Key benchmark indices extended losses and hit fresh intraday low in afternoon trade. A decision by State Bank of India (SBI), India's biggest commercial bank in terms of branch network, to raise lending rates by 20 basis points hurt investor sentiment adversely as borrowing costs will rise for the corporate sector. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their lowest levels in more than a week as a faster-than-estimated expansion in a US services gauge stoked speculation the world's largest economy is strong enough to allow the US Federal Reserve to reduce stimulus for the US economy earlier than analysts had projected. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The Sensex was down 58.67 points or 0.28%, off close to 129 points from the day's high and up about 33 points from the day's low. The market breadth, indicating the overall health of the market, was positive.
Shares of rice companies were in demand on buzz of price hike. ABB rose on strong Q3 result.
A bout of volatility was witnessed in early trade as key benchmark regained positive terrain after slipping into the red after opening higher. The Sensex retained positive zone after striking fresh intraday high in morning trade. A bout of volatility was witnessed as key benchmark indices regained positive terrain after slipping into the red for a brief period in mid-morning trade. Volatility continued as key benchmark indices reversed intraday gains and hit fresh intraday low in early afternoon trade. Key benchmark indices extended losses and hit fresh intraday low in afternoon trade.
At 13:15 IST, the S&P BSE Sensex was down 58.67 points or 0.28% to 20,916.12. The index fell 92.15 points at the day's low of 20,882.64 in afternoon trade, its lowest level since 29 October 2013. The index rose 70.59 points at the day's high of 21,045.38 in morning trade.
The CNX Nifty was down 24.70 points or 0.40% to 6,228.45. The index hit a low of 6,220.05 in intraday trade, its lowest level since 29 October 2013. The index hit a high of 6,269.70 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,229 shares rose and 1,044 shares fell. A total of 129 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks fell and rest of them rose. Sesa Sterlite (down 3.34%), Hindalco Industries (down 2.12%), HDFC (down 1.99%), Bharti Airtel (down 1.56%), Bajaj Auto (down 1.25%), HDFC Bank (down 1.24%) and Tata Steel (down 1.18%), edged lower from the Sensex pack.
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NTPC (up 2.41%), TCS (up 1.66%), Sun Pharmaceutical Industries (up 1.64%), Tata Power (up 1.02%), Coal India (up 0.98%), Infosys (up 0.8%), Hero MotoCorp (up 0.68%), Cipla (up 0.61%) and Wipro (up 0.61%), edged higher from the Sensex pack.
State Bank of India (SBI) dropped 1.9%. SBI today, 6 November 2013, said it has revised upwards the base rate by 20 basis points (bps) from 9.8% to 10% per annum (p.a) and the benchmark prime lending rate by 20 bps from 14.55% to 14.75% p.a with effect from Thursday, 7 November 2013. A bank's base rate is the rate which it charges on floating-rate loans. The prime lending rate is the benchmark for floating-rate loans made before Indian banks shifted to the base rate in July 2010.
HDFC Bank was off 1.3% at Rs 667.05. HDFC Bank has raised its base rate by 0.2 percentage point to 10% from 2 November 2013.
Shares of rice companies surged on price hike buzz. Usher Agro (up 13.31%), Lakshmi Energy and Foods (up 5%), Chaman Lal Setia Exports (up 4.99%), KRBL (up 4.59%), Kohinoor Foods (up 3.86%), L T Foods (up 2.87%) and REI Agro (up 0.41%), edged higher. Media reports suggest that a decline in paddy production in eastern states and Andhra Pradesh has triggered speculation of a lower rice output this year. This may increase rice prices by 10-30%.
ABB India rose 4.39% on good Q3 result. The company's net profit jumped 78.14% to Rs 38.07 crore on 1.25% decline in total income to Rs 1786.82 crore in Q3 September 2013 over Q3 September 2012. The company said it continued to follow a policy of cash over revenue in its businesses to mitigate the credit risk in the market.
Focused initiatives in streamlining operations, optimizing costs and increasing localization are yielding sustainable improvements, ABB India said. Saving from these initiatives has helped balance the adverse impact of continuing price erosion and weak market condition, ABB India said.
ABB India's order intake rose 5% to Rs 1762 crore in Q3 September 2013 over Q3 September 2012. Emerging sectors like renewables, exports and rail continued to grow faster than the conventional segments, ABB India said. The company's order backlog stood at Rs 8252 crore as at 30 September 2013, lower than Rs 9062 crore as on 30 September 2012.
"The economic environment in India remains muted and capex investments continue to be deferred. While the renewed momentum in reforms is a welcome measure, the markets are yet to realize its tangible benefits. In the meantime, we continue to pursue new growth opportunities, indigenize our portfolio and innovate to stay ahead," said Bazmi Husain, Managing Director, ABB India.
In the foreign exchange market, the rupee weakened past 62 against the dollar. The partially convertible rupee was hovering at 62.19, compared with its close of 61.625/635 on Tuesday, 5 November 2013. The rupee dropped, tracking global gains in the dollar after a gauge of US service industries climbed more than forecast in October, adding to the case for the US Federal Reserve to taper monthly bond purchases.
Indian government bond prices dropped after State Bank of India, the country's largest lender by assets, said interest rates it charges on floating-rate loans will increase by 20 basis points from Thursday, 7 November 2013. The yield on the benchmark government paper -- 7.16% GS 2023 -- was hovering 8.8011%, higher than its close of 8.7368% on Tuesday, 5 November 2013. Bond yield and bond prices are inversely related.
Most Asian stocks were trading lower on Wednesday, 6 November 2013. Key benchmark indices in China, Singapore, Hong Kong and South Korea shed 0.01% to 0.82%. Key benchmark indices in Taiwan, Indonesia and Japan rose 0.03% to 0.79%.
China's leaders will meet in Beijing on November 9-12 to map out economic policies as the country heads for its slowest annual growth in more than two decades.
Indonesia's economy expanded less than 6% last quarter as higher interest rates weighed on consumption and exports fell. Gross domestic product increased 5.62% in the three months ended Sept. 30 from a year earlier, the Central Bureau of Statistics said in Jakarta today. That compares with 5.81% growth for the second quarter.
Trading in US index futures indicated that the Dow could advance 62 points at the opening bell on Wednesday, 6 November 2013. US stocks closed mostly lower on Tuesday, 5 November 2013, after a gauge of service industries climbed more than forecast in October, adding to the case for the Federal Reserve to taper monthly bond purchases.
The US Institute for Supply Management's gauge of service industries climbed more than strategists predicted, data showed yesterday, stoking concern that the world's biggest economy is faring well enough for the Fed to consider reducing asset purchases. Fed policy makers last week signaled diminishing concern over higher borrowing costs as they maintained their $85 billion in monthly bond-buying and sought more evidence of sustained growth before paring stimulus.
The US government will on Friday, 8 November 2013, release nonfarm payrolls figures for October 2013. The job data is a key economic indicator that has been watched closely in recent months to see whether the US Federal Reserve will roll back its bond-buying program.
In Europe, the European Union yesterday cut its forecast for euro-area growth next year and raised its unemployment estimate as the economy struggles to regain momentum after a record-long recession.
The European Central Bank (ECB) holds a monetary policy meeting tomorrow, 7 November 2013. The ECB is seen retaining its key policy rate at a record-low 0.5%.
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