Key benchmark indices trimmed intraday losses after the Finance Ministry's Economic Survey 2013-14 predicated a recovery in India's economic growth in 2014-15.. The 50-unit CNX Nifty alternately swung between positive and negative terrain. The barometer index, the S&P BSE Sensex was down 27.71 points or 0.11%, up about 185 points from the day's low and off close to 130 points from the day's high. The market breadth indicating the overall health of the market was weak.
Shares of tea makers and liquor makers fell across the board.
At 13:15 IST, the S&P BSE Sensex was down 27.71 points or 0.11% to 25,554.40. The index jumped 101.86 points at the day's high of 25,683.97 in early trade. The index slumped 212.90 points at the day's low of 25,369.21 in morning trade, its lowest level since 30 June 2014.
The CNX Nifty was down 4.80 points or 0.06% to 7,618.40. The index hit a high of 7,650.10 in intraday trade. The index hit a low of 7,551.65 in intraday trade, its lowest level since 30 June 2014.
The market breadth indicating the overall health of the market was weak. On BSE, 1,896 shares declined and 834 shares rose. A total of 96 shares were unchanged.
The BSE Mid-Cap index was down 37.94 points or 0.41% at 9,172.27. The BSE Small-Cap index was down 108.66 points or 1.07% at 10,019.35. Both these indices underperformed the Sensex.
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Among the 30 Sensex shares, 17 fell and the remaining shares rose. Mahindra & Mahindra (down 2.62%), Bajaj Auto (down 2.28%), TCS (down 1.84%), Tata Power (down 1.71%), Sesa Sterlite (down 1.52%), Tata Motors (down 1.4%), NTPC (down 1.31%), Coal India (down 1.3%), Maruti Suzuki India (down 1.12%) and Hero MotoCorp (down 1.05%), edged lower from the Sensex pack.
Hindalco Industries (up 2.72%), ONGC (up 2.11%), ITC (up 1.89%), Tata Steel (up 1.56%), Bharat Heavy Electricals (up 1.46%), GAIL (India) (up 1.32%), Hindustan Unilever (up 0.69%), State Bank of India (up 0.63%) and Reliance Industries (up 0.54%) edged higher from the Sensex pack.
Liquor makers fell across the board. Empee Distilleries (down 3.32%), Khoday India (down 2.31%), Radico Khaitan (down 2.24%), United Breweries (down 1.24%), United Spirits (down 0.93%) and Tilaknagar Industries (down 0.64%), edged lower.
Tea makers fell across the board. Asian Tea & Exports (down 4.81%), Warren Tea (down 4.30%), Diana Tea (down 2.93%), Jayshree Tea and Industries (down 2.24%), Goodricke Group (down 2.10%), Assam Company (down 0.87%), Tata Global Beverages (down 0.63%), Harrisons Malayalam (down 0.56%) and Mcleod Russel India (down 0.53%), edged lower.
A bout of volatility was witnessed as key benchmark indices regained positive terrain after slipping into the red for a brief period after opening higher. Volatility continued as key benchmark indices recouped almost entire intraday losses after a sudden slide in morning trade. The Sensex and the 50-unit CNX Nifty, both trimmed losses after hitting their lowest level in more than a week. Key benchmark indices moved in a narrow range ahead of the presentation of Economic Survey for 2013-14 which could set the tone for tomorrow's Union Budget 2014-15. Key benchmark indices once again slipped into the red in early afternoon trade after the Finance Ministry tabled its Economic Survey for 2013-14 in parliament. Key benchmark indices trimmed intraday losses in afternoon trade.
