A broad based decline was witnessed on the bourses as selling intensified during the latter part of the trading session. The barometer index, the S&P BSE Sensex, hit three-week low. The 50-unit CNX Nifty hit lowest level in almost three weeks after falling below the psychological 8,000 level. The Sensex was provisionally off 331.44 points or 1.24% at 26,485.12. The market breadth indicating the overall health of the market was weak, with more than two losers for every gainer on BSE. A number of side counters fell sharply. The BSE Mid-Cap index was off 3.42%. The BSE Small-Cap index was off 3.99%. Bank stocks dropped. Asian and European stocks were in red. Meanwhile, the latest data showed that India's merchandise exports registered a small increase of 2.35% in August 2014.
There is a concern that a tighter monetary policy in the US may slow inflow from foreign portfolio investors (FPIs) into the country. Investors across the globe are awaiting the outcome on the Federal Reserve's two-day policy meeting that begins today, 16 September 2014, to gauge the timing of interest rate hike in the US. The Fed is likely to raise short-term interest rates next year from their current near-zero levels, where they have been since December 2008.
Meanwhile, a deluge of new share sales could soak liquidity from the secondary equity market over the next few months. Fresh supply of paper is expected as companies aim to raise additional capital and as the government looks to trim stakes in state-run companies. The government kicked off a big-bang divestment programme last week by announcing stake-sale in three state-run firms.
Earlier, key indices had extended losses in afternoon trade after hovering in a narrow range in red with small losses until that time.
Key indices fell for the second day in a row today, 16 September 2014.
Asian and European stocks declined on caution ahead of the start of Federal Reserve's two-day policy meeting today, 16 September 2014.
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In the foreign exchange market, the rupee edged higher against the dollar.
Brent crude oil prices edged lower in choppy trade before the weekly oil inventory data in the US, the world's biggest oil consumer.
As per provisional figures, the S&P BSE Sensex was down 331.44 points or 1.24% at 26,485.12. The index dropped 344.55 points at the day's low of 26,472.01 in late trade, its lowest level since 26 August 2014. The index rose 44.73 points at the day's high of 26,861.29 in early trade.
The CNX Nifty was down 113.10 points or 1.41% at 7,928.90, as per provisional figures. The index hit a low of 7,925.15 in intraday trade, its lowest level since 27 August 2014. The index hit a high of 8,044.90 in intraday trade.
The total turnover on BSE amounted to Rs 4354 crore, higher than Rs 3605.01 crore on Monday, 15 September 2014.
The market breadth indicating the overall health of the market was weak, with more than two losers for every gainer on BSE. 2,222 shares declined and 807 shares rose. A total of 89 shares were unchanged.
The BSE Mid-Cap index was down 341.55 points or 3.42% at 9,659.31. The BSE Small-Cap index was down 449.21 points or 3.99% at 10,796.31.
Lupin dropped 3.69%. The company announced during market hours that it has entered into a long?term strategic partnership with Merck Serono, the Biopharmaceutical division of Merck. Lupin will support Merck Serono in the implementation of the company's General Medicines portfolio expansion initiative in emerging markets thus addressing local needs for affordable, high?quality medicines. The agreement builds on an established working relationship between the two companies, and could add up to 20 new products to the current portfolio. The first launches are expected in 2016. Lupin and Merck agreed not to release any financial details of the transaction.
Bank stocks dropped. Among private sector banks, HDFC Bank (down 1.13%), ICICI Bank (up 1.65%), Federal Bank (down 5.27%), Kotak Mahindra Bank (down 1.74%) and Axis Bank (down 3.14%), declined.
Yes Bank fell 4.21% after Morgan Stanley Capital International excluded the stock from its standard and mid-cap indexes. The change will be effective from Thursday, 18 September 2014.
IndusInd Bank lost 0.96%. The bank has cut interest rate on savings bank account to 4.5% from 5.5% on daily balance less than Rs 1 lakh. The change is effective from 1 September 2014. The bank has, however, maintained the rate of 6% for daily balance equal to or greater than Rs 1 lakh. Savings deposits currently constitute 16.6% of the total deposits of IndusInd Bank (as on 30 June 2014).
Among PSU bank stocks, Canara Bank (down 5.99%), Punjab National Bank (down 4.32%) Syndicate Bank (down 5.37%), Andhra Bank (down 4.65%), and Oriental Bank of Commerce (down 5.16%) declined.
Union Bank of India dropped 4.63%. The bank reportedly paid 4.41% higher advance tax at Rs 355 crore in Q2 September 2014 over Q2 September 2013.
Bank of India declined 3.59%. The bank reportedly paid 22.22% higher advance tax at Rs 330 crore in Q2 September 2014 over Q2 September 2013.
Bank of Baroda fell 2.45%. The bank reportedly paid 1.58% higher advance tax at Rs 640 crore in Q2 September 2014 over Q2 September 2013.
