Key benchmark indices dropped in volatile trade on concerns foreign investors may slowdown their purchases of emerging market stocks if the US Federal Reserve hikes interest rates earlier than expected. The losses for key benchmark indices for the day were small. The barometer index, the S&P BSE Sensex, provisionally settled above the psychological 27,000 mark, having alternately moved above and below that level in intraday trade. The Sensex was provisionally down 48.67 points or 0.18% at 27,008.74. But, the broad market depicted strength. The market breadth indicating the overall health of the market was strong. The BSE Mid-Cap index was up 1.07%. The BSE Small-Cap index was up 1.39%. Both these indices outperformed the Sensex. Brent crude extended previous day's losses, which augur well for India as the country imports about 80% of its crude oil requirement. ONGC, Coal India and NHPC declined in volatile trade after the Cabinet Committee on Economic Affairs on Wednesday, 10 September 2014, approved stake-sale in these three state-run firms. Sun Pharmaceutical Industries and Ranbaxy Laboratories dropped on reports that Sun Pharma's manufacturing facility in Halol, Gujarat is undergoing a surprise inspection by the US Food and Drug Administration (USFDA). Shares of other pharma companies also declined.
On the macro front, data due later this week and early next week is likely to show easing of inflation in August 2014 and a muted growth in industrial production in July 2014.
Earlier, key indices had lost ground after a firm opening triggered by overnight drop in Brent crude oil prices and gains in US stocks. After regaining positive zone in mid-afternoon trade, key indices once again slipped into the red later.
In overseas markets, European stocks reversed initial gains as investors awaited data on US jobless claims. Asian stocks dropped after the latest data showed that China's inflation remained subdued last month.
In the foreign exchange market, the rupee edged higher against the dollar as crude oil prices slumped.
As per provisional closing, the S&P BSE Sensex was down 48.67 points or 0.18% at 27,008.74. The index lost 152.91 points at the day's low of 26,904.50 in mid-morning trade, its lowest level since 2 September 2014. The index gained 93.37 points at the day's high of 27,150.78 at the onset of the trading session.
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The CNX Nifty was down 11.70 points or 0.14% at 8,082.40. The index hit a low of 8,057.30 in intraday trade, its lowest level since 5 September 2014. The index hit a high of 8,127.95 in intraday trade.
The market breadth indicating the overall health of the market was strong. On BSE, 2,010 shares gained and 1,059 shares fell. A total of 97 shares were unchanged.
The BSE Mid-Cap index was up 105.61 points or 1.07% at 9,956.40. The BSE Small-Cap index was up 152.32 points or 1.39% at 11,103.35. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 3570 crore, higher than a turnover of Rs 3262.72 crore on Wednesday, 10 September 2014.
Among the 30-share Sensex pack, 17 stocks gained and rest of them declined.
State Bank of India (up 2.1%), Hero MotoCorp (up 1.52%) and Bharat Heavy Electricals (Bhel) (up 1.46%) edged higher from the Sensex pack.
ONGC, Coal India and NHPC declined in volatile trade after the Cabinet Committee on Economic Affairs on Wednesday, 10 September 2014, approved stake-sale in these three state-run firms.
Coal India was off 3.33% at Rs 361.40. The stock hit a high of Rs 374.60 and low of Rs 360.
Oil and Natural Gas Corporation (ONGC) was off 3.55% at Rs 429.50. The stock hit a high of Rs 447.50 and low of Rs 428.
NHPC was off 4.69% at Rs 21.35. The stock hit a high of Rs 22.45 and low of Rs 21.05.
The government will sell a 5% stake in ONGC, 10% in Coal India and 11.36% in NHPC. As on 30 June 2014, the government held 68.94% in ONGC, 89.65% in CIL and 85.96% in NHPC.
Sun Pharmaceutical Industries dropped 4.26% on reports that the company's manufacturing facility in Halol, Gujarat is undergoing a surprise inspection by the US Food and Drug Administration (USFDA). The plant supplies significant amount of medicines to the US. Halol plant reportedly contributes to around 40% of US sales and around 25% of consolidated profit of the company.
Shares of Ranbaxy Laboratories fell 4.69%. In April 2014, Sun Pharmaceutical Industries acquired Ranbaxy Laboratories in a $4 billion landmark transaction.
Shares of other pharma companies also declined. Cadila Healthcare (down 1.35%), Glenmark Pharmaceuticals (down 0.47%), Wockhardt (down 1.49%), Dr Reddy's Laboratories (down 0.66%) and Lupin (down 1.98%) declined. Cipla rose 0.14%.
Meanwhile, the government has kicked off a big-bang divestment programme by announcing stake-sale in ONGC, Coal India and NHPC. The Cabinet Committee on Economic Affairs (CCEA) on Wednesday, 10 September 2014, approved disinvestment of 10% stake in Coal India, 5% stake in ONGC and disinvestment of 11.36% stake in NHPC. The government will raise about Rs 46000 crore from the divestment in these three PSU based the closing price of the shares of these three PSUs on Wednesday, 10 September 2014.