The Economic Survey 2013-14 predicated a recovery in India's economic growth in 2014-15. It has forecast 5.4% to 5.9% growth in GDP in 2014-15, compared with 4.7% expansion in 2013-14. The survey also states that there are downside risks to the economy arising from a poor monsoon, the external environment and the poor investment climate. The survey recommends that the government needs to move towards a low and stable inflation regime through fiscal consolidation, establishing a monetary policy framework, and creating a competitive national market for food. The survey also discusses the need for revamping some of the social sector schemes such as MNREGA, NRHM, SSA, etc. The survey calls for putting public finances on the sustainable path through fiscal correction, a new Fiscal Responsibility and Budget Management (FRBM) Act with teeth, better accounting practices, greater transparency and improved budgetary management. It argues that improvements on both tax and expenditure are needed to obtain high quality fiscal adjustment. The survey recommends fiscal consolidation through higher tax-GDP ratio than merely reducing the expenditure to GDP ratio.
According to the survey, government expenditure reform should involve three elements: shifting subsidy programmes away from price subsidies to income support, a change in the focus of government spending towards provision of public goods, and a focus on outcomes through an improvement in systems of accountability. The survey calls for a tax regime that is simple, predictable and stable consisting of a single-rate goods and services tax (GST), fewer exemptions in direct taxes, and a transformation of tax administration.
Noting that the industrial growth has slowed down considerably in the recent years, the Economic Survey highlights the need for revival of corporate sector investment, pushing ahead with critical reforms and removal of infrastructure bottlenecks. In order to boost manufacturing sector, the government has already announced setting up of sixteen national investment and manufacturing zones (NIMZs). According to the survey, industrial policy needs to focus on labour-intensive and resource-based manufacturing in informal sector to rejuvenate small businesses. According to the survey, the near term industrial outlook is conditional on continued improvements in the policy environment and quick return to peak investment rate. With the improvement in overall macroeconomic environment, industry is expected to revive and growth can accelerate gradually over the next two years, the survey states.
The pick-up in India's exports in April-May 2014, after five months of low/negative growth, though a positive sign, is partly due to the low base. The quarterly and monthly export and import growth performance of the world and major trading countries is also not very encouraging. Thus world trade and India's exports are still fragile, the recent good performance notwithstanding. There is also the downside risk of external shocks like the latest increase in oil prices owing to the Iraq crisis, according to the survey.
The survey also highlighted several challenges and reforms required in the agriculture sector. The survey states that restoring economic freedom of farmers and allowing them to be part of a competitive national market is essential for controlling food inflation.
The Economic Survey 2013-14 comes just a day ahead of the Union Budget 2014-15. Finance Minister Arun Jaitley will present the final Union Budget for 2014-15 in Lok Sabha at 11:00 IST tomorrow, 10 July 2014. There are expectations that the finance minster will announce measures in the Budget aimed at bolstering economic growth. Increase in outlay on infrastructure sector with focus on stricter and time-bound implementation of projects, initiatives towards investments in agriculture and irrigation aimed at easing supply bottlenecks for food-grains, fiscal prudence with roadmap to reduce the fiscal deficit, a roadmap for reducing the subsidy burden and timeline for implementation of the Goods and Services Tax are some of the expectations from the Budget.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 59.71, compared with its close of 59.78/79 on Tuesday, 8 July 2014.
European markets were mostly higher in early trade on Wednesday, 9 July 2014. Key benchmark indices in France and Germany were up by 0.18% to 0.25%. UK's FTSE 100 was down 0.19%.
Asian stocks edged lower on Wednesday, 9 July 2014, in a broad based decline in global equities triggered by concerns that equity valuations are too high. Key benchmark indices in China, South Korea, Taiwan, Hong Kong, Singapore and Japan were off 0.08% to 1.69%. Indonesia's Jakarta Composite rose 0.72%.
Consumer-price inflation in China slowed last month, data today showed, while factory gate prices fell at the lowest pace in more than two years. China's consumer price index rose 2.3% in June from a year earlier, after gaining 2.5% in May. The country's measure of producer prices, which hasn't shown a year-on-year increase since January 2012, fell 1.1%. It dropped 1.4% in May.
Trading in US index futures indicated that the Dow may fall 6 points at opening bell on Wednesday, 9 July 2014. US stocks declined on Tuesday, 8 July 2014, in a broad selloff, dropping for a second straight session and driving the Dow Jones Industrial Average below 17,000 as investors turned cautious before the start of earnings season.
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