Key benchmark indices reversed intraday gains after the latest data showed 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 S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their lowest levels in almost a week. The market breadth, indicating the overall health of the market, turned negative from positive. The Sensex was down 107.67 points or 0.55%, off about 461 points from the day's high and up close to 29 points from the day's low.
Realty shares declined. Shares of pharma major Ranbaxy Laboratories tumbled after the US Food and Drug Administration issued an import alert against company's Mohali plant.
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.
In the foreign exchange market, the rupee surged against the dollar. The partially convertible rupee was hovering at 62.65, sharply higher than its close of 63.49/50 on Friday, 13 September 2013.
At 13:15 IST, the S&P BSE Sensex was down 107.67 points or 0.55% to 19,625.09. 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 down 46.10 points or 0.79% to 5,804.50. 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 BSE Mid-Cap index was down 0.86% and the BSE Small-Cap index was down 0.75%. Both these indices underperformed the Sensex.
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The market breadth, indicating the overall health of the market, turned negative from positive in afternoon trade. On BSE, 1,216 shares fell and 965 shares rose. A total of 107 shares were unchanged.
Sesa Goa (down 3.21%), Bhel (down 3.02%), Coal India (down 2.69%), Tata Motors (down 1.89%), Tata Steel (down 1.86%), Tata Power (down 1.85%), TCS (down 1.75%), Cipla (down 1.38%), Wipro (down 1.34%) and Reliance Industries (down 1.3%), edged lower from the Sensex pack.
Maruti Suzuki India (up 2.45%), Hero MotoCorp (up 2.18%), ICICI Bank (up 1.64%), M&M (up 1.22%), Bharti Airtel (up 1.21%), NTPC (up 1.1%), Dr Reddy's Laboratories (up 0.65%) and HDFC Bank (up 0.56%), edged higher from the Sensex pack.
Realty shares declined. HDIL (down 5.27%), Indiabulls Real Estate (down 3.08%), Unitech (down 2.76%), Sobha Developers (down 2.49%), D B Realty (down 2.37%), Parsvnath Developers (down 2.08%), Anant Raj Industries (down 2.06%), Oberoi Realty (down 2.05%), DLF (down 1.56%), Sunteck Realty (down 1.52%) and Phoenix Mills (down 0.83%), edged lower.
Pharma major Ranbaxy Laboratories tumbled 28.54% to Rs 326.75 after the US Food and Drug Administration issued an import alert against company's Mohali plant. The FDA issued the alert on Friday, 13 September 2013. Ranbaxy Laboratories' plant in Mohali manufactures oral solids for export to the US, the European Union and other geographies. In May 2013, Ranbaxy Laboratories agreed to pay $500 million penalty to the US government to settle criminal and civil charges related to drug safety.
Ranbaxy during trading hours today, 16 September 2013, said that the company has so far not received any communication from the USFDA against company's Mohali plant. The company is seeking information from the USFDA in this regard, it added.
Strides Arcolab fell 3.80% to Rs 866 after the company said that the sterile manufacturing facility 2 (SFF) at Bangalore of Agila Specialties, a wholly-owned subsidiary of the company, has received a warning letter from the United States Food and Drug Administration (US FDA).
The US FDA inspected SFF in the month of June 2013 and the inspection resulted in issuance of Form FDA 483 with observations. The company responded to the 483 observations by implementing corrective actions. Strides Arcolab said that the company is committed to work collaboratively and expeditiously with the USFDA to resolve concerns cited in the warning letter in the shortest possible time.
Further, the oncology facility at Bangalore of Agila Specialties was also inspected recently by the USFDA and this facility has cleared the inspection with "Zero 483 status", Strides Arcolab said.
Strides Arcolab said that the company has 8 US FDA approved sterile manufacturing facilities.
Among other pharma shares, Wockhardt (down 7.67%), Aurobindo Pharma (down 4.51%), Divi's Laboratories (down 2.12%), Glenmark Pharmaceuticals (down 1.53%), GlaxoSmithKline Pharmaceuticals (down 1.28%), Biocon (down 1.10%), Sun Pharmaceutical Industries (down 0.91%), Lupin (down 0.78%) and Cipla (down 0.77%), edged lower.
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 13 mainly contributed to increase in inflation in August 2013. The government announced the WPI data during trading hours today, 16 September 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 gained in early trade 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 by 0.59% to 0.97%.
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 by 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 146 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. Meanwhile, the United Nations said Sunday that Secretary-General Ban Ki-moon had received a report from weapons inspectors on their probe into the use of chemical weapons in Syria, with the report to be published on the UN's website later on Monday morning, according to media reports.
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