Finance Minister Arun Jaitley was released from hospital on Wednesday, 10 September 2014, after a longer-than-expected stay for treatment. Media reports said that Jaitley will not be able to attend a meeting of finance ministers from the Group of 20 nations in Australia next week. Jaitley was admitted to a private hospital in New Delhi on 1 September 2014 for planned surgery to manage a long-standing diabetic condition. He had been expected to leave after a few days, a report indicated.
Crude oil prices extended previous day's losses after the International Energy Agency cut its global oil demand forecast for this year and next year. Brent for October settlement was off 81 cents at $97.23 a barrel. The contract fell $1.12 to settle at $98.04 a barrel yesterday, 10 September 2014, on rising supply and tepid demand. The price had slumped to $97.60 in intraday trade yesterday, the lowest intraday price since 18 April 2013.
The International Energy Agency today, 11 September 2014, trimmed its forecast for the rise in oil demand this year for the third month in a row, calling the recent slowdown in demand nothing short of remarkable. In its closely watched monthly oil market report, the Paris-based energy watchdog said it expects global oil demand to grow by 0.9 million barrels a day in 2014, a decrease of 65,000 barrels a day compared with last month's forecast and down by 300,000 barrels a day since July. According to the IEA, oil demand growth in the second quarter was at its lowest in 2-1/2 years, dented by economic weakness in Europe and China, a trend the agency expects will continue to weigh on demand. The agency expects oil demand to increase by 1.2 million barrels a day next year, though that is still 100,000 barrels a day less than it forecast last month
Lower crude oil prices will help India in containing its fiscal deficit, current account deficit and fuel price inflation. India imports 80% of its crude oil requirement.
US President Barack Obama reportedly told Americans in a speech late on Wednesday, 10 September 2014 that he had authorized US air strikes for the first time in Syria and more attacks in Iraq in a broad escalation of a campaign against the Islamic State militant group. He said he would hunt down Islamic State militants "wherever they are," reports added.
In the foreign exchange market, the rupee edged higher against the dollar as crude oil prices slumped. The partially convertible rupee was hovering at 60.77, compared with its close of 60.955 on Wednesday, 10 September 2014.
Data due later this week and early next week is likely to show easing of inflation in August 2014 and a muted growth in industrial production in July 2014. The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India is seen decelerating to 7.8% in August 2014, from 7.96% in July 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will release the CPI data for August 2014 at 17:30 IST tomorrow, 12 September 2014. The Reserve Bank of India (RBI) is targeting CPI inflation at 8% by January 2015 and 6% by January 2016.
Meanwhile, the growth in industrial production is seen decelerating to 1.9% in July 2014, from 3.4% in June 2014, as per the median estimate of a poll of economists carried out by Capital Market. Industrial production growth had eased to 3.4% in June 2014, from 5% increase recorded in May 2014. The government will release the industrial production data for July 2014 at 17:30 IST tomorrow, 12 September 2014.
The annual rate of inflation based on the monthly Wholesale Price Index (WPI) is seen decelerating to 4.43% in August 2014, from 5.19% in July 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will release the WPI data for August 2014 at 12 noon on Monday, 15 September 2014.
European stocks reversed initial gains today, 11 September 2014, as investors awaited data on US jobless claims. Key benchmark indices in Germany, France and UK fell 0.06% to 0.38%.
Asian stocks edged lower today, 11 September 2014, after the latest data showed that China's inflation remained subdued last month. Key benchmark indices in Indonesia, Singapore, China, Hong Kong and Taiwan were off 0.17% to 0.74%. Key benchmark indices in South Korea and Japan were up 0.26% to 0.76%.
China's consumer price index rose 2% August 2014 from a year earlier, which was slower than 2.3% rise in July 2014, according to data released by the National Bureau of Statistics today, 11 September 2014. The producer price index fell 1.2% in August 2014, extending a decline to 30th month.
Meanwhile, China's central bank is reportedly set to withdraw cash from the financial system this week for the first time since early August, reflecting concerns about accelerating inflows of speculative funds.
In Japan, Bank of Japan Governor Haruhiko Kuroda reportedly assured Prime Minister Shinzo Abe today, 11 September 2014, that the central bank won't hesitate to take further action should a 2% inflation target become difficult to achieve. In a meeting with Abe, Kuroda reportedly exchanged views with Abe over recent economic conditions, and told the prime minister that the global economy is on a recovery path. The BOJ governor also talked about consumer spending before and after April's sales tax increase, reports further indicated.
Trading in US index futures indicated that the Dow could fall 44 points at the opening bell today, 11 September 2014. US stocks edged higher on Wednesday, 10 September 2014, helped by rebound in Apple shares.
Investors will look to next week's Federal Open Market Committee (FOMC) meeting for fresh guidance on US interest rates. At the end of a two-day meeting on 16-17 September 2014, 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.
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