Intraday volatility continued as key benchmark indices once again slipped into the red in afternoon trade as the Prime Minister's Economic Advisory Council (PMEAC) today, 13 September 2013, sharply trimmed India's GDP growth forecast to 5.3% for the year ending 31 March 2014 (FY 2014) from earlier estimate of 6.4% and said that the current stance of monetary policy has to continue until stability in the rupee is achieved. Also weighing on sentiment was stronger-than-expected US jobless-claims data released on Thursday, 12 September 2013, which triggered speculation that the Federal Reserve would begin trimming its monetary stimulus at next week's meeting. The barometer index, the S&P BSE Sensex, was down 21.26 points or 0.11%, off about 140 points from the day's high and up close to 85 points from the day's low. The market breadth, indicating the overall health of the market, was positive.
Pharma stocks rose for the second straight day. Metal stocks also gained. Among capital goods shares, power equipment major Bharat Heavy Electricals (Bhel) extended intraday gain.
A bout of volatility was witnessed as the key benchmark indices reversed initial losses triggered by weak Asian stocks. Key benchmark indices pared gains after striking fresh intraday high in morning trade. Key benchmark indices reversed intraday gains after Prime Minister's Economic Advisory Council (PMEAC) sharply trimmed India's GDP growth forecast to 5.3% for the year ending 31 March 2014 (FY 2014) from earlier estimate of 6.4% and said that the current stance of monetary policy has to continue until stability in the rupee is achieved. Key benchmark indices regained positive zone in early afternoon trade. The Sensex once again slipped into the red in afternoon trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 930.54 crore on Thursday, 12 September 2013, as per provisional data from the stock exchanges.
In the foreign exchange market, the rupee weakened against the dollar. The partially convertible rupee was hovering at 63.60, a tad lower than its close of 63.50/51 on Thursday, 12 September 2013.
At 13:20 IST, the S&P BSE Sensex was down 21.26 points or 0.11% to 19,760.72. The index gained 117.49 points at the day's high of 19,899.37 in morning trade. The index fell 106.20 points at the day's low of 19,675.68 in mid-morning trade, its lowest level since 10 September 2013.
The CNX Nifty was up 5.05 points or 0.09% to 5,855.75. The index hit a high of 5,884.30 in intraday trade. The index hit a low of 5,822.90 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,228 shares gained and 947 shares fell. A total of 139 shares were unchanged.
Among the 30-share Sensex pack, 20 stocks gained and rest of them declined. Wipro (down 3.9%), Bharti Airtel (down 2.43%) and Infosys (down 1.44%), edged lower from the Sensex pack. M&M (up 2.36%), Coal India (up 2.31%) and Hero MotoCorp (up 2.24%), edged higher from the Sensex pack.
Bhel rose 5.16%, with the stock extending intraday gain.
HCL Technologies declined 2.68%. The company said during market hours today, 13 September 2013,that SPIELO International UK (SPIELO), a subsidiary of GTECH S.p.A., has contracted with the company to provide technical operations services that have been previously provided in house. Under the terms of the agreement, SPIELO affiliate Boss Media AB expects to transfer to HCL the employment of approximately 160 technical operations service employees currently based in Vaxjo, Sweden. The agreement is subject to certain closing conditions.
Under a multi-year services agreement, HCL will provide software services relating to, among other matters, Boss Media's existing systems. All services provided by HCL under this agreement will be subject to oversight, direction and management of SPIELO.
HCL will also provide coding and technical services subject to SPIELO's strict Quality Assurance standards. SPIELO will continue to own all current and future Intellectual Property, customer contracts and agreements, and will continue to be fully responsible for providing its customers with product specifications, design, deliveries, and ongoing service.
Negotiations with trade union representatives have been initiated, with the goal of transferring the affected employees to HCL by 1 November 2013. The closing of the agreement is expected following the completion of the employee transfer.
Pharma stocks rose for the second straight day. Cipla (up 1.13%), Dr Reddy's Laboratories (up 0.86%), Lupin (up 0.83%), Ranbaxy Laboratories (up 0.02%), and Sun Pharmaceutical Industries (up 1.59%), gained.
Metal stocks also gained. JSW Steel rose 0.7% after the company unveiled production data for August 2013. JSW Steel's crude steel production fell 2% to 9.85 lakh tonnes in August 2013 over August 2012. Production of flat rolled products rose 12% to 8.24 lakh tonnes in August 2013 over August 2012. Production of long rolled products declined 13% to 1.28 lakh tonnes in August 2013 over August 2012. The figures are after giving effect to the merger of JSW ISPAT Steel with the company.
JSW Steel said it took shutdown of one of its Corex furnaces for relining and capacity enhancement and the same is expected to recommence production during September 2013. The capacity utilization at Vijayanagar works remains at around 80% due to iron ore shortage caused by inordinate delays in opening Category A and B mines even after the Supreme Court order in April 2013 to resume mining operations, JSW Steel said.
Jindal Steel & Power gained 0.78%. The stock turned ex-dividend today, 13 September 2013, for dividend of Rs 1.60 per share for the financial year ended 31 March 2013.
Hindustan Copper rose 0.38%. The stock turned ex-dividend today, 13 September 2013, for dividend of Rs 1 per share for the financial year ended 31 March 2013.
Among other metal and mining stocks, Sesa Goa (up 0.74%), Bhushan Steel (up 1.36%), NMDC (up 0.28%) and Hindalco Industries (up 0.76%), gained.
