Weakness continued on the bourses in afternoon trade after hawkish comments on inflation from Reserve Bank of India (RBI) Governor Dr. Raghuram Rajan. The barometer index, the S&P BSE Sensex, was down 144.68 points or 0.68%, up 22.16 points from the day's low and off 89.93 points from the day's high. The market breadth, indicating the overall health of the market, was negative. Weakness in Asian stocks hit sentiment on the domestic bourses adversely. In the foreign exchange market, the rupee edged lower against the dollar.
Index heavyweight Reliance Industries (RIL) slipped in volatile trade. Coal India edged lower in choppy trade on reports that the competition regulator has imposed fine of Rs 1770 crore on state-run coal miner for abusing its dominant position and imposing unfair conditions in fuel supply agreements with customers. Tyre stocks gained across the board on renewed buying.
Asian stocks edged lower on Wednesday, 11 December 2013, on speculation a US budget agreement will boost prospects of tapering the Federal Reserve's stimulus program. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
The market edged lower in early trade on weak Asian stocks. A bout of volatility was witnessed as key benchmark indices trimmed losses after hitting fresh intraday low in morning trade. Weakness continued on the bourses in mid-morning trade. Key benchmark indices extended losses and hit fresh intraday low in early afternoon trade after Reserve Bank of India (RBI) Governor Dr. Raghuram Rajan said that the central bank's focus remains on controlling inflation. Key benchmark indices trimmed losses after hitting fresh intraday low in early afternoon trade.
At 13:15 IST, the S&P BSE Sensex was down 144.68 points or 0.68% to 21,110.58. The index fell 166.84 points at the day's low of 21,088.42 in early afternoon trade, its lowest level since 6 December 2013. The index declined 54.75 points at the day's high of 21,200.51 in early trade.
The CNX Nifty was down 41.75 points or 0.66% to 6,291.10. The index hit a low of 6,282.15 in intraday trade, its lowest level since 6 December 2013. The index hit a high of 6,313.25 in intraday trade.
Also Read
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,308 shares fell and 957 shares rose. A total of 161 shares were unchanged.
The total turnover on BSE amounted to Rs 896 crore by 13:15 IST.
From the 30-share Sensex pack, 20 stocks fell and rest rose. Jindal Steel & Power (up 1.55%), ITC (up 0.76%) and Bajaj Auto (up 0.45%) edged higher from the Sensex pack.
Tata Motors (down 3.09%), ONGC (down 2.85%) and Bhel (down 2.23%) edged lower from the Sensex pack.
Index heavyweight Reliance Industries (RIL) fell 1.04% at Rs 874.35. The scrip hit high of Rs 883.65 and low of Rs 872.20 so far during the day. Reliance Jio Infocomm, a subsidiary of Reliance Industries and Bharti Airtel on Tuesday, 10 December 2013, announced a comprehensive telecom infrastructure sharing arrangement under which they will share infrastructure created by both parties. This will include optic fibre network - inter and intra city, submarine cable networks, towers and internet broadband services and other such opportunities identified in the future, Reliance Jio Infocomm and Bharti Airtel said in a joint statement issued after trading hours on Tuesday, 10 December 2013.
The cooperation is aimed at avoiding duplication of infrastructure, wherever possible, and to preserve capital and the environment, the two companies said. This will also provide redundancy in order to ensure seamless services to customers of the respective parties, they said. The arrangement could, in future, be extended to roaming on 2G, 3G and 4G, and any other mutually benefiting areas relating to telecommunication, including but not limited to jointly laying optic fibre or other forms of infrastructure services. The pricing would be at 'arm's length', based on the prevailing market rates. As part of this arrangement, Bharti and Reliance Jio have already announced an agreement under which Bharti has provided capacity on its i2i submarine cable to Reliance Jio.
Coal India edged lower in choppy trade on reports that the competition regulator has imposed fine of Rs 1770 crore on state-run coal miner for abusing its dominant position and imposing unfair conditions in fuel supply agreements with customers. The stock was off 0.4% at Rs 284.30. The stock lost as much as 3.68% at an intraday low of Rs 274.95 at the onset of the trading session. The scrip rose as much as 0.35% at the day's high of Rs 286.45 so far during the day.
As per reports, the Competition Commission of India (CCI) on Tuesday issued a cease and desist order to the state-run miner and directed it to modify clauses in its fuel supply contracts related to sampling and testing, transportation charges, and compensation on supply of stones. The company, which accounts for 80% of India's coal output, changed its pricing system last year, allowing it to charge higher prices from some customers. However, it still sells domestic coal at discounts of between 45 and 70% to international prices. The CCI had launched a probe earlier this year after complaints from state utilities Maharashtra State Power Generation Co. and Gujarat State Electricity Corp against the miner and its units.
