Key benchmark indices edged lower in choppy trade as European stocks dropped and after Indonesia's central bank surprised markets with a quarter-percentage-point increase in its benchmark policy rate. The rupee dropped against the dollar. The S&P BSE Sensex was provisionally down 211.82 points or 1.06%, up 109.14 points from the day's low and off 266.42 points from the day's high. The market breadth, indicating the overall health of the market, turned negative from positive in late trade.
Hero MotoCorp dropped on profit booking. Index heavyweight and cigarette major ITC extended intraday gains in late trade. Another index heavyweight Reliance Industries (RIL) extended intraday losses in late trade. PSU OMCs dropped as crude rose and as the rupee fell against the dollar. Jaiprakash Associates tumbled after its wholly-owned subsidiary executed an agreement to sell its cement plant in Gujarat to UltraTech Cement.
Key benchmark indices reversed direction after a firm opening triggered by higher Asian stocks. The barometer index, the S&P BSE Sensex, dropped below the psychological 20,000 mark after regaining that level at the onset of the trading session. Key benchmark indices extended initial losses and hit intraday low in morning trade. Key benchmark hovered in red in mid-morning trade. A bout of volatility was witnessed as key benchmark indices trimmed losses after hitting fresh intraday low in early afternoon trade. The Sensex continued to hover in the negative terrain in afternoon trade. Key benchmark indices extended intraday losses and hit fresh intraday low in mid-afternoon trade as European markets reversed initial gains and after Indonesia's central bank surprised markets with a quarter-percentage-point increase in its benchmark policy rate. Key benchmark indices cut losses after hitting fresh intraday low in late trade.
In the foreign exchange market, the rupee weakened against the dollar. The partially convertible rupee was hovering at 63.7625, weaker than its close of 63.38/39 on Wednesday, 11 September 2013. Earlier in the session, the rupee rose to 62.92, its highest since 19 August 2013.
As per provisional closing, the S&P BSE Sensex was down 211.82 points or 1.06% to 19,785.63. The index lost 320.96 points at the day's low of 19,676.49 in late trade, its lowest level since 10 September 2013. The index rose 54.60 points at the day's high of 20,052.05 in early trade.
The CNX Nifty was down 62.70 points or 1.06% to 5,850.45. The index hit a low of 5,815.80 in intraday trade, its lowest level since 10 September 2013. The index hit a high of 5,932 in intraday trade, its highest level since 26 July 2013.
The market breadth, indicating the overall health of the market, turned negative from positive in late trade. On BSE, 1,188 shares declined and 1,166 shares rose. A total of 149 shares were unchanged.
The total turnover on BSE amounted to Rs 2811 crore, higher than Rs 2402 crore on Wednesday, 11 September 2013.
Among the 30-share Sensex pack, 23 stocks declined and rest of them gained. Tata Steel (down 4.24%), Bhel (down 3.85%) and ONGC (down 3.65%) edged lower from the Sensex pack.
Index heavyweight and cigarette major ITC rose 2.52% to Rs 338, with the stock extending gains in late trade. The stock was volatile. The stock hit a high of Rs 338.55 and low of Rs 329.40.
Reliance Industries fell 1.89% to Rs 870.55, with the stock extending fall in late trade. The stock was volatile. The stock hit a high of Rs 900 and low of Rs 870.
Hero MotoCorp lost 3.9% to Rs 2,007 on profit booking. The stock had hit a 52-week high of Rs 2,127.70 in intraday trade on Wednesday, 11 September 2013.
PSU OMCs dropped as crude rose and as the rupee fell against the dollar. US crude futures rose ahead of talks between the US and Russia to resolve the crisis in Syria, a conflict that has sparked concern Middle Eastern oil supplies may be disrupted. US crude oil futures for October delivery were up 21 cents at $107.77 a barrel. HPCL (down 3.94%) and BPCL (down 2.82%) declined. Indian Oil Corporation was unchanged at Rs 228.50.
PSU OMCs suffer under recoveries on domestic sale of diesel, LPG and kerosene at government controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.
Oil secretary Vivek Rae today, 12 September 2013, said that the government will decide on raising the retail prices of diesel and cooking gas (LPG) in a few weeks. A recent sharp recovery in the rupee, which had hit a record low of 68.85 to the dollar on August 28, and a fall in global crude prices following an easing of geopolitical tensions -- with an attack on Syria appearing less imminent -- have taken off some pressure from the government finances, Rae said.
Infosys lost 1.67%. Infosys BPO during market hours today, 12 September 2013, announced that it has been selected by AkzoNobel, a leading global paint and coatings company and a major producer of specialty chemicals, to transform its finance and accounting (F&A) processes to deliver higher operational efficiencies and performance. Infosys BPO will play a key role in accelerating AkzoNobel's finance transformation program and streamline accompanying operations for AkzoNobel's decorative business in over 30 countries across Europe, the Middle East and Africa.