But, Tata Steel fell 1.78%.
Prime Minister's Economic Advisory Council (PMEAC) today, 13 September 2013, sharply trimmed India's GDP growth forecast to 5.3% for the year ending 31 March 2014 (FY 2014) from earlier estimate of 6.4% and said that the current stance of monetary policy has to continue until stability in the rupee is achieved. The full impact of various measures taken over the last six months will be reflected later in this year, PMEAC said. Depreciation of the rupee may put some upward pressure on inflation, it said. On balance, WPI inflation by end March 2014 will be around 5.5% as against the average of 7.4% in 2012-13 and 5.7% at end March 2013.
Controlling current account deficit (CAD) remains main concern at present, the council said. Current account deficit is projected at $70 billion (3.8% of GDP) in 2013-14 against an estimated $88.2 billion (4.8% of GDP) in 2012-13, it said. The CAD may go even below $70 billion in 2013-14 if the recent trends in exports and imports are maintained through the year, the PMEAC said.
For India, the short-term problem is of financing the large CAD. The medium term objective should be to compress CAD to 2.5% of GDP and ensure price stability, the council said. Containing fiscal deficit within the budgeted estimate could be a challenge, it said adding discretionary expenditure budgeted may need to be compressed, and subsidies restructured.
Industrial production rose 2.6% in July 2013 as against a contraction of 1.8% in June 2013, data released by the government after trading hours on Thursday, 12 September 2013, showed. The manufacturing sector registered a growth of 3% and electricity generation rose 5.2%. Mining sector output registered a contraction of 2.3%. As per use-based classification, production of basic goods rose 1.7% in July 2013. Capital goods production jumped 15.6% and production of intermediate goods rose 2.4%. Production of consumer goods declined 0.9%. Within the consumer goods sector, production of consumer non-durables rose 6.8% whereas production of consumer durables witnessed a contraction of 9.3%.
Industrial production for June 2013 was revised upwards to de-growth of 1.8% from de-growth of 2.2% reported earlier. Industrial production growth for April 2013 was revised downward to 1.5% from 1.9% reported earlier. On cumulative basis, industrial production registered a contraction of 0.2% for the period April-July 2013 over the corresponding period of the previous year.
The rate of inflation based on the consumer price index decelerated in August 2013, data released by the government after trading hours on Thursday, 12 September 2013, showed. The rate of inflation based on the combined consumer price index (CPI) for urban and rural India decelerated to 9.52% in August 2013 from 9.64% in July 2013. Inflation for the category 'food and beverages' stood at 11.06% in August 2013, the data showed.
The Reserve Bank of India on Thursday, 12 September 2013, announced the details of its committee constituted to examine the current monetary policy framework and recommend ways to revise and strengthen it to make it more transparent and predictable. RBI Governor Raghuram Rajan, who took over on Sept. 4, had announced the committee would be headed by Deputy Governor Urjit Patel. The panel will review the objectives, structure, operating framework and instruments of monetary policy, particularly the multiple indicator approach and the liquidity management framework, the RBI said. It will also identify regulatory, fiscal and other impediments to monetary policy transmission, and recommend measures to improve transmission. The committee is expected to submit its report within three months, the RBI said.
Most European stocks dropped on Friday, 13 September 2013, with investors awaiting retail-sales data and consumer-sentiment numbers from the US. Key benchmark indices in Germany and UK were down by 0.08% to 0.17%. France's CAC 40 was flat.
Asian shares edged lower on Friday, 13 September 2013, as investors fretted stronger-than-expected US jobless-claims data on Thursday has increased the odds the Federal Reserve would begin trimming its monetary stimulus at next week's meeting. Key benchmark indices in Taiwan, Hong Kong, China, South Korea and Singapore fell by 0.17% to 0.86%. Key benchmark indices in Indonesia and Japan rose by 0.01% to 0.12%.
Trading in US index futures indicated a flat opening of US stocks on Friday, 13 September 2013. US stocks declined on Thursday, 12 September 2013, with the S&P 500 snapping its seven-session winning streak, as investors worried about developments related to Syria and Federal Reserve policy moves.
First-time claims for unemployment benefits declined by 31,000 to 292,000 in the week ending Sept. 7, but processing glitches involving two states clouded the reading, the US Labor Department reported on Thursday, 12 September 2013.
The US and Russia began talks on Thursday on Moscow's plan for Syria to surrender its chemical weapons as Damascus formally applied to join a global poison gas ban, but US Secretary of State John Kerry held fast to the position that the US may still use military force if diplomacy fails. Separately, Syria's President Bashar al-Assad reportedly said that the US needs to give up "its policy of threats" and stop shipping arms to Syrian rebels before his government surrenders its chemical weapons.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled next week, considered by many to provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program. The FOMC holds a two-day policy meeting on Tuesday 17 September and Wednesday 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.
US President Barack Obama reportedly plans to name former US Treasury Secretary Lawrence Summers as the next chairman of the US Federal Reserve Board of Governors. An announcement is expected as early as late next week, following the conclusion of the Fed's policy meeting on Wednesday, 18 September 2013, a Japanese newspaper report said. Treasury Undersecretary Lael Brainard, who served as an economic adviser under the Clinton administration, will likely be named the central bank's vice chairman, the report said. Summers would succeed Fed Chairman Ben Bernanke, whose term expires in January 2014. Summers and current Fed Vice Chairman Janet Yellen had been considered the front-runners to become the Fed's next chief.
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