State Bank of India (SBI) declined 2.31%. The bank reduced interest rate on 1-3-year term deposit by 25 basis points (bps) and raised interest rate on 180-210 day term deposit by 25 bps. The stock was up 0.49%. SBI has raised interest rate on term deposits below Rs 1 crore with maturity period 180-210 days by 25 bps to 7.25% from 7%. Interest rate on term deposit with maturity period of 1 year to less than 3 years has been cut to 8.75% from 9%. The changes are effective from 18 September 2014.
SBI reportedly paid 24.1% higher advance tax at Rs 1390 crore in Q2 September 2014 over Q2 September 2013.
Hero MotoCorp shed 0.25%. The company said during market hours that it has entered into a Memorandum of Understanding (MOU) with the State Government of Andhra Pradesh to set-up a manufacturing plant in Chittoor district of the state of Andhra Pradesh. The plant with an investment of Rs 1600 crores approx will have a production capacity of around 1.8 million per annum.
Himachal Futuristic Communications (down 16.5%), Oscar Investments (down 16.23%), Himadri Chemicals & Industries (down 16.13%), Dhunseri Petrochem & Tea (down 11.65%), and Genus Power Infrastructure (down 11.72%), were the biggest losers from the BSE Small-Cap index.
GMR Infrastructure (down 10.26%), Gujarat State Fertilisers and Chemicals (down 10%), Amtek India (down 9.56%), Gujarat Pipavav Port (down 8.94%) and Delta Corp (down 8.58%), were the biggest losers from the BSE Mid-Cap index.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 61.09, compared with its close of 61.14 during the previous trading session.
Provisional data released by the stock exchanges after trading hours on Monday, 15 September 2014, showed that foreign portfolio investors (FPIs) sold shares worth a net Rs 74.59 crore on that day.
Brent crude oil prices edged lower in choppy trade before the weekly oil inventory data in the US, the world's biggest oil consumer. Brent for November settlement was off 10 cents at $97.78 a barrel. The contract had risen 0.84% to settle at $97.88 a barrel on Monday, 15 September 2014. The October contract which expired on Monday, 15 September 2014 dipped to a 26-month low at $96.21 in its final session.
On macro front, India's merchandise exports registered a small increase of 2.35% at $26.95 billion in August 2014 over August 2013, data released by the government after trading hours yesterday, 15 September 2014, showed. Imports rose 2.08% at $37.79 billion in August 2014 over August 2013. Oil imports declined 14.97% at $12.83 billion in August 2014 over August 2013. Non-oil imports jumped 13.82% at $24.95 billion in August 2014 over August 2013. The trade deficit increased to $10.83 billion in August 2014, from $10.68 billion in August 2013.
European stocks dropped today, 16 September 2014, as investors awaited the outcome of the latest Federal Reserve meeting. Key benchmark indices in UK, France and Germany were off 0.43% to 0.59%.
UK inflation slowed to match the least in five years in August as a supermarket price war and weather effects pushed food prices down the most in more than a decade. The rate of consumer-price growth fell to 1.5% from 1.6% in July, the Office for National Statistics said today in London.
Meanwhile, investors are also waiting the 18 September 2014 referendum on Scottish independence.
Asian stocks declined today, 16 September 2014, on caution ahead of the start of Federal Reserve's two-day policy meeting today, 16 September 2014. Key benchmark indices in Hong Kong, Indonesia, Singapore, China, Taiwan and Japan were off 0.28% to 1.82%. South Korea's Kospi rose 0.35%.
Foreign direct investment into China, a gauge of external confidence, slumped to a four-year low amid widening antitrust probes into multinational companies. Inbound investment was $7.2 billion in August, down 14% from a year earlier, the Ministry of Commerce said on its website today in Beijing after a 17% drop in July. It was the first back-to-back decline of more than 10% since 2009.
Trading in US index futures indicated that the Dow could fall 23 points at the opening bell on Tuesday, 16 September 2014. US stocks closed mostly lower on Monday, 15 September 2014, with losses led by technology and small-cap stocks as investors continued to unload riskier position ahead of this week's pivotal Federal Reserve policy meeting.
Economic data yesterday showed US industrial production unexpectedly declined in August for the first time in seven months as automakers slowed assembly lines.
Investors will look to Federal Open Market Committee (FOMC) meeting for fresh guidance on US interest rates. A two-day policy meeting of the Federal Open Market Committee (FOMC) starts today, 16 September 2014. At the end of a two-day meeting, the FOMC is widely expected to announce cut in Fed's monthly bond-buying program by another $10 billion to $15 billion, staying on track to end the program at its October meeting. The Fed is likely to raise short-term interest rates next year from their current near-zero levels, where they have been since December 2008.
The Fed will also announce US economic projections after the policy meet. Fed now releases economic projections four times a year (March, June, September, and December). Traditionally, the Fed forecasts covered GDP, the PCE price index, and the civilian unemployment rate. However, the forecast report additionally now includes forecasts for the appropriate timing of the next change in the fed funds rate and the expected fed funds rate at the end of the next two years. The policy meet will be followed by a press conference by Federal Reserve Chairwoman Janet Yellen on 17 September 2014.
The Federal Reserve after two-day policy meeting on 30 July 2014, said it would reduce its purchases of mortgage and Treasury bonds by $10 billion to $25 billion monthly from $35 billion earlier, as widely expected.
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