Power Grid Corporation of India (PGCIL) was off 0.25% at Rs 98.25. The company has priced its recently concluded follow-on public offer (FPO) at Rs 90 per share, the top end of the Rs 85-90 per share price band. A discount of Rs 4.50 per share has been allowed to retail investors and eligible employees on the issue price, PGCIL said on Tuesday, 10 December 2013. The FPO which was completed last week had received strong response from investors. The FPO was subscribed 6.74 times. The portion reserved for institutional investors i.e. Qualified Institutional Buyers (QIBs) was subscribed 9.09 times. Category wise subscription data showed that foreign institutional investors (FIIs) put in bids for a total of 186.93 crore shares, compared with 39.20 crore shares reserved for the QIB category as a whole.
The portion reserved for retail individual investors was subscribed 2.17 times. The portion reserved for non-institutional investors was subscribed 9.7 times.
The PGCIL FPO was a combination of fresh issue of 60.18 crore shares by the company and disinvestment by the Government of India (GoI) of 18.51 crore equity shares held by the President of India, acting through the Ministry of Power. After the successful divestment, GoI's holding in PGCIL has dropped to 57.89% from earlier 69.42%.
PGCIL, a navaratna public sector undertaking under the ministry of power, is the country's central transmission utility (CTU). The company owns and operates more than 90% of India's inter-state and interregional electric power transmission systems (ISTS). As principal electric power-transmission company of the country, it owns and operates 102109 circuit kilometers of electrical transmission lines and 172 electrical substations with a total transformation capacity of 172378 MVA as end of 30 September 2013
GVK Power & Infrastructure lost 4.62% on profit booking. The stock had surged 9.65% on Tuesday after the company said that it has relieved the Australian Federal Government's approval for its Abbot Point Port Capital Dredging programme. The announcement was made during trading hours on Tuesday, 10 December 2013.
Bharat Electronics rose 0.28%. The company during market hours said that the Negotiating Trade Unions of the company's constituent units along with the corporate office have served notices on management to go on one day token strike by all the non-executive employees on or after 11 December 2013. The matter of dispute is that the Unions are demanding early settlement of Plant Performance Incentive (PPI)/upward revision of PPI amount from the financial year 2012-13 onwards, the company said.
Tyre stocks gained across the board on renewed buying. Apollo Tyres (up 3.13%), CEAT (up 3.6%), Goodyear India (up 0.34%), JK Tyre & Industries (up 2.93%), MRF (up 2.25%) and TVS Srichakra (up 0.31%) gained.
In the foreign exchange market, the rupee edged lower against the dollar on speculation a US budget agreement will boost prospects of tapering the Federal Reserve's stimulus program. The partially convertible rupee was hovering at 61.32, compared with its close of 61.04/05 on Tuesday, 10 December 2013.
India's trade deficit declined sharply to $9.219 billion in November 2013, from $17.203 billion in November 2012, data released by the government today, 11 December 2013, showed. Merchandise exports rose 5.86% year-on-year (YoY) at $24.613 billion in November 2013. Imports declined 16.37% YoY at $33.833 billion in November 2013. Oil imports declined 1.1% to $12.964 billion. Non-oil imports dropped 23.69% at $20.868 billion.
The government will unveil industrial production data for October 2013 after trading hours tomorrow, 12 December 2013. Industrial output is estimated to fall 1.5% in October 2013, as per the median estimate of a poll of economists carried out by Capital Market. Industrial production rose 2% in September 2013, showing increase in growth from 0.4% growth recorded in August 2013.
Data on inflation based on the general consumer price index (CPI) for November 2013 will also be unveiled after trading hours tomorrow, 12 December 2013. CPI (combined) for November 2013 is estimated at 10% in November 2013, as per the median estimate of a poll of economists carried out by Capital Market. The CPI inflation (combined) for October 2013 stood at 10.09% (y-o-y), higher than 9.84% (y-o-y) seen in September 2013.
The government will unveil data on inflation based on the wholesale price index (WPI) for November 2013 on 16 December 2013. WPI is seen easing a bit at 6.9% in November 2013, from 7% in October 2013, as per the median estimate of a poll of economists carried out by Capital Market.
