Amid mixed trend in index components, key benchmark indices registered small losses. Benchmark indices witnessed high volatility throughout the trading session. Asian and European stocks edged lower, extending a global selloff. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their lowest closing level in almost eight weeks. The Sensex dropped 25.18 points or 0.1% to settle at 26,246.79. The market breadth indicating the overall health of the market was negative. Crude oil prices dropped which augurs well for India. Meanwhile, tension continues on the Indo-Pak border.
Index heavyweight Reliance Industries gained after a foreign bank reportedly upgraded the stock to "overweight" from "equal weight. Software stocks declined after a foreign brokerage reportedly downgraded its rating on Infosys, Tech Mahindra and MindTree. PSU OMCs gained as crude oil prices dropped sharply. Shares of state-run upstream oil and gas companies edged higher on hopes of lower subsidy sharing burden.
Auto stocks rose. Pharmaceutical shares declined. Some capital goods stocks gained on renewed buying. L&T advanced after its owned subsidiary L&T Technology Services announced the intent to acquire the asset of US based Dell Product and Process Innovation Services. Banks stocks were in demand. Most metal and mining stocks gained.
Meanwhile, the International Monetary Fund yesterday, 7 October 2014, raised its growth forecast for India to 5.6% for FY 2015 from 5.4% predicted earlier.
In overseas markets, European stocks fell as investors awaited minutes from the Federal Reserve's last meeting to be released later in the global day. Asian stocks declined, extending a global selloff, amid concern that the global economic outlook is worsening. US stocks tumbled on Tuesday, 7 October 2014, as weak data out of Germany raised concerns about the strength of global growth ahead of the start of earnings season.
In the foreign exchange market, the rupee edged higher against the dollar.
Brent crude oil prices dropped after the International Monetary Fund (IMF) yesterday, 7 October 2014, cut its outlook for global growth in 2015.
The S&P BSE Sensex dropped 25.18 points or 0.1% to settle at 26,246.79, its lowest closing level since 14 August 2014. The index fell 121.88 points at the day's low of 26,150.09 in mid-afternoon trade. The index gained 66.34 points at the day's high of 26,338.31 in late trade.
The CNX Nifty fell 9.70 points or 0.12% to settle at 7,842.70, its lowest closing level since 14 August 2014. The index hit a low of 7,815.75 and a high of 7,869.90 in intraday trade.
The market breadth indicating the overall health of the market was negative. On BSE, 1,566 shares declined and 1,339 shares gained. A total of 121 shares were unchanged.
The BSE Mid-Cap index fell 21.56 points or 0.23% to settle at 9,403.83, underperforming the Sensex. The BSE Small-Cap index rose 6.18 points or 0.06% to settle at 10,564.14, outperforming the Sensex.
The S&P BSE Healthcare index (down 3.27%), the S&P BSE Teck index (down 2.83%), and the S&P BSE IT index (down 3.44%) underperformed the Sensex.
The S&P BSE Consumer Durables index (up 0.34%), the S&P BSE Capital Goods index (up 1.61%), the S&P BSE Oil & Gas index (up 1.69%), the S&P BSE FMCG index (up 0.35%), the S&P BSE Bankex (up 1.09%), the S&P BSE Power index (up 1.12%), the S&P BSE Auto index (up 0.58%), the S&P BSE Metal index (up 1.13%), and the S&P BSE Realty index (up 1.57%) outperformed the Sensex.
Coal India rose 0.28%. Manoj Joshi, joint secretary of financial markets in the Finance Ministry, was quoted as saying that Coal India's divestment process should begin immediately after the Diwali festival on 23 October 2014. The government wants to sell a 10% in the state-owned company this fiscal year ending 31 March as part of many divestments aimed at bolstering its stressed finances.
