFC (down 3.71%), ICICI Bank (down 3.48%), Larsen & Toubro (down 3.25%), Jindal Steel & Power (down 2.86%), Tata Power (down 2.86%), Bharti Airtel (down 2.73%) and HDFC Bank (down 2.62%), edged lower from the Sensex pack.
Tata Motors fell 1.28% to Rs 334.35. A block deal of 17.15 lakh shares was struck in the counter on BSE at Rs 334.95 per share at 11:43 IST.
Glenmark Pharmaceuticals slipped 6.34% to Rs 491.85.
Mahindra & Mahindra (M&M) fell 2.02% to Rs 855. M&M announced during trading hours today, 23 September 2013, the appointment of Dr. Pawan Goenka to the board of the company as Executive Director (ED), the first ED appointment to the board since 1992. He will now be designated Executive Director and President (Automotive & Farm Equipment Sectors), with effect from today, 23 September 2013.
Shares of public sector oil marketing companies (PSU OMCs) declined as the weakness of the rupee against the dollar could raise cost of crude oil imports. HPCL (down 5.18%), BPCL (down 3.01%) and Indian Oil Corporation (down 0.45%), edged lower. PSU OMCs meet most of their crude oil requirements through imports.
Meanwhile, as per media reports that the government has turned cautious about the proposal to increase diesel prices sharply and raise them every week as top Congress leaders and the party's allies are worried about the political fallout of such a move ahead of the festive season and elections in five states.
In the foreign exchange market, the rupee dropped against the dollar. The partially convertible rupee was hovering at 62.645, weaker than its close of 62.23/24 on Friday, 20 September 2013. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
Economic affairs secretary Arvind Mayaram today, 23 September 2013, said that the intrinsic value of the rupee is between 58 and 60 against the dollar. He said that overseas speculators were partly responsible for the sharp fall in the currency over the past few months. He also said that a fall in bulk diesel demand this fiscal year will save the government about $1 billion. Mayaram said he expected foreign direct investment (FDI) flows of about $36 billion for the fiscal year ending on 31 March 2014 if the current trend continues. Net FDI in the first quarter of this fiscal year rose to $9 billion from $5 billion in the same period a year earlier, Mayaram said last week.
Bond prices declined as the government is likely to unveil its market borrowing programme via dated securities for the period from October 2013 to March 2014 today, 23 September 2013. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.8186%, higher than its close of 8.5777% on Friday, 20 September 2013. Bond prices and bond yields are inversely related.
European stock markets opened slightly lower on Monday, 23 September 2013, as investors digested results from the German election over the weekend. Key benchmark indices in UK, France and Germany were down by 0.13% to 0.3%.
Chancellor Angela Merkel's conservative party won Germany's election, but finished just short of an absolute majority. Merkel's Christian Democrats (CDU) bloc took about 42% of the vote. But she might yet have to seek a grand coalition with the Social Democrats (SPD) who won about 26% of the vote. Mrs Merkel's preferred liberal partners have not made it into parliament. The results showed that the liberal Free Democrats (FDP) won only 4.8%, leaving it with no national representation in parliament for the first time in Germany's post-war history. Mrs Merkel has made clear she would be prepared to work with the Social Democrats (SPD) in a grand coalition, as she did in 2005-09.
Asian stocks were mixed on Monday, 23 September 2013. Key benchmark indices in Indonesia, Hong Kong and Singapore were off 0.73% to 1.13%. Key benchmark indices in South Korea, China and Taiwan rose 0.19% to 1.33%. Japanese markets were closed for a holiday.
A Chinese manufacturing index rose to a six-month high in September, signaling that a rebound in the world's second-largest economy is gaining steam. The preliminary reading of 51.2 for a Purchasing Managers' Index released today by HSBC Holdings Plc and Markit Economics. The gauge was at 50.1 in August.
Trading in US index futures indicated that the Dow could gain 18 points at the opening bell on Monday, 23 September 2013. US stocks fell on Friday, 20 September 2013, after Federal Reserve Bank of St. Louis President James Bullard said that the Fed could make a small stimulus reduction at its next meeting in October. Bullard said tapering is more likely if the labor market continues to improve. 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. Kansas City Fed President Esther George on Friday, 20 September 2013, said markets were ready for reduced stimulus to begin, and the central bank's failure to follow through on expectations hurt its credibility on Wall Street.
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