A bout of volatility was witnessed in mid-morning trade as the key benchmark indices weakened once again after staging recovery from lower levels. The S&P BSE Sensex was down 69.18 points or 0.27%, up 82.71 points from the day's low and off 109.42 points from the day's high. The market breadth, indicating the overall health of the market, was weak. The market sentiment was hit adversely by increase in crude oil prices which stoked concerns of fuel price inflation and increase in India's current account deficit and fiscal deficit.
Exports-driven IT and pharmaceutical shares gained as the rupee edged lower against the dollar. Britannia Industries rose on bargain hunting. Yes Bank reversed intraday fall in volatile trade after the bank paid higher advance tax in Q1 June 2014.
At 11:15 IST, the S&P BSE Sensex was down 69.18 points or 0.27% to 25,158.99. The index lost 151.89 points at the day's low of 25,076.28 in morning trade, its lowest level since 5 June 2014. The index gained 40.24 points at the day's high of 25,268.41 in early trade.
The CNX Nifty was down 26.60 points or 0.35% to 7,515.50. The index hit a low of 7,487.55 in intraday trade, its lowest level since 5 June 2014. The index hit a high of 7,548.60 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,533 shares declined and 848 shares rose. A total of 78 shares were unchanged.
The BSE Mid-Cap index was off 64.37 points or 0.72% at 8,871.56. The BSE Small-Cap index was off 68.79 points or 0.71% at 9,605.79. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 1292 crore by 11:15 IST compared to Rs 755 crore by 10:15 IST.
Among the 30-share Sensex pack, 16 stocks declined and rest of them gained.
L&T (down 2.03%), Mahindra & Mahindra (down 1.53%) and Tata Power Company (down 1.43%) edged lower from the Sensex pack.
GAIL (India) (up 2.09%), Bajaj Auto (up 1.57%) and Sesa Sterlite (up 1.43%) edged higher from the Sensex pack.
IT stocks gained on weak rupee. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Infosys (up 1.63%), Wipro (up 0.9%) and Tech Mahindra (up 0.49%) gained. HCL Technologies fell 0.2% to Rs 1,432.20
Tata Consultancy Services (TCS) gained 1.47% to Rs 2,247.20. TCS on Friday, 13 June 2014, said that the appreciation of the rupee against the dollar will adversely impact the company's EBIT margin by about 100 basis points in Q1 June 2014. This is based on the rupee movement so far during the quarter and these estimates could change depending on the rupee movement in June. TCS also said that annual salary increments will adversely impact profit margin in Q1 June 2014 which is in line with and proportionate to impact seen in earlier years. TCS also said that other income in Q1 June 2014 will be in line with expectations.
TCS also said that there will be one-time additional depreciation charge of about 2% of fixed assets in financial results as per International Financial Reporting Standards (IFRS) due to a change in depreciation policy. There will be a write back of depreciation of 4% to 5% of fixed assets in consolidated results as per Indian accounting standards due to the change in depreciation policy.
TCS said that there is no change in revenue outlook issued at conference call held after announcing Q4 March 2014 results in April 2014. The TCS management had at that time said that the company was upbeat that the next 12 months will bring many more opportunities for growth across multiple industries and markets.
Many pharmaceutical shares gained as the rupee edged lower against the dollar. Weakness in rupee could boost sales of pharma companies in rupee terms as pharma firms derive substantial revenue from exports.
Cadila Healthcare (up 0.35%), Glenmark Pharmaceuticals (up 0.09%), Ranbaxy Laboratories (up 1.04%), Sun Pharmaceutical Industries (up 1.41%) and Wockhardt (up 1.92%) gained. Cipla (down 0.27%), Dr Reddy's Laboratories (down 1.48%) and Lupin (down 1.12%) declined.
Britannia Industries rose 2.77%, with the stock recovering on bargain hunting after Friday's 5.4% slide.
Yes Bank rose 0.49% to Rs 530, with the stock reversing intraday fall in volatile trade. The stock hit high of Rs 533.60 and low of Rs 508.10 so far during the day. Yes Bank's advance tax payment rose 20.19% to Rs 125 crore in Q1 June 2014 over Q1 June 2013. Indian companies are required to pay not less than 15% of estimated tax liability for the full year on or before 15 June every year which is the first advance tax installment.
The sentiment on the domestic bourses was hit adversely by increase in crude oil prices which stoked concerns of fuel price inflation and increase in India's current account deficit and fiscal deficit. India imports majority of its crude oil requirements.
Brent crude oil futures rose to near nine-month high today, 16 June 2014, on fears the insurgency in Iraq could worsen and affect oil exports. Brent crude oil futures for August delivery were up 65 cents at $113.11 a barrel.
Volatility struck the bourses in early trade as the key benchmark indices dropped to intraday low after reversing initial fall. Key benchmark indices extended fall in morning trade and hit fresh intraday low. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit 1-1/2-week low. A bout of volatility was witnessed in mid-morning trade as the key benchmark indices weakened once again after staging recovery from lower levels.
In the foreign exchange market, the rupee edged lower against the dollar as strong demand for the greenback from oil marketing companies weighed after global crude prices surged to nine-month highs on Friday, 13 June 2014. The partially convertible rupee was hovering at 59.965, compared with its close of 59.76/59.77 on Friday, 13 June 2014.
On the macro front, the rate of inflation based on the wholesale price index (WPI) is seen accelerating to 5.4% in May 2014, from 5.2% in April 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will announce data on inflation based on the wholesale price index (WPI) for May 2014 at 12:00 noon today, 16 June 2014. WPI inflation eased to 5.2% in April 2014, from 5.7% in March 2014, helped by a decline in fuel prices.
Prime Minister Narendra Modi on Saturday, 14 June 2014, said setting the economy on the right track would require unpleasant decisions and tough actions. He added that he was confident that the people would support these decisions, as they would be in the national interest. The Prime Minister said that the government would lay targeted focus on the areas of entrepreneurship, skill development and infrastructure, to harness the talent and energy of India's youth.
Modi called for two movements to be pursued in mission mode. He called for Swachh Bharat - Clean India, to be achieved by the 150th birth anniversary year of Mahatma Gandhi, in 2019. He also called for providing a home with basic amenities of water, power and sanitation, to all families by the 75th anniversary of Indian independence, in 2022. These missions would also build infrastructure and boost employment, the Prime Minister said. The Prime Minster was speaking at in a meeting with leaders from various walks of life in Goa.
Asian stocks edged lower on Monday, 16 June 2014 amid an escalation of violence in Iraq. Key benchmark indices in Hong Kong, Japan, Singapore and Indonesia fell by 0.02% to 1.16%. Key benchmark indices in China, South Korea and Taiwan rose by 0.12% to 0.18%.
Trading in US index futures indicated that the Dow could fall 41 points at the opening bell on Monday, 16 June 2014. US stock rose modestly on Friday, 13 June 2014, but trading was choppy with news out of Iraq resulting in price swings in late trade.
In economic news, the University of Michigan/Thomson Reuters sentiment gauge fell in June to 81.2 the lowest level in three months. Separately, government data ahead of the open showed wholesale prices for May fell unexpectedly.
The Federal Open Market Committee (FOMC) undertakes monetary policy review at a two-day meeting that begins tomorrow, 17 June 2014. The FOMC after a monetary policy review on 30 April 2014 reduced its monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in "measured steps" if the economy continues to improve. The Fed also said at that time that it will keep the benchmark interest-rate target at almost zero for a "considerable time" after its bond-buying program ends.
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