Telecom stocks saw mixed trend. Idea Cellular (down 4.99%), Bharti Airtel (down 0.73%) and Tata Teleservices (Maharashtra) (down 0.1%) declined. MTNL (up 0.96%) and Reliance Communications (up 3.9%) rose.
Most metal and mining stocks gained. Hindustan Copper (up 0.06%), JSW Steel (up 1.92%), Hindustan Zinc (up 4.21%), Tata Steel (up 3.52%), Hindalco Industries (up 0.27%), Steel Authority of India (Sail) (up 0.84%), National Aluminum Company (up 5.91%) and NMDC (up 0.91%) gained. Bhushan Steel (down 4.36%) and Sesa Sterlite (down 0.56%) declined.
Jindal Steel & Power rose 1.74% to Rs 166.20, with the stock reversing direction after hitting a 52-week low of Rs 161 in intraday trade.
PSU OMCs surged as crude oil prices dropped. HPCL (up 5.42%), BPCL (up 3.77%) and Indian Oil Corporation (IOCL) (up 6.99%) edged higher.
Lower crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol.
Shares of state-run upstream oil and gas companies edged higher on hopes of lower subsidy sharing burden. GAIL (India) (up 0.1%), ONGC (up 2.3%) and Oil India (up 0.19%) rose.
State run upstream companies share a part of the under recoveries of state-run oil marketing companies (PSU OMCs) arising from the government-imposed price caps on fuel sales.
Banks stocks were in demand on renewed buying. Among private bank stocks, HDFC Bank (up 0.72%), IndusInd Bank (up 3.86%), Axis Bank (up 1.15%), Yes Bank (up 0.47%) and ICICI Bank (up 1.37%) gained. Kotak Mahindra Bank shed 0.48%.
Among PSU bank stocks, Punjab National Bank (up 0.73%), Bank of India (up 2.05%) and Union Bank of India (up 3.01%) gained. Bank of Baroda shed 0.94%.
State Bank of India rose 1.77% on buzz that a foreign brokerage has maintained buy rating on the stock citing the bank's strong deposit franchise, well capitalised balance sheet and focus on profitability.
Some capital goods stocks gained on renewed buying. Bharat Heavy Electricals (Bhel) (up 2.1%), BEML (up 0.74%), Crompton Greaves (up 3.91%), and Siemens (up 0.5%) gained. Thermax fell 2.52%.
Larsen & Turbo (L&T) advanced 2.5% to Rs 1,450. The stock was volatile. The stock hit high of Rs 1,451 and low of Rs 1,400. L&T Technology Services, the wholly owned subsidiary of L&T, today, 8 October 2014, announced the intent to acquire the asset of US based Dell Product and Process Innovation Services, the engineering services division of Dell. The Competition Commission of India (CCI) has approved the proposed transaction. The company is awaiting US regulatory approvals which are expected shortly, L&T said. The proposed transaction will significantly drive forward L&T Technology Services' position as a premier engineering services provider by adding local delivery centers in North America, L&T said. The proposed acquisition enables L&T Technology Services to consolidate its position as preferred vendor in the $4 billion Transportation Engineering Research & Development (RR&D) market.
Pharmaceutical shares declined. Cadila Healthcare (down 0.14%), Cipla (down 2.51%), Dr Reddy's Laboratories (down 4.37%), Glenmark Pharmaceuticals (down 1.54%), Lupin (down 2.56%), Ranbaxy Laboratories (down 3.79%), and Sun Pharmaceutical Industries (down 4.31%) declined.
Auto stocks rose. Maruti Suzuki India rose 0.39%. Maruti Suzuki India after market hours on Tuesday, 7 October 2014, said that the company's production rose 26.17% to 1.16 lakh units in September 2014 over September 2013. The company had said on 1 October 2014, its total sales rose 4.6% to 1.09 lakh units in September 2014 over September 2013.
