Weak market breadth

Selling intensified in afternoon trade as key benchmark indices extended losses and hit fresh intraday low. The market breadth, indicating the overall health of the market, was weak. The barometer index, the S&P BSE Sensex, was down 144.91 points or 0.68%, off about 150 points from the day's high and up about 8 points from the day's low.

Reliance Industries (RIL) edged higher in volatile trade ahead of its Q3 results. Bajaj Auto extended Thursday's gains triggered by company reporting record net profit in Q3 December 2013. Index heavyweight and cigarette maker ITC edged lower in choppy trade after announcing Q3 result.

Key benchmark indices edged lower amid initial volatility on weak Asian stocks. After regaining positive terrain for a brief period, the key benchmark indices once again slipped into the red in morning trade. Key benchmark indices extended losses and hit fresh intraday low in mid-morning trade. The Sensex further extended losses and hit fresh intraday low in early afternoon trade. Selling intensified in afternoon trade as key benchmark indices extended losses and hit fresh intraday low.

At 13:15 IST, the S&P BSE Sensex was down 144.91 points or 0.68% to 21,120.27. The sensex fell 153.30 points at the day's low of 21,111.88, its lowest level since 15 January 2014. The index rose 4.93 points at the day's high of 21,270.11 in morning trade.

The CNX Nifty was down 38.80 points or 0.61% to 6,280.10. The index hit a low of 6,278.45 in intraday trade, its lowest level since 15 January 2014. The index hit a high of 6,327.10 in intraday trade.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,621 shares fell and 784 shares rose. A total of 144 shares were unchanged.

Coal India (down 9.55%), TCS (down 4.98%), Wipro (down 3.36%), HDFC (down 2.54%), Hindalco Industries (down 1.37%), ICICI Bank (down 1.26%), Bharti Airtel (down 0.97%), Tata Steel (down 0.92%), Sesa Sterlite (down 0.75%) and State Bank of India (down 0.69%), edged lower from the Sensex pack.

Hindustan Unilever (up 1.47%), Tata Power Company (up 1.09%), Jindal Steel & Power (up 0.9%), Hero MotoCorp (up 0.89%), Sun Pharmaceutical Industries (up 0.8%), Infosys (up 0.78%) and Cipla (up 0.76%), edged higher from the Sensex pack.

Reliance Industries (RIL) edged higher in volatile trade ahead of its Q3 results. The stock was up 0.83% at Rs 892.50. The scrip hit high of Rs 896.80 and low of Rs 885.15 so far during the day. A media report suggested that RIL is eyeing Petronas' 11% stake in $20-billion Venezuela project. RIL clarified to the stock exchanges during trading hours today that it continues to look for opportunities to grow its business internationally and cannot make any specific comment on the media report.

Index heavyweight and cigarette maker ITC edged lower in choppy trade after reporting Q3 result. The scrip was off 0.21% at Rs 325. The scrip hit high of Rs 328.20 and low of Rs 322.50. The company's net profit rose 16.25% to Rs 2385.34 crore on 13.4% increase in total income to Rs 9117.91 crore in Q3 December 2013 over Q3 December 2012. The company announced the results during market hours.

ITC said gross revenue grew by 12.9% to Rs 12223.44 crore in Q3 December 2013 over Q3 December 2012, driven by the new FMCG businesses and the Paperboards, Paper and Packaging segment. Within the FMCG segment, ITC said that the branded packaged foods businesses posted robust growth in revenues and enhanced market standing across categories by leveraging a portfolio of differentiated and innovative products.

Overall, the new FMCG businesses recorded a robust growth of 16.4% in revenue despite a marked slowdown in consumption expenditure, ITC said. The segment also recorded a profit of Rs 10 crore during Q3 December 2013 on the back of enhanced scale and improvement in profitability, ITC said.

ITC said its hotels business recorded a significant improvement in profitability aided by superior performance by ITC Grand Chola.

ITC said that its agri business profits rose 19% in Q3 December 2013, driven by higher realisation and superior mix.

Bajaj Auto rose 1.26% to Rs 1,932, with the stock extending Thursday's 0.66% rise triggered by the two-wheeler major reporting record net profit in Q3 December 2013. The company's net profit rose 10.48% to a record Rs 904.55 crore on 4.67% decline in total income to Rs 5353.08 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours on Thursday, 16 January 2014.

Exports rose 23.5% to Rs 2123 crore in Q3 December 2013 over Q3 December 2012.

Operating earnings before interest, taxation, depreciation and amortization (EBITDA) before mark-to-market gain/loss rose 0.64% to Rs 1092 crore in Q3 December 2013 over Q3 December 2012. Operating EBITDA margin before mark-to-market gain/loss, edged up to 21.1% in Q3 December 2013, from 19.8% in Q3 December 2012.

Total automobile sales fell 11.88% to 9.93 lakh units in Q3 December 2013 over Q3 December 2012. Bajaj Auto said that sales during festive period, though reasonable, were not robust. Subsequently, in November and December, industry sales continued to remain sluggish, Bajaj Auto said.

