Key benchmark indices further weakened and hit fresh intraday low in mid-afternoon trade as a sharp slide in rupee against the dollar spoiled sentiment. The barometer index, the S&P BSE Sensex was down 382.36 points or 2.03%, off about 500 points from the day's high and up close to 75 points from the day's low. The market breadth, indicating the overall health of the market, was weak. Airline stocks bucked weak market. Pharma stocks edged lower.
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 67.62 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.
At 14:20 IST, the S&P BSE Sensex was down 382.36 points or 2.03% to 18,503.57. The index fell 458.44 points at the day's low of 18,427.69 in mid-afternoon trade, its lowest level since 30 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.
The CNX Nifty was down 140.45 points or 2.53% to 5,410.30. The index hit a low of 5,397.75 in intraday trade, its lowest level since 30 August 2013. The index hit a high of 5,580.95 in intraday trade, its highest level since 16 August 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,237 shares fell and 808 shares rose. A total of 126 shares were unchanged.
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Among the 30-share Sensex pack, 24 stocks fell and rest of them rose. Hero MotoCorp (down 4.57%), ICICI Bank (down 4.3%), and Reliance Industries (down 4.38%), edged lower from the Sensex pack.
Pharma stocks edged lower. Cipla (down 1.26%), Dr Reddy's Laboratories (down 2.03%), Ranbaxy Laboratories (down 0.52%) and Sun Pharmaceutical Industries (down 2.99%), declined.
Airline stocks bucked weak market. Jet Airways (up 2.03%), Kingfisher Airlines (up 5%) and SpiceJet (up 0.78%), gained.
Jet fuel prices have been hiked by a steep 7% taking the rates to a high of over Rs 75,000 per kilolitre. This is the fourth consecutive monthly hike in the aviation turbine fuel prices, which have now gone up by over 20 per cent since June. Aviation Turbine Fuel, or ATF, price at Delhi was hiked by Rs 4,827.94 per kilo liter (kl), or 6.87 per cent, to Rs 75,031.09 per kl, according to Indian Oil Corp, the nation's largest fuel retailer. The increase has been effected from September 1. Aviation turbine fuel or jet fuel constitutes more than 50% of operating cost for airliners. Prices of jet fuel are directly linked to crude oil prices.
Diamond Power Infrastructure rose 0.48% after the company said it received orders aggregating to $30.48 million for exporting cables and conductors. The announcement was made at the fag end of the trading session on Monday, 2 September 2013. Diamond Power Infrastructure said it bagged orders aggregating to $30.48 million for exporting cables and conductors. From the total order size, orders for exporting cables is worth $14.70 million and orders for exporting conductors is worth $15.78 million. These orders are to be executed over nine months.
Zensar Technologies rose 2.18% after the company said it has launched insourcing services division to provide comprehensive services to global conglomerates to set up captive centres in India. The announcement was made during trading hours today, 3 September 2013.
Zensar Technologies said that the business of setting up global in-house centres which started many years ago has been getting significant traction over the past few years and continues to mature. This is evident from the growth of captive units and their contribution to India exports. Captive revenues have grown from $3 billion in 2003 to $13.9 billion in 2012. MNCs setting up their captive centres in India indicate that the quality of work in India is on the rise, say experts, Zensar Tech said in a statement.
Dr. Ganesh Natarajan, Vice Chairman & CEO, Zensar said, "As per the McKinsey-Nasscom survey, 52% of companies with captives in India intend to increase their offshore penetration by 15-30% over the next two to three years. It is also expected that almost all Fortune 500 companies will establish their own captives and/or shared services centres by 2020. Recognizing the significant market potential in this space, we have established a separate business unit Insourcing Services' that specializes in closely partnering with large multinational organizations to jointly build enhanced value propositions by utilizing global talent and leveraging a global footprint."
Aamod Wagh, Chief Executive of the newly minted Division said, "The time is ripe in the market for the launch of this service, and Zensar's track record of executing build operate and transfer centres for American and European clients in the past will be leveraged by this newly formed Insourcing Services Division."
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 France and Germany were down 0.05% to 0.3%. UK's FTSE 100 rose 0.15%.
Asian stocks climbed on Tuesday on evidence of a pickup in global manufacturing. Key benchmark indices in China, Hong Kong, South Korea, Singapore, Japan, Indonesia, and Taiwan rose by 0.09% to 2.99%.
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 123 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 next 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.
President Barack Obama on Saturday, 31 August 2013 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.
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