Mahindra & Mahindra (M&M) gained 0.94%. M&M yesterday, 7 October 2014, said that Mahindra Two Wheelers (MTWL), an unlisted subsidiary of the company has made a binding offer to acquire a 51% stake in Peugeot Motocycles (PMTC), part of PSA Group based in France. PMTC (a.k.a. Peugeot Scooters), a key player in urban mobility in Europe for 116 years, is the oldest motorized two-wheeler manufacturer in the world. The transaction between MTWL and PSA, subject to Works Council consultation, as part of the employee dialogue process and anti-trust law, would involve infusion of Euro 15 million into PMTC to finance projects implemented through the strategic partnership, and further sale of shares by PSA which would allow MTWL to take a 51% stake in PMTC, M&M said.
Tata Motors rose 1.01%. Tata Motors after market hours on 1 October 2014 said that its total sales (including exports) of Tata commercial and passenger vehicles declined 8% to 46,118 units in September 2014 over September 2013. Domestic sales of Tata commercial and passenger vehicles declined 11% to 40,874 units in September 2014 over September 2013. Exports rose 18% to 5,244 units in September 2014 over September 2013.
Ashok Leyland rose 2.93% to Rs 43.85 after scaling a record high of Rs 44.10 in intraday trade. The company's total sales surged 27% to 9,193 units in September 2014 over September 2013. The sales numbers were announced on 4 October 2014.
TVS Motor Company gained 0.49%. The company's total sales rose 27% to 2.50 lakh units in September 2014 over September 2013. The sales numbers were announced after market hours on 1 October 2014.
Bajaj Auto gained 0.69%.
Hero MotoCorp declined 0.21%. The company during market hours announced that it has rolled out the country's first 100 cc-class motorcycle with cafe racer styling and the first 100 cc-class on-road off-road bike. Splendor Pro Classic is priced at Rs 48,650 (ex-showroom Delhi) and Passion Pro TR at Rs 51550 (ex-showroom Delhi). Having kicked-off the festive season with record 6-lakh plus sales in September, Hero MotoCorp has lined-up a slew of new products, including refreshes and variants in the festive season, the company said.
Index heavyweight Reliance Industries (RIL) gained 1.13% to Rs 937.15. The stock hit high of Rs 942 and low of Rs 922.10. A foreign bank has reportedly upgraded the stock to "overweight" from "equal weight". RIL's earnings are likely to more than double in the subsequent five years starting second half of year ending 31 March 2016, the foreign bank reportedly said.
Software stocks declined after a foreign brokerage downgraded its rating on Infosys, Tech Mahindra and MindTree.
Infosys dropped 4.65%. The foreign brokerage downgraded its rating on Infosys to "neutral" from "buy." It said the stock trades at around 17x 1-year forward earnings after outperforming the market and added that positives in the stock are adequately discounted.
Investors will keenly watch Infosys' commentary regarding changes in its strategy under the new CEO, Dr. Vishal Sikka, when the company unveils its Q2 September 2014 results on Friday, 10 October 2014. At the time of announcing Q1 June 2014 results in July 2014, Infosys had forecast 7% to 9% growth in the company's revenue in dollar terms for the year ending 31 March 2015 (FY 2015). At that time, the company had forecast 5.6% to 7.6% growth in revenue in rupee terms for FY 2015. The guidance was based on rupee dollar exchange rate of 60. With deprecation of rupee against the dollar since that time, there is a room for upward revision in revenue guidance in rupee terms.
Tech Mahindra lost 4.61%. A foreign brokerage cut its rating on Tech Mahindra to "sell" from "neutral".
MindTree dropped 3.98%. A foreign brokerage downgraded MindTree to "sell" from "buy".
Tata Consultancy Services (TCS) (down 1.73%), Wipro (down 4.18%), HCL Technologies (down 3.72%), Oracle Financial Services Software (down 0.69%), Hexaware Technologies (down 5.62%) declined.