Bajaj Auto said that the quarter witnessed a marked increase in input costs of steel, aluminium and other imported components.

Cash and cash equivalents as on 31 December 2013 stood at Rs 6920 crore, higher than Rs 6516 crore as on 30 September 2013, Bajaj Auto said in a statement.

In the foreign exchange market, the rupee edged higher against the dollar, tracking gains of other regional currencies against the dollar. The partially convertible rupee was hovering at 61.365, compared with its close of 61.535/545 on Thursday, 16 January 2014.

Bond prices rose as data released by the government this week showed inflation based on the wholesale price index (WPI) eased to a five-month low in December 2013, raising hopes that the central bank won't raise interest rates at its next monetary policy review later this month. The sentiments were also boosted by the absence of fresh supplies of gilts with the Reserve Bank of India deferring the bond auction scheduled for the current week. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.5951%, lower than its close of 8.6157% on Thursday, 16 January 2014. Bond yield and bond prices are inversely related.

The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.

On the political front, Congress President Sonia Gandhi said at a meeting of the All India Congress Committee (AICC) today, 17 January 2014, that the Congress party is ready and prepared for the 2014 Lok Sabha battle. "This election will be a battle for India as was conceived by our forefathers," Sonia Gandhi said. She also said the decision of the Congress Working Committee (CWC) on not naming Rahul Gandhi as the party's prime ministerial candidate for the 2014 Lok Sabha elections is final.

Sonia Gandhi also said that it was because of the Congress that changes and reforms were brought. Highlighting the Congress's achievements, Sonia Gandhi spoke about the MNREGA scheme and the Right to Information Act. She also praised Prime Minister Manmohan Singh for withstanding criticism. "The Prime Minister has achieved all its targets steadily," she said.

Asian stocks edged higher on Friday, 17 January 2014, ahead of a batch of US economic data due later in the session which include December US housing starts, building permits, industrial production and the University of Michigan sentiment index. Key benchmark indices in Japan, Indonesia, Singapore and Hong Kong were up 0.02% to 0.61%. Key benchmark indices in China, South Korea and Taiwan were off 0.19% to 0.93%.

China's central bank has vowed to maintain liquidity at appropriate levels while urging financial institutions to enhance their ability to manage liquidity. The authorities will use various liquidity management tools and will adjust liquidity levels if needed, Zhang Xiaohui, head of the People's Bank of China's (POBC) monetary policy department, wrote in an article published in China Finance magazine. The PBOC has been maintaining a relatively hawkish stance toward liquidity since a cash crunch occurred in the nation's financial system last June, refraining from injecting funds into the system in an effort to curb high debt levels in the economy. The central bank will also study measures to allow financial institutions to issue certificates of deposit to individuals and nonfinancial enterprises, Ms. Zhang wrote in the same article published in the magazine, which is run by the central bank. She didn't give a time frame.

China began allowing banks to issue negotiable certificates of deposit in the interbank market late last year, in a move seen as setting the stage for liberalizing deposit rates.

Trading in US index futures indicated that the Dow could advance 10 points at the opening bell on Friday, 17 January 2014. US stocks ended lower on Thursday, 16 January 2014, snapping a two-day rally, after disappointing results from Best Buy Co. Inc., Citigroup Inc. and Goldman Sachs Group Inc. The Nasdaq Composite edged higher.

In economic news, the number of Americans who applied last week for unemployment benefits fell slightly and is now back to a level that prevailed shortly before the Thanksgiving holiday. Separately, US consumer prices rose a seasonally adjusted 0.3% in December, led by higher energy and shelter costs, the Labor Department said.

Fed Bank of Atlanta President Dennis Lockhart, who doesn't vote on monetary policy this year, said yesterday that he expects inflation that's been "too low" will accelerate toward the Fed's 2% target.

During an interview with Liaquat Ahamed, Fed Chairman Ben Bernanke defended the response to the financial crisis and said stock market valuations are within historic range. Commenting about the central bank's bond purchases, known as quantitative easing, he said: "The problem with QE is that it works in practice but it doesn't work in theory." Meanwhile, in a paper delivered at a Brookings Institution seminar on US monetary policy, San Francisco Fed President John Williams warned of "nagging concerns that large-scale asset purchases carry with them particular risks to the economy or the health of the financial system that we still don't fully understand." He also said the central bank's new forward-guidance tool seems "overly simplified and prone to misinterpretation."

The Senate cleared for President Barack Obama's signature a bipartisan $1.1 trillion bill to finance the US government through Sept. 30, making a debt ceiling increase the next potential fiscal showdown. The Democratic-controlled Senate voted 72-26 in favor of the spending measure a day after the Republican-led House passed it, 359-67. The bipartisan cooperation marks a turnaround from the Tea Party-fueled discord that caused a 16-day partial government shutdown in October.

The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.

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