Key benchmark indices pared initial gains and swung alternately between gains and losses near the flat line in morning trade. The S&P BSE Sensex was up 8.56 points or 0.04%, up close to 35 points from the day's low and off about 90 points from the day's high. The market breadth, indicating the overall health of the market, was positive.
SKS Microfinance surged after the company on Tuesday said it has received A ratings for Rs 2000 crore of bank facilities from a leading rating agency. Shares of gold jewellery retailers and manufacturers rose after the government raised import duty on gold jewelry to 15% from 10%. Two-wheeler makers rose on expectations of pick up in sales during the upcoming festive season and on hopes good rains this year will boost rural sales.
The market edged higher amid initial volatility. Key benchmark indices pared initial gains and swung alternately between gains and losses near the flat line in morning trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 318.05 crore on Tuesday, 17 September 2013, as per provisional data from the stock exchanges.
At 10:20 IST, the S&P BSE Sensex was up 8.56 points or 0.04% to 19,812.59. The index rose 96.65 points at the day's high of 19,900.68 in early trade, its highest level since 16 September 2013. The index fell 28.74 points at the day's low of 19,775.29 in morning trade.
The CNX Nifty was almost unchanged for the day at 5,850.40. The index hit a high of 5,877.90 in intraday trade, its highest level since 16 September 2013. The index hit a low of 5,840.20 in intraday trade.
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The market breadth, indicating the overall health of the market, was positive. On BSE, 802 shares rose and 639 shares fell. A total of 97 shares were unchanged.
Among the 30-share Sensex pack, 20 stocks rose and rest of them fell. Cipla (up 1.7%), Coal India (up 1.55%) and Hindustan Unilever (up 1.4%), edged higher.
Two-wheeler stocks rose on expectations of pick up in sales during the upcoming festive season and on hopes good rains this year will boost rural sales. The festive season starts with the Durga Puja in October. The festival is followed by Dussehra and Diwali. Bajaj Auto (0.56%), TVS Motor Company (up 1.03%) and Hero MotoCorp (up 0.36%), gained.
Dr Reddy's Laboratories rose 1.17%, with the stock extending Tuesday's gain triggered by the company getting USFDA nod for Azacitidine for injection 100 mg/vial, a bioequivalent generic version of VIDAZA (azacitidine for injection). The launch of product in the US market is planned in the near term, the company said during trading hours on Tuesday, 17 September 2013. The VIDAZA brand had US sales of approximately $378.5 million for the twelve months ended July 2013, according to IMS Health data.
Shares of gold jewellery retailers and manufacturers rose after the government raised import duty on gold jewelry to 15% from 10%. Titan Industries, Rajesh Exports, P C Jeweller, Tribhovandas Bhimji Zaveri and Gitanjali Gems rose by 0.45% to 5.87%.
The government said on Tuesday that to protect the interests of small artisans, the customs duty on articles of jewellery and of goldsmiths' or silversmiths' wares and parts thereof is being increased from 10% to 15%. A notification notifying the revised rates of customs duty on articles of jewellery and of goldsmiths' or silversmiths' wares and parts thereof has been issued on Tuesday. As part of measures to contain the current account deficit, the customs duty on gold has been revised upwards periodically in the past two years. The government said jewellery making is a labour intensive industry. Millions of artisans are dependent on this sector for their livelihood. In the absence of any duty differential between articles of jewellery and primary metal, which was 8% in the case of gold jewellery and 4% in the case of silver jewellery in January 2012, there is an apprehension that Indian jewellery makers would not be able to compete with cheaper imports, particularly when majority of the imported jewellery is machine-made as compared to handmade jewellery in India.
SKS Microfinance surged 10.42% after the company after market hours on Tuesday, 17 September 2013, said that a leading rating agency has assigned 'A' rating for its long-term and 'A1' rating for its short-term bank facilities for an aggregate sum of Rs 2000 crore. According to the rating agency, instruments with 'A' rating are considered to have adequate degree of safety regarding timely servicing of financial obligations and carry low credit risk. Instruments with 'A1' rating are considered to have very strong degree of safety regarding timely payment of financial obligations and carry lowest credit risk, SKS said.
Mr. S. Dilli Raj, Chief Financial Officer, SKS Microfinance said: "The ratings would help to reduce the risk weights assigned to banks' exposure on SKS Microfinance from the present 100% to 50% in the case of long-term facilities and 30% for short-term facilities. The ratings are likely to enhance credit availability and reduce the cost of borrowing as they will free up capital allocation for banks in the case of SKS Microfinance's borrowings. We are unable to quantify the gains at this juncture, but expect the impact will be positive."
SKS Microfinance's borrowings as of 31 August 2013 stood at Rs 1675 crore.
SKS Microfinance said that the ratings are significant in view of the fact that the company has sustained and completed its turnaround in Q1 June 2013 with three consecutive quarters of profit. During the Andhra Pradesh situation, the company had repaid Rs 5800 crore to the banking system without any rescheduling or deferral or haircut. As of 30 June 2013, the company had a capital adequacy ratio of 30% and cash and bank balance of Rs 310 crore. Collection efficiency of the non-Andhra Pradesh portfolio is at 99.8% in Q1, SKS said.
Foreign direct investment inflows into India rose an annual 12.9% to $1.66 billion in July 2013, the government said in statement released late on Tuesday, the highest monthly inflow for three months.
Meanwhile, the Reserve Bank of India (RBI) reportedly cracked down on offshore foreign exchange trading by Indians through online trading websites, asking banks to report any such remittances to the regulator. In a circular issued late on Tuesday, the Reserve Bank of India (RBI) asked banks to advise customers not to undertake forex trading on foreign websites that offer currency contracts by accepting margins through credit card and online money transfer mechanisms. The RBI also asked banks to close the credit card or online bank account of a customer that is found to be in violation of the rule.
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.
Most Asian stocks fell on Wednesday, 18 September 2013, amid prospects the Federal Reserve will announce today whether it intends to pare back economic stimulus. Key benchmark indices in China, Taiwan, Hong Kong, and Indonesia shed by 0.21% to 0.7%. Key benchmark indices in Singapore and Japan rose by 0.54% to 1.84%. South Korean stock markets were closed for a holiday.
Trading in US index futures indicated that the Dow could gain 10 points at the opening bell on Wednesday, 18 September 2013. US stocks rose slightly on Tuesday on expectations the Federal Reserve will make a modest cut in its stimulative bond buying and keep interest rates extraordinarily low. A report in the US on Tuesday showed the cost of living rose less than forecast in August, with the consumer-price index increasing 0.1%, the least in three months.
Investors across the globe are eyeing the two-day policy meeting of the Federal Open Market Committee (FOMC), considered by many to provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program. The FOMC's two-day policy meeting on interest rates in the United States ends today, 18 September 2013. 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. Investors are also eyeing Fed's forward guidance on policy.
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