The Sensex declined for third day in a row today, 8 October 2014. From a recent high of 26,630.51 on 30 September 2014, the Sensex has declined 383.72 points or 1.44% in three trading sessions. The Sensex has declined 383.72 points or 1.44% in this month so far (till 8 October 2014). The Sensex has gained 5,076.11 points or 23.97% in calendar year 2014 so far (till 8 October 2014). From a record high of 27,354.99 on 8 September 2014, the Sensex has declined 1,108.20 points or 4.05%. From a 52-week low of 19,647.88 on 7 October 2013, the Sensex has risen 6,598.91 points or 33.58%.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 61.395, compared with its close of 61.425 during the previous trading session.
Brent crude oil prices dropped after the International Monetary Fund (IMF) cut its outlook for global growth. Brent for November settlement was off 83 cents at $91.28 a barrel. The contract hit a low $90.76 a barrel earlier in the session, its lowest point since June 2012. The contract had declined 68 cents to settle at $92.11 a barrel yesterday, 7 October 2014, the lowest settlement price since June 2012.
Lower crude oil prices will help India in containing its fiscal deficit, current account deficit and fuel price inflation. India imports 80% of its crude oil requirement.
Meanwhile, the provisional data released by the stock exchanges after trading hours yesterday, 7 October 2014, showed that foreign portfolio investors (FPIs) sold shares worth a net Rs 332.84 crore on that day.
Meanwhile, India's international border with Pakistan remains tense. As per reports, two people have lost their lives in fresh firing that took place in Samba along the International Border today, 8 October 2014, taking the death toll in ceasefire violations up to seven. Six others including a Border Security Force personnel have also been injured in the firing, according to reports.
The International Monetary Fund yesterday, 7 October 2014, raised its growth forecast for India to 5.6% for FY 2015 from 5.4% predicted earlier. It has forecast 6.4% growth for India for FY 2016. IMF said the post-election recovery of confidence in India provides an opportunity for the country to embark on much-needed structural reforms in areas such as education, labour and markets to improve competitiveness and productivity. The IMF said it believes that fiscal reforms and improvement of investment conditions will continue in India, lowering near-term vulnerabilities and bolstering medium-term growth.
The IMF yesterday, 7 October 2014, cut its outlook for global growth in 2015 and warned about the risks of rising geopolitical tensions and a financial-market correction as stocks reach frothy levels. The world economy will grow 3.8% next year, compared with a July forecast for 4%, after a 3.3% expansion this year, the Washington-based IMF said. Some financial markets may be overheating after a sustained period of near-zero rates, according to the report.
European stocks fell today, 8 October 2014, as investors awaited minutes from the Federal Reserve's last meeting later in the global day. Key benchmark indices in France, Germany and UK were off 0.5% to 0.78%. Travel stocks were hit particularly hard on fears the spread of Ebola will hamper tourism.
Asian stocks closed lower today, 8 October 2014, after the International Monetary Fund (IMF) cut its outlook for global growth in 2015. Key benchmark indices in Singapore, Taiwan, Hong Kong, Japan, Indonesia and South Korea were off 0.39% to 1.48%. China's Shanghai Composite index was up 0.8%.
The HSBC China services Purchasing Managers Index edged down to 53.5 in September, after recording a 17-month high of 54.1 in August, HSBC Holdings PLC today, 8 October said. A reading above 50 indicates a month-on-month expansion while below points to contraction.
Trading in US index futures indicated that the Dow could fall 9 points at the opening bell today, 8 October 2014. US stocks ended sharply lower on Tuesday, 7 October 2014, as weak data out of Germany raised concerns about the strength of global growth ahead of the start of earnings season.
The US Federal Reserve will today, 8 October 2014, release the minutes of its Sept. 16-17 meeting at which it had decided to cut its monthly bond purchases to $15 billion. The Fed minutes may reveal clues about the policy makers' thinking on the timing of an interest-rate increase. Policy makers next begin their two-day meeting on 28 October 2014.
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