Selling pressure intensified in afternoon trade after European stocks opened lower. The barometer index, the S&P BSE Sensex, was down 291.23 points or 1.48%, off about 215 points from the day's high and up close to 14 points from the day's low. The market breadth, indicating the overall health of the market, was weak. Metal shares fell across the board on weak Chinese data. Tech Mahindra rose after brokerage upgrade.
Indian stocks dropped today, 30 September 2013, as global market fell and as US index futures pointed to a weak opening of US stocks later in the global day on concern the US government is headed for a shutdown amid a budget stalemate. The US Congress failed to agree on a new budget over the weekend, while the threat of new elections out of Italy and a report showing that China's manufacturing sector grew at a slower pace than expected also weighed on sentiment. In the foreign exchange market, the rupee dropped against the dollar.
The market edged lower in early trade on weak Asian stocks. The market extended initial losses and hit fresh intraday low in morning trade. The barometer index, the S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their lowest level in nearly three weeks. The market trimmed losses after hitting fresh intraday low in mid-morning trade. Weakness continued on the bourses in early afternoon trade. Selling pressure intensified in afternoon trade after European stocks opened lower.
The market sentiment was hit adversely by data showing that foreign funds were net sellers of Indian stocks on Friday, 27 September 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 244.95 crore on Friday, 27 September 2013, as per provisional data from the stock exchanges.
In the foreign exchange market, the rupee weakened against the dollar, tailing global risk-off sentiment on a potential shutdown of the US government. The partially convertible rupee was hovering at 62.8200, compared with its close of 62.51/52 on Friday, 27 September 2013. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
The Reserve Bank of India (RBI) will unveil data on India's current account deficit and data on balance of payments at 17:00 IST today, 30 September 2013.
At 13:15 IST, the S&P BSE Sensex was down 291.23 points or 1.48% to 19,436.04. The index declined 305.49 points at the day's low of 19,421.78 in afternoon trade, its lowest level since 6 September 2013. The index fell 75.96 points at the day's high of 19,651.31 in opening trade.
The CNX Nifty was down 83.65 points or 1.43% to 5,749.55. The index hit a low of 5,744.45 in intraday trade, its lowest level since 10 September 2013. The index hit a high of 5,810.20 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,278 shares fell and 767 shares rose. A total of 118 shares were unchanged.
Among the 30-share Sensex pack, 25 stocks fell and only four rose. Bhel (down 5.52%), Coal India (down 4.22%), ONGC (down 3.79%), ICICI Bank (down 3.61%), Larsen & Toubro (down 3.24%), Bharti Airtel (down 3.18%), M&M (down 3%), Hero MotoCorp (down 2.45%) and ITC (down 2.01%), edged lower from the Sensex pack.
Hindustan Unilever (up 1.31%), Wipro (up 1.01%), Infosys (up 0.62%), Sun Pharmaceutical Industries (up 0.33%) and Bajaj Auto (up 0.29%), edged higher from the Sensex pack.
Tech Mahindra rose by 1.50% to Rs 1,325.75 after a foreign brokerage upgraded the stock to 'buy' from 'sell' and raised its target price to Rs 1,650 from Rs 920, citing potential earnings upside, cheap valuations. The brokerage added that the recent rupee weakness will help offset some of the cost associated with trying to increase revenue.
Shares of metal companies tumbled after a Chinese manufacturing gauge unexpectedly rose less than a preliminary estimate in September 2013. Tata Steel (down 5.68%), Coal India (down 4.23%), NMDC (down 3.97%), Sail (down 3.42%), Hindalco Industries (down 2.64%), JSW Steel (down 2.42%), Jindal Steel & Power (down 1.42%), Hindustan Zinc (down 1.34%) and Sesa Sterlite (down 0.46%), edged lower. China is the world's largest consumer of copper and aluminum.
The government said on Friday that it will allow unlisted Indian companies to list directly and raise capital overseas to retire debt or for acquisitions or operational needs abroad. The move comes at a time when the government is battling to trim the current account deficit and attract dollar inflows.
A finance ministry statement said unlisted Indian companies would be allowed for two years, on a pilot basis, to list and raise capital abroad without the requirement of prior or subsequent listing in the country. "At present, unlisted companies that are incorporated in India are not allowed to directly list in overseas markets without prior or simultaneous listing in Indian markets," the statement said. After the initial two year period, the impact of this arrangement will be reviewed. While raising resources abroad, the listing company shall be fully compliant with the FDI policy in force, the finance ministry said. In case funds raised are not utilized abroad such companies would be asked to remit the money back to India within 15 days and these funds would be parked only in AD category banks recognized by RBI.
European stocks dropped in early trade on Monday as a fresh political crisis in Italy and the prospect of a shutdown of the U.S. government spook investors. Key benchmark indices in UK, France and Germany 0.86% to 1.07%.
In Europe, Italian Prime Minister Letta said he will ask for a vote of confidence on 2 October 2013, speaking on Rai 3 television. The Italian government has been torn apart by legal troubles facing former leader Silvio Berlusconi, whose criminal tax-fraud conviction subjects him to expulsion proceedings in parliament. Berlusconi allies have said they planned to quit the cabinet.
Asian stocks fell on Monday, 30 September 2013, on concern the US government is headed for a shutdown amid a budget stalemate. Key benchmark indices in Japan, Hong Kong, Taiwan, Indonesia, Singapore and South Korea fell 0.69% to 2.06%. China's Shanghai Composite rose 0.68%
A Chinese manufacturing gauge unexpectedly rose less than a preliminary estimate in September, highlighting challenges for Premier Li Keqiang in sustaining a rebound from a two-quarter economic slowdown. The Purchasing Managers' Index from HSBC Holdings Plc and Markit Economics rose to 50.2 in September from 50.1 in August. The final number was less than last week's 51.2 preliminary reading. A similar gauge from the government is due tomorrow, 1 October 2013.
China opened a new free trade zone in Shanghai on Sunday in what has been hailed as potentially the boldest reform in decades, and gave fresh details on plans to liberalise regulations governing finance, investment and trade in the area. The Shanghai FTZ, which covers an area of nearly 29 sq km on the eastern outskirts of the commercial hub, was approved by China's State Council, or cabinet, in July. Some Chinese and foreign firms are already setting up subsidiaries in the zone. A total of 25 companies so far have been approved to start operations in a variety of sectors, alongside 11 financial institutions, most of which are domestic banks but including the mainland subsidiaries of Citibank and DBS.
Trading in US index futures indicated that the Dow could fall 114 points at the opening bell on Monday, 30 September 2013. US stocks Friday closed a downcast week on a sour note, declining amid relentless partisan squabbling over a budget bill to avert a partial US government shutdown.
Republican-led House voted Sunday to delay President Barack Obama's health-care law by one year. If the two sides can't agree by the Tuesday-morning deadline, thousands of government employees will be unable to work. There's one more vote before the shutdown would take place.
Even if Congress resolves the budget fight by the Oct. 1 deadline, US lawmakers would move to the next fiscal dispute over raising the $16.7 trillion debt ceiling.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. 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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