Key benchmark indices slumped on geopolitical concerns after the Russian defence ministry was quoted by a news agency as saying it had detected two ballistic objects fired towards the eastern Mediterranean. On domestic front, a sharp slide in rupee against the dollar also spoiled sentiment. The barometer index, the S&P BSE Sensex was provisionally down 679.76 points or 3.6%, off about 800 points from the day's high and up close to 40 points from the day's low. The market breadth, indicating the overall health of the market, was weak. Bank stocks tumbled. Pharma stocks edged lower. Index heavyweights, Reliance Industries and ITC, both, slumped.
The Sensex snapped four-day winning streak today, 3 September 2013.
A bout of volatility was witnessed as key benchmark indices slipped into the red after opening higher. It weakened and hit fresh intraday low in morning trade. It hovered in negative terrain in mid-morning trade. It slumped and hit fresh intraday low in early afternoon trade. Key benchmark indices hit their fresh intraday lows in afternoon trade after European stock markets opened lower. It further weakened and hit fresh intraday low in mid-afternoon trade.
The partially convertible rupee was trading at 68.08 sharply lower than Monday's close of 66. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
Meanwhile, Geopolitical concerns weighed on sentiment after Russia reportedly announced that its missile early warning system had detected the launch of two missiles from the central part of the Mediterranean Sea fired towards the sea's eastern coastline. The launches took place on Tuesday and were detected by the early warning system in Armavir in southern Russia, the defence ministry said in a statement quoted by Russian news agencies. It said Defence Minister Sergei Shoigu had already reported to President Vladimir Putin about the event, which comes amid growing expectations of Western military action in Syria.
President Barack Obama on Saturday, 31 August 2013 had said he has decided military action is appropriate, but he would still seek congressional authorization on the use of US military force against Syria. Congressional leaders have agreed to debate and vote on the possible action when lawmakers return from recess on September 9. And, while lawmakers aren't due back in Washington until next week, the Senate Foreign Relations Committee said it would hold hearings on Syria today and tomorrow.
As per provisional figures, the S&P BSE Sensex was down 679.76 points or 3.6% to 18,206.37. The index tumbled 719.96 points at the day's low of 18,166.17 in late trade, its lowest level since 29 August 2013. The index rose 121.18 points at the day's high of 19,007.31 in opening trade, its highest level since 16 August 2013.
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The CNX Nifty was down 213.75 points or 3.85% to 5,337, as per provisional figures. The index hit a low of 5,323.75 in intraday trade, its lowest level since 29 August 2013. The index hit a high of 5,580.95 in intraday trade, its highest level since 16 August 2013.
The total turnover on BSE amounted to Rs 2173 crore, higher than Rs 1721.63 crore on Monday, 2 September 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,470 shares fell and 809 shares rose. A total of 137 shares were unchanged.
Among the 30-share Sensex pack, 28 stocks fell and only two of them rose. HDFC (down 5.4%), Bharti Airtel (down 5.26%), and L&T (down 4.73%), edged lower from the Sensex pack.
Hero MotoCorp dropped 6.31% as the stock turned ex-dividend today, 3 September 2013, for a dividend of Rs 60 per share for the year ended 31 March 2013.
Index heavyweight and cigarette maker ITC tumbled 4.48%.
Another index heavyweight Reliance Industries dropped 6.33%.
TCS lost 2.69%. The company said during market hours today, 3 September 2013 that it has been selected by Norway's largest financial group, DNB to drive the company's strategic transformation by leveraging information technology (IT). It is a six year managed services contract.
Bank stocks tumbled. Among private sector banks, ICICI Bank (down 5.1%), HDFC Bank (down 4.18%), Axis Bank (down 10.42%), Yes Bank (down 10.08%), and Kotak Mahindra Bank (down 4.44%), edged lower
State Bank of India (SBI) declined 3.41%. The bank said after market hours on Monday, 2 September 2013 that it has acquired 23% shares of Bank State Bank of India, Indonesia (BSBII) in a recent deal with P. T. Ravindo Jaya. As per the present State Bank of India holds 99% in BSBII and P. T. Ravindo Jaya holds 1%.
Among other PSU bank stocks, Bank of Baroda, Canara Bank, Union Bank of India, Bank of India, and Punjab National Bank shed by 3.29% to 7.07%.
Pharma stocks edged lower. Cipla (down 3.15%), Dr Reddy's Laboratories (down 3.07%), Ranbaxy Laboratories (down 5.6%) and Sun Pharmaceutical Industries (down 3.37%), declined.
On macro front, the combined index of eight core industries rose 3.1% in July 2013 over July 2012. The eight core industries have a combined weight of 37.90% in the Index of Industrial Production (IIP).
The Rajya Sabha on Monday approved a $20 billion scheme to distribute subsidised wheat and rice to 80 crore people, backing an anti-malnutrition drive that investors fear will mean missing the fiscal deficit target. The Food Security Bill is seen as a vote winner by the ruling Congress party as it prepares for elections due by May next year. But investors reacted negatively to the plan when the lower house approved it last weak, on worries the government will struggle to contain the cost of subsidies. The scheme has now been passed by both houses. Before becoming law it must be signed by the president, a formality.
Europe's stock markets edged lower on Tuesday ahead of monetary policy decisions in Japan, the euro zone and the UK on Thursday and the US employment report on Friday. Key benchmark indices in UK, France and Germany were down 0.52% to 0.68%.
Asian stocks climbed on Tuesday on evidence of a pickup in global manufacturing. Key benchmark indices in China, Hong Kong, South Korea, Japan, Indonesia, and Taiwan rose by 0.46% to 2.99%. Singapore's Straits Times fell 0.03%.
China's official purchasing managers' index (PMI) for the non-manufacturing sector dipped slightly to 53.9 in August from July's 54.1, the National Bureau of Statistics (NBS) said on Tuesday. A reading above 50 indicates activity in the sector is accelerating, while one below 50 indicates it is slowing. The services sector index followed the bureau's manufacturing PMI on Sunday, which showed China's factory activity expanded at the fastest pace in more than a year in August with a jump in new orders.
Australia's central bank left its key interest rate unchanged on signs of a pickup in housing and as a slide in the currency eases pressure on the economy before an election that polls suggest will change the government. Governor Glenn Stevens and his board kept the overnight cash-rate target at a record-low 2.5%, the Reserve Bank of Australia said in a statement today in Sydney.
Trading in US index futures indicated that the Dow could gain 81 points at the opening bell on Tuesday, 3 September 2013. US stock markets remained closed on Monday, 2 September 2013, for the Labor Day holiday.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled this month, with their focus squarely on the timing of tapering of Federal Reserve's bond purchases. The FOMC holds a two-day policy meeting on 17-18 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.
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