A bout of volatility was witnessed as key benchmark indices once again slipped into the red after reversing intraday losses in mid-afternoon trade as data released by the government today, 16 September 2013, showed that inflation based on wholesale price index (WPI) accelerated in August 2013, firming expectations that the central bank may again hold off cutting interest rates at its monetary policy review on Friday, 20 September 2013. The market breadth, indicating the overall health of the market, was negative. The S&P BSE Sensex was down 68.66 points or 0.35%, off about 425 points from the day's high and up close to 70 points from the day's low.
IT stocks extended intraday losses as the rupee surged against the dollar. Index heavyweight Reliance Industries (RIL) extended intraday losses.
The market surged in early trade after the main opposition party, the Bharatiya Janata Party (BJP), late on Friday, 13 September 2013, named business friendly Gujarat chief minister Narendra Modi as the party's prime ministerial candidate for the general elections in 2014. The Sensex regained the psychological 20,000 level. The market trimmed initial gains and hit fresh intraday low in morning trade. The Sensex fell below the 20,000 mark. The Sensex further pared intraday gain to hit fresh intraday low in mid-morning trade. The market further pared gains and hit fresh intraday low in early afternoon trade after the latest data showed inflation based on wholesale price index (WPI) accelerated in August 2013. The Sensex slipped into the red in afternoon trade. The Sensex and the 50-unit CNX Nifty, both, hit their lowest levels in almost a week. A bout of volatility was witnessed as key benchmark indices once again slipped into the red after reversing intraday losses in mid-afternoon.
In the foreign exchange market, the rupee surged against the dollar. The partially convertible rupee was hovering at 62.60, sharply higher than its close of 63.49/50 on Friday, 13 September 2013.
At 14:20 IST, the S&P BSE Sensex was down 68.66 points or 0.35% to 19,664.10. The index fell 136.61 points at the day's low of 19,596.15 in afternoon trade, its lowest level since 10 September 2013. The index surged 353.67 points at the day's high of 20,086.43 in early trade, its highest level since 25 July 2013.
The CNX Nifty was off 40.05 points or 0.69% to 5,810.55. The index hit a low of 5,798.15 in intraday trade, its lowest level since 10 September 2013. The index hit a high of 5,957.25 in intraday trade, its highest level since 25 July 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,249 shares fell and 1,005 shares rose. A total of 112 shares were unchanged.
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From the 30-share Sensex pack, 18 stocks declined and rest of them rose. Sesa Goa (down 4.49%), Bhel (down 3.9%) and Coal India (down 2.76%), declined.
IT stocks extended intraday losses as the rupee surged against the dollar. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports. Wipro (down 0.92%), TCS (down 2.1%), Infosys (down 1.1%) and HCL Technologies (down 4.9%), dropped.
Index heavyweight Reliance Industries (RIL) declined 2.04%, with the stock extending intraday losses.
Godrej Industries fell 0.86% to Rs 288.50. A block deal of 17.07 lakh shares was executed on the counter on BSE at Rs 294 at 13:05 IST.
Steel Strips Wheels rose 0.34% after the company said it has bagged an export order for tractor segment from Ring Tech Company (RTCL), a subsidiary of Nippon Steel & Sumitomo Metal. The company made the announcement during trading hours today, 16 September 2013. The order size was was disclosed.
RTCL has a technical tie up with SSWL for developing state of the art technology in steel wheel manufacturing. Nippon Steel & Sumitomo Metal holds a strategic stake in SSWL and that will substantially improve the scope of potential business being developed with RTCL, SSWL said in a statement.
SSWL is developing various products in different segments with RTCL. This marks the beginning of yet another export business and will add a lot of value with ramp up, the company said.
Man Industries (India) rose 3.05% the company announced the demerger of its real estate and infrastructure business which is conducted through Man Infraprojects. Shareholders of Man Industries will be entitled one fully paid-up equity share of Rs 5 each of Man Infraprojects for each share held in Man Industries (India). Man Infraprojects will be listed separately on the bourses in due course.
Commenting on the development, Mr. R. C. Mansukhani, Chairman, Man Industries (India) said, "The family settlement entered into with Mr. J C Mansukhani has put an end to the dispute and misunderstandings."
Man Industries (India) said that it is confident that the demerger will enhance value of its shareholders, and provide fresh momentum for growth in both the business verticals. The proposed demerger will allow the Group to improve performance significantly by capitalizing the opportunities, the company said in a statement.