Jaiprakash Associates tumbled 11.75% after Jaypee Cement Corporation (JCCL), a wholly-owned subsidiary of the company, executed an agreement to sell its cement plant in Gujarat to UltraTech Cement. The enterprise value of the deal is Rs 3800 crore, besides the actual net working capital. Over the past decade, Jaiprakash Associates increased its cement capacity from 4.4 MT in 2002 to 36.8 MT, and post this deal will continue to remain the third largest cement manufacturer in the country, the company said.
Shares of UltraTech Cement rose 0.16%.
On the macro front, the government will unveil data on industrial production for July 2013 after trading hours today, 12 September 2013. Industrial production is seen contracting 0.8% in July 2013, as per the median estimate of a poll of economists carried out by Capital Market. Industrial production registered a contraction of 2.2% in June 2013.
Consumer price inflation is expected to remain high at 9.6% in August 2013, as per the median estimate of a poll of economists carried out by Capital Market. Inflation based on the combined consumer price index (CPI) for urban and rural India had decelerated to 9.64% in July 2013 from 9.87% in June 2013. The government will unveil data on combined consumer price index (CPI) for urban and rural India for August 2013 after trading hours today, 12 September 2013.
Reserve Bank of India Governor Raghuram Rajan on Wednesday, 11 September 2013, said that India's slowing economy and its massive current account and fiscal deficits are not structural problems and can be fixed with modest reforms. This is not to say that ambitious reform is not good, or is not warranted to sustain growth for the next decade. But India does not need to become a manufacturing giant overnight to fix its current problems, Rajan wrote in commentary published on the Project Syndicate website. He said the slowdown in the economy was paradoxically the effect of substantial fiscal and monetary stimulus that the policymakers had injected into its economy in the aftermath of the 2008 financial crisis. The resulting growth spurt led to inflation, especially because the world did not slide into a second Great Depression, as was originally feared, he said. So monetary policy has since remained tight, with high interest rates contributing to slowing investment and consumption, he wrote. Economic growth would slow to a 5% to 5.5% pace, he said, adding that was "not great, but certainly not bad for what is likely to be a low point in economic performance".
European stocks reversed initial gains on Thursday, 12 September 2013, as output by factories in the euro zone fell sharply in July to the lowest level in more than three years, raising new questions about the bloc's ability to keep a modest economic recovery alive. Key benchmark indices in France, UK and Germany fell by 0.14% to 0.48%.
Eurostat said industrial production across the euro-zone fell 1.5% in July from June, the biggest fall since September last year. Production was down 2.1% compared with July 2012. The last time the level of output was lower was in April 2010. Sizable declines in output by German, Italian and to a lesser extent French factories were responsible for much of July's weakness. These economies are the euro zone's three largest and make up about two-thirds of its total output.
Italy's industrial production fell unexpectedly in July, declining 1.1% on the month in seasonally-adjusted terms, as output fell in all the main sectors apart from energy, national statistics institute Istat said Thursday. Industrial output in the euro zone's third-largest economy fell 4.3% in July from the same month a year earlier, using workday-adjusted terms for the annualized figure, Istat said. This marks the 23rd consecutive decline. June's monthly figure was revised lower to a 0.2% increase from the earlier estimate of a 0.3% increase, Istat said.
French consumer prices rose in August from July, led by an increase in the price of clothes and shoes, statistics showed Thursday. The consumer price index in the euro zone's second largest economy rose 0.5% in August from the previous month. Prices were 0.9% higher than in August 2012, France's statistics bureau Insee said.
Asian stock markets edged higher Thursday, 12 September 2013, with energy stocks offering a bright spot after an increase for oil futures. Key benchmark indices in Indonesia, Taiwan, Hong Kong, South Korea, China, and Singapore rose by 0.01% to 0.64%. Japan's Nikkei Average fell 0.26%.
Bank Indonesia surprised markets on Thursday by raising its benchmark interest rate by a quarter of a percentage point, while central banks in the Philippines, South Korea and New Zealand all kept rates on hold. Indonesia's central bank Bank Indonesia raised its benchmark interest rate by 25 basis points to 7.25% on Thursday. The move comes as a surprise to market participants who widely expected the central bank to keep rates on hold after it raised the benchmark rate by 50 basis points in late August in an attempt to prop up the beleaguered rupiah. Bank Indonesia also raised the key money market Fasbi rate to 5.5%.
Japanese core machinery orders stayed flat in July from the previous month, the government said Thursday, following a 2.7% decrease in June, suggesting businesses are still cautious about increasing investment despite a weaker yen and economic stimulus programs in place to support Japan's economic recovery. Unadjusted core orders also rose 6.5% from the year-earlier month.
Trading in US index futures indicated that the Dow could slide 14 points at the opening bell on Thursday, 12 September 2013. US stocks ended mostly higher on Wednesday, 11 September 2013, with the Dow industrials tallying a third day of triple-digit gains, as reduced worry about Syria countered Apple Inc.'s sharp drop.
On Thursday, Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov meet in Geneva to discuss how to handle Syria's chemical weapons. Earlier in the week, Syria accepted a Russian proposal to give up its chemical arms to the international community to avert a US military attack, with President Barack Obama subsequently asking Congress to delay a vote on an intervention. The US says President Bashar al-Assad's regime used sarin gas outside of Damascus on Aug. 21, killing more than 1,400 people.
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.
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