The Reserve Bank of India (RBI) announces next Mid-Quarter Review of Monetary Policy for 2013-14 on 18 December 2013. The Third Quarter Review of Monetary Policy for 2013-14 is scheduled 28 January 2014.
The focus of the Reserve Bank of India remains on inflation, Governor Raghuram Rajan said on Wednesday, 11 December 2013, adding growth seems to be stabilising, although it is too early to call a bottom. Rajan added the rupee had stabilised "somewhat", but said there is no room for complacency. He also called on the government to continue its efforts to contain the fiscal deficit and said raising subsidised diesel prices to market levels would help. "Our effort is firmly on controlling inflation," Rajan said during a speech to the Delhi Economic Conclave organised by India's Finance Ministry. "Growth is stabilising though it is too early to say it has bottomed at this point," he also said.
Rajan also reiterated the central bank would continue to focus on developing markets, adding the RBI is also keen to strengthen debt markets and introduce more products. Rajan also said the RBI would introduce measures to improve liquidity and depth in government bonds, known widely in India as G-secs. "We will roll out more measures to improve liquidity and depth of G-sec market," he said.
Rajan also said that the Reserve Bank of India will announce next weeks steps to recognise and resolve financial stresses, including making it more expensive for so-called wilful defaulters to borrow funds. The RBI defines a wilful defaulter as a borrower who is able but unwilling to pay, or one that has diverted loan proceeds for uses other than their initially stated intention. Wilful defaulters can also refer to borrowers that overstate profits in order to obtain a loan. "For wilful defaulters, or the category that we call un-cooperative defaulters, future borrowing will become more expensive," Rajan said.
Global rating agency Standard & Poor's (S&P) today, 11 December 2013, said that India's sovereign rating may come under pressure if general elections due by May next year end up with a hung parliament or with a government unable to push through reforms. S&P has a "negative" outlook on India's sovereign ratings, meaning any downgrade from its current "BBB-minus" would place the country's debt in so-called "junk."
Finance Minister P. Chidambaram today, 11 December 2013, said that the government will not compromise on fiscal prudence and will contain its fiscal deficit and narrow it to 3% of gross domestic product by the fiscal year ending in March 2017. The comments come a day after Fitch Ratings had warned the setback for the Congress party in recent state elections could imperil the fiscal deficit target by tempting the government to have less restraint on spending. The fiscal deficit target for the current fiscal year ending in March 2014 is set at 4.8% of GDP and Chidambaram has repeatedly pledged the country would meet the target. "There will be no compromise on the decision to walk on the path of fiscal prudence and contain the fiscal deficit step by step, year by year, until we the reach the goal of 3% of GDP in 2016/17," Chidambaram said. The finance minister also highlighted the government would do all it can to moderate inflation, given the RBI only has monetary policy as a "blunt tool" to contain rising food prices.
The Asian Development Bank (ADB) on Wednesday kept its growth forecast for India at 4.7% for this year, and sees the country growing at 5.7% in 2014. The Manila-based bank slightly raised its forecast for China this year and the next, aided by the impact of government reforms and better prospects for key trading partners. The bank lifted its 2013 forecast for China to 7.7%, from 7.6% in October. It now sees 2014 growth at 7.5% rather than 7.4%. However, the ADB lowered estimates for Southeast Asia this year and in 2014, in the wake of a strong typhoon in the Philippines and political uncertainties in Thailand. The bank kept its growth forecast for developing Asia at 6% this year and 6.2% next year.
Asian stocks edged lower on Wednesday, 11 December 2013, on speculation a US budget agreement will boost prospects of tapering the Federal Reserve's stimulus program. Key benchmark indices in Taiwan, South Korea, Indoensia, Singapore, China, Japan and Hong Kong were off 0.11% to 1.8%. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
Trading in US index futures indicated that the Dow could fall 16 points at the opening bell on Wednesday, 11 December 2013. US stocks fell on Tuesday as investors weighed federal budget negotiations and better-than-estimated economic data to gauge the timing of any Federal Reserve stimulus cuts. The US budget deal, worked out between chief negotiators Senator Patty Murray and Representative Paul Ryan, would set spending at about $1.01 trillion in 2014, higher than the $967 billion required in a 2011 budget accord. A partial shutdown in October lasted for 16 days because lawmakers couldn't agree on how to fund the government.
Meanwhile, the latest data showed job openings in the US climbed to a five-year high in October, indicating employers were confident about demand even as Washington's budget impasse shuttered parts of the federal government. Another report showed wholesale trade sales and inventories increased more than economists forecast.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.
Powered by Capital Market - Live News