On the macro front, the annual rate of inflation, based on the monthly wholesale price index (WPI), accelerated to 6.1% in August 2013 from 5.79% in July 2013, firming expectations that the central bank may again hold off cutting interest rates at its monetary policy review on Friday, 20 September 2013. A surge in primary food articles inflation to 18.2% in August 2013 from 11.9% in July 2013 mainly contributed to increase in inflation in August 2013. Meanwhile, the government revised the rate of WPI inflation for June 2013 to 5.16%, from 4.86% reported earlier.
Build up inflation rate in the financial year so far was 3.91% compared to a build up rate of 4.35% in the corresponding period of the previous year. The government announced the WPI data during trading hours today, 16 September 2013.
WPI inflation had eased to the Reserve Bank of India's comfort zone of 5% in April and May. But inflation rebounded following a rise in food prices due to crop damage after heavy rainfall this year, and increases in prices of fuel to compensate for higher import costs due to a sharp fall in the rupee.
At its upcoming mid-quarter monetary policy review on Friday, 20 September 2013, the Reserve Bank of India will have to decide whether to give in to industry demands and lower interest rates in order to boost slowing economic growth, or leave interest rates unchanged for the third straight policy review as it guards against risks of a fresh rise in inflationary pressures.
The Securities and Exchange Board of India (Sebi) said on Friday, 13 September 2013, that FIIs/QFIs shall hereafter be permitted to invest in government debt without purchasing debt limits till the overall investment reaches 90%. Once this 90% limit is reached, auction mechanism shall be initiated for allocation of the remaining limits, as currently in place for FII investments in corporate debt. Presently FIIs/QFIs have to purchase the debt limits through the auction mechanism.
In a major development on political front, Gujarat chief minister Narendra Modi was crowned as the candidate for prime minister's post by India's main opposition -- Bharatiya Janata Party (BJP) -- late on Friday, 13 September 2013. BJP said that Modi's pro-business stance can revive India's stumbling economy. Parliamentary polls are due by next May. "At this time, when corruption and rising prices have become a big problem for the country, I hope the people will support our call for development and good governance," Mr. Modi said at a news conference in New Delhi on Friday, 13 September 2013.
European stocks edged higher on Monday, 16 September 2013, after former Treasury Secretary Lawrence Summers dropped out of the running for the top Federal Reserve job. Key benchmark indices in UK, France and Germany were up 0.94% to 1.26%.
Asian stocks rose on Monday, 16 September 2013, after Lawrence Summers withdrew from consideration to be the next Federal Reserve chairman, paving the way for Janet Yellen, who some investors say may favor a slower reduction in US stimulus. Key benchmark indices in Taiwan, Hong Kong, Singapore, South Korea and Indonesia rose 0.96% to 2.46%. China's Shanghai Composite fell 0.22% in choppy trade. Japanese stock markets were closed for a holiday.
Trading in US index futures indicated that the Dow could jump 167 points at the opening bell on Monday, 16 September 2013. US stocks on Friday scored modest gains despite a mediocre retail sales report and a disappointing read on consumer sentiment. US retail sales, a closely watched benchmark of economic health, rose just 0.2% in August. The consumer sentiment reading in September issued by Thomson Reuters and the University of Michigan was 76.8, down from the 82.1 reading in August.
Summers withdrew his nomination to lead the Fed, before a two-day policy meeting starting tomorrow, 17 September 2013. Summers, 58, was one of three names that US President Barack Obama had mentioned as possible replacements for Bernanke, whose term as Fed chairman ends on 31 January 2014. Janet Yellen, 67, the current Fed vice chairman, was also on Obama's candidate list along with Donald Kohn, 70, a former Fed vice chairman, the president said earlier. The exit of Summers, who faced wide opposition in the Fed race, could clear the path for Yellen. Yellen is seen as one who would favor a slower pace of tapering on Fed bond purchases.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled this week, considered by many to provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program. The FOMC holds a two-day policy meeting on Tuesday 17 September and Wednesday 18 September 2013 to decide on interest rates in the United States. The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.
The US and Russia announced a deal on Saturday, 14 September 2013, for Syria to destroy its chemical-weapons stockpile by the middle of 2014. The agreement halted preparation for a possible US attack on Syrian government targets in retaliation for the apparent use of chemical agents on civilians last month.
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