Intraday volatility continued as key benchmark indices pared gains in mid-morning trade. The barometer index, the S&P BSE Sensex, was up 168.59 points or 0.85%, off 86.58 points from the day's high and up 29.17 points from the day's low. The market breadth, indicating the overall health of the market, was strong. Indian stocks edged higher today, 8 October 2013, after the Reserve Bank of India's (RBI) surprise announcement on Monday evening to improve liquidity conditions in the banking system boosted sentiment. Gains in Asian stocks also aided the upmove on the domestic bourses. The rupee edged higher against the dollar.
Index heavyweight and cigarette major ITC extended initial gains. Telecom stocks rose on renewed buying, with shares of Idea Cellular hitting record high. Tyre shares were in demand. Shares of Apollo Tyres extended Monday's gain triggered by growing uncertainty about the company's $2.5 billion deal to buy US-based Cooper Tire & Rubber Company.
The Reserve Bank of India's (RBI) surprise decision on Monday evening to improve liquidity conditions in the banking system triggered a firm opening on the bourses. The barometer index, the S&P BSE Sensex, moved past the psychological 20,000 level. A bout of volatility was witnessed as key benchmark indices regained strength after paring initial gains in morning trade. The Sensex and the 50-unit CNX Nifty, both, hit their highest level in more than two weeks. Key benchmark indices pared gains in mid-morning trade.
The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Monday, 7 October 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 494.13 crore on Monday, 7 October 2013, as per provisional data from the stock exchanges.
Bond prices rose after the Reserve Bank of India (RBI) on Monday evening announced measures to improve liquidity conditions in the banking system. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.4826%, lower than its close of 8.6833% on Monday, 7 October 2013. Bond yield and bond prices are inversely related. The RBI announced a reduction in the marginal standing facility (MSF) rate by 50 basis points to 9% with immediate effect. The central bank has also decided to provide additional liquidity through term repos of 7-day and 14-day tenor for a notified amount equivalent to 0.25% of net demand and time liabilities (NDTL) of the banking system through variable rate auctions on every Friday beginning from 11 October 2013. The notified amount and tenor of the term repo auctions will be announced prior to the dates of the auctions, the RBI said in a statement. Starting with the Mid-Quarter Review of September 2013, the RBI began a calibrated withdrawal of exceptional measures undertaken since July 2013. This was done with a view to normalising liquidity conditions, the RBI said. RBI said that open market purchase operations of Rs 9974 crore were conducted on Monday, 7 October 2013, to inject liquidity into the banking system.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 61.65, compared with its close of 61.79/80 on Monday, 7 October 2013.
At 11:18 IST, the S&P BSE Sensex was up 168.59 points or 0.85% to 20,063.69. The index jumped 255.17 points at the day's high of 20,150.27 in morning trade, its highest level since 23 September 2013. The index rose 139.42 points at the day's low of 20,034.52 in morning trade.
The CNX Nifty was up 47.60 points or 0.81% to 5,953.75. The index hit a high of 5,981.70 in intraday trade, its highest level since 23 September 2013. The index hit a low of 5,948.70 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,167 shares gained and 771 shares fell. A total of 121 shares were unchanged.
The total turnover on BSE amounted to Rs 695 crore by 11:20 IST compared to Rs 483 crore by 10:20 IST.
Among the 30-share Sensex pack, 25 stocks gained and rest of them declined.
Index heavyweight and cigarette major ITC gained 1.4% to Rs 344.60. The stock hit a high of Rs 345.35 and low of Rs 340 so far during the day.
Telecom stocks rose on renewed buying. Bharti Airtel (up 2.84%) and Reliance Communications (up 2.35%) edged higher.
Idea Cellular gained 2.59% to Rs 178 after hitting a record high of Rs 179.50 in intraday trade.
Tyre shares were in demand. Tyre shares were in demand. Goodyear India (up 1.18%), CEAT (up 4.8%), JK Tyre & Industries (up 1.95%) and MRF (up 0.42%) edged higher.
Apollo Tyres rose 1.22%, with the stock extending Monday's gains triggered by growing uncertainty about the company's $2.5 billion deal to buy US-based Cooper Tire & Rubber Company. Cooper Tire & Rubber Company (Cooper) on Friday, 4 October 2013, said that it filed a complaint in a US court asking that subsidiaries of Apollo Tyres be required to expeditiously close the pending merger between the two tyre companies in accordance with the terms of the definitive merger agreement.
Apollo said in a statement late on Sunday that it may have to bear "significant and unanticipated costs" that were "well beyond" those it was obligated to bear under the initial merger agreement. Those costs are related to labour issues both in the United States and in China, where workers at Cooper's joint venture have been on strike for three months in opposition to the deal. "Cooper has acknowledged to Apollo that some price reduction is warranted. The issue now is by how much," Apollo said in a statement late on Sunday. Cooper disputed that. "Cooper has not agreed that a reduction in share price is warranted," it said in a statement.
On 30 September 2013, Cooper's stockholders voted to approve its pending merger with a wholly-owned subsidiary of Apollo Tyres. When finalised, the pending merger will result in a strategic business combination that creates the seventh-largest tire company in the world.
Cooper and Apollo announced the proposed merger on 12 June 2013 following unanimous approval by the boards of directors of both companies.
Asian markets were mostly higher on Tuesday, 8 October 2013, after the latest data showed China's services industry continued to expand. Key benchmark indices in China, South Korea, Taiwan, Hong Kong, Japan, Singapore and Indonesia rose by 0.12% to 1.05%.
The HSBC China Services Purchasing Managers' Index fell to 52.4 in September from 52.8 in August, HSBC Holdings PLC said on Tuesday. A reading above 50 denotes expansion.
Trading in US index futures indicated that the Dow could gain 11 points at the opening bell on Tuesday, 8 October 2013. US stocks declined on Monday, with the S&P 500 index closing at a four-week low, as a stalemate on Capitol Hill over preventing a government default persisted.
US President Barack Obama reiterated on Monday that he won't negotiate with Republicans over the debt limit. "We're not going to negotiate under the threat of economic catastrophe," Obama said during a visit to the Federal Emergency Management Agency in Washington. Republicans are insisting on changing the 2010 Affordable Care Act, while Obama refuses to engage in discussions about policy conditions tied to opening the government or raising the debt ceiling. Treasury Secretary Jacob J. Lew has warned the U.S. may be unable to pay its bills after Oct. 17.
Federal Reserve Bank of Dallas President Richard Fisher said in a speech that the US cannot afford to default and that debt ceiling talks "will come down to the wire". Fisher, who doesn't hold a policy vote this year, has said he favors a reduction in the central bank's $85 billion monthly bond purchases.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. The lack of data may make it harder for the Federal Reserve to assess the economy's strength as policy makers mull the timing of reductions in bond buying. Government data from payrolls to retail sales will be delayed as long as the shutdown continues. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.
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