A bout of volatility was witnessed as key benchmark indices weakened once again after trimming initial losses in morning trade. The barometer index, the S&P BSE Sensex, was down 126.16 points or 0.6%, off close to 65 points from the day's high and up about 40 points from the day's low. The market breadth, indicating the overall health of the market, was negative. The market sentiment was hit adversely by two sets of economic data released after market hours on Thursday, 12 December 2013, which showed a spike in consumer price inflation in November and a worse-than-expected contraction in industrial production in October. Sharp uptick consumer price inflation raised the likelihood of the Reserve Bank of India (RBI) hiking its main lending rate viz. the repo rate at a monetary policy review next week. The rupee fell and bonds yields surged after retail inflation spiked, raising bets of a rate hike at the RBI's policy meeting next week.
Bank stocks edged lower as a sharp uptick consumer price inflation raised the likelihood of the Reserve Bank of India (RBI) hiking its main lending rate viz. the repo rate at a monetary policy review next week. Capital goods pivotals declined as higher interest rates could put spanner in the works for a likely revival of investment cycle.
The market edged lower in early trade after weak macroeconomic data announced after trading hours on Thursday, 12 December 2013. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than a week. A bout of volatility was witnessed as key benchmark indices weakened once again after trimming initial losses in morning trade.
At 10:20 IST, the S&P BSE Sensex was down 126.16 points or 0.6% to 20,799.45. The index fell 163.25 points at the day's low of 20,762.36 in early trade, its lowest level since 4 December 2013. The index declined 58.44 points at the day's high of 20,867.17 in opening trade.
The CNX Nifty was down 40.85 points or 0.65% to 6,196.20. The index hit a low of 6,185.25 in intraday trade, its lowest level since 4 December 2013. The index hit a high of 6,208.60 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 863 shares fell and 696 shares rose. A total of 96 shares were unchanged.
From the 30-share Sensex pack, 21 stocks fell and rest rose. HDFC (down 1.43%), NTPC (down 1.25%) and Cipla (down 1.18%) declined from the Sensex pack.
Bank stocks edged lower as a sharp uptick consumer price inflation raised the likelihood of the Reserve Bank of India (RBI) hiking its main lending rate viz. the repo rate at a monetary policy review next week. AXIS Bank (down 1.6%), ICICI Bank (down 2.57%), HDFC Bank (down 0.45%), and Yes Bank (down 1.54%), dropped.
Syndicate Bank fell 1.17% to Rs 88.45. The bank after market hours on Thursday, 12 December 2013, said it has fixed minimum issue price at Rs 88.36 per share for the proposed issue of 2.26 crore equity shares of face value of Rs 10 each aggregating to Rs 200 crore to Government of India (GoI) by way of preferential allotment basis. The bank will hold an Extraordinary General Meeting of the shareholders on 10 January 2014. The Government of India (GoI) currently holds 66.17% stake in Syndicate Bank (as per the shareholding pattern as on 30 September 2013).
State Bank of India (SBI) shed 0.85% to Rs 1763.20. The bank after market hours on Thursday, 12 December 2013, said that the Executive Committee of Central Board (ECCB) of the bank at its meeting held on Thursday, 12 December 2013, has accorded its approval to fix the issue price at Rs 1,782.74 per share of face value of Rs 10, including a premium of Rs 1772.74 per share, and accordingly, to issue 1.12 crore equity shares on preferential basis to Government of India (Gol) for a consideration of about Rs 2000 crore.
The price for preferential issue has been arrived at in accordance with the Sebi (Issue of Capital and Disclosure Requirements) Regulations, 2009, taking into consideration 29 November 2013 as the relevant date, SBI said.
The GoI currently holds 62.31% stake in SBI (as per the shareholding pattern as on 30 September 2013).
Among other PSU bank stocks, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank dropped 0.61% to 1.62%.
Capital goods pivotals declined as higher interest rates could put a spanner in the works for a likely revival of investment cycle. Bhel (down 2.6%) and L&T (down 1.37%) declined.
In the foreign exchange market, the rupee edged lower against the dollar and fell below 62 level after two sets of economic data released after market hours on Thursday, 12 December 2013, which showed a spike in consumer price inflation in November and a worse-than-expected contraction in industrial production in October. The partially convertible rupee was hovering at 62.14, compared with its close of 61.81/82 on Thursday, 12 December 2013.
Provisional annual inflation rate based on all India general consumer price index (CPI) (combined) rose 11.24% in November 2013 as compared to 10.17% (final) in October 2013. The data was announced after market hours on Thursday, 12 December 2013.
Index of industrial production (IIP) declined 1.8% in October 2013, against 2% growth in the previous month September 2013. The decline in the output of manufacturing sector at 2% and mining sector at 3.5% mainly led to decline in IIP for October 2013. Meanwhile, the marginal 1.3% growth in the electricity generation restricted further dip in industrial production during October 2013.
The IIP growth for the month of September 2013 has been retained unchanged at 2%, while the growth for the month of July 2013 has been scaled down to 2.6% from 2.8% reported at first revision. However, the final growth rate for July 2013 is similar to the provisional level of 2.6%. The data was announced after market hours on Thursday, 12 December 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 on 28 January 2014.
Japanese shares led most Asian markets higher on Friday, 13 December 2013, as the yen weakened against the dollar. Key benchmark indices in China, Hong Kong, Taiwan and Japan were up 0.03% to 0.9%. Key benchmark indices in South Korea, Indonesia, and Singapore were off 0.05% to 0.37%.
Trading in US index futures indicated that the Dow could gain 30 points at the opening bell on Friday, 13 December 2013. US stocks fell a third day on Thursday, 12 December 2013, sending the Standard & Poor's 500 Index to a one-month low, as improving economic data spurred speculation the Federal Reserve will cut stimulus as early as next week.
Data showed retail sales rose more than forecast in November as Americans bought cars and took advantage of discounts going into the holiday-shopping season. A separate report indicated applications for unemployment benefits jumped last week from an almost three-month low.
The US House of Representatives on Thursday passed the first bipartisan federal budget in four years, which would ease $63 billion in automatic spending cuts and avert another government shutdown. The legislation now heads to the Senate. The House voted 332-94 for the $1.01 trillion compromise budget crafted by Senator Patty Murray and Representative Paul Ryan, the chairman of a special bipartisan panel. President Barack Obama said he'll sign the final measure.
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.
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