Weakness in European stocks and tension at the Indo-Pak border hit investor sentiment as key equity benchmark indices in India slumped on the first trading session of the week. Benchmark indices extended losses in late trade, with barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hitting 1-1/2-week low. The Sensex was provisionally down 296.75 points or 1.12% at 26,271.24. The market breadth indicating the overall health of the market was weak. Metal and mining stocks edged lower on concerns over growth in China.
Key benchmark indices declined for second day in a row today, 7 October 2014, as trading resumed after a slew of holidays.
Meanwhile, the Ministry of Home Affairs has reportedly asked the Border Security Force (BSF) to seek a flag meeting with Pakistan over continuous ceasefire violations along the Line of Control. Five civilians were killed and 34 others were injured in firing by Pakistani troops on Monday in Jammu's Arnia sector, as per reports.
In overseas markets, European stocks dropped as a report showed German industrial production contracted the most in more than five years. Asian stocks were trading mixed. US stocks edged lower in volatile trade yesterday, 6 October 2014, as investors resorted to profit taking after last week's rally.
Earlier, key indices had lost ground after initial volatility.
In the foreign exchange market, the rupee edged higher against the dollar amid optimism the falling oil price will help narrow the nation's trade deficit.
Brent crude oil prices edged lower after disappointing German output reinforced concern that global oil demand will falter.
As per provisional closing, the S&P BSE Sensex was down 296.75 points or 1.12% at 26,271.24. The index lost 317.75 points at the day's low of 26,250.24 in late trade, its lowest level since 26 September 2014. The index rose 2.39 points at the day's high of 26,570.38 in early trade.
The CNX Nifty was down 93.15 points or 1.17% at 7,852.40. The index hit a low of 7,842.70 in intraday trade, its lowest level since 26 September 2014. The index hit a high of 7,943.05 in intraday trade.
The market breadth indicating the overall health of the market was weak. On BSE, 1,760 shares declined and 1,120 shares gained. A total of 111 shares were unchanged.
The BSE Mid-Cap index was down 86.01 points or 0.9% at 9,425.39. The BSE Small-Cap index was down 83.86 points or 0.79% at 10,557.96. Both these indices outperformed the Sensex.
Among the 30-share Sensex pack, 25 stocks declined and rest of them gained.
Cipla (down 3.57%), Dr Reddy's Laboratories (down 3.3%) and HDFC (down 3.09%) edged lower from the Sensex pack.
Metal and mining stocks edged lower on concerns over growth in China. China is the world's largest consumer of steel, copper and aluminum.
Sesa Sterlite (down 4.12%), JSW Steel (down 2.2%), Tata Steel (down 1.59%), Hindustan Copper (down 1.14%), Hindustan Zinc (down 2.29%), National Aluminium Company (down 4.14%), Jindal Steel & Power (down 4.88%) and Hindalco Industries (down 4.61%) edged lower. Steel Authority of India (Sail) gained 1.71%.
NMDC fell 5.03%. NMDC fell 5.03%. NMDC during trading hours today, 7 October 2014, said its total iron ore production rose 12.28% to 14.44 million tonnes for six months from April-September 2014 from 12.86 million tonnes during six months from April-September 2013. Sales rose 15.18% to 15.85 million tonnes for six months from April-September 2014 from 12.86 million tonnes during six months from April-September 2013.
Meanwhile, NMDC kept price of iron ore unchanged for October 2014. NMDC said it has rolled over the September 2014 price of lump ore (Rs 4600 per tonne) and fines (Rs 3160 per tonne) to the month of October 2014.
GAIL (India) rose 1.12%. Shipping of Corporation India (SCI) jumped 5.47%. With reference to media report titled "SCI, GAIL (India) may buy LNG import carriers for $3 billion", SCI during market hours clarified that SCI and GAIL (India) had on 7 June 2013 signed a Memorandum of Understanding (MOU) to cooperate for transportation of LNG sourced by GAIL from USA. It is expected that about 9 to 11 LNG tankers would be required for this purpose, SCI said. The company further added that it has the option to exercise step in rights to participate in the shipping venture with up to 26% share.
In the foreign exchange market, the rupee edged higher against the dollar amid optimism the falling oil price will help narrow the nation's trade deficit. The partially convertible rupee was hovering at 61.4, compared with its close of 61.61 during the previous trading session on Wednesday, 1 October 2014. The foreign exchange market was closed from Thursday, 2 October 2014, to Monday, 6 October 2014 for local holidays.
Brent crude oil prices edged lower after disappointing German output reinforced concern that global oil demand will falter. Brent for November settlement was off 48 cent at $92.31 a barrel. The contract had risen 48 cents to settle at $92.79 a barrel yesterday, 6 October 2014.
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 on Wednesday, 1 October 2014, showed that foreign portfolio investors (FPIs) sold shares worth a net Rs 63.24 crore on that day. Indian financial markets were closed from Thursday, 2 October 2014, till Monday, 6 October 2014, for local holidays.
There was a moderate improvement in India's service sector activity during September, as per a latest survey. The headline seasonally adjusted HSBC India Services Business edged up to 51.6 in September from 50.6 in August. A figure above 50 indicates expansion while one below points to a contraction.
The Indian economy is set to grow by 6.4% in fiscal year (FY) 2015/16 after 5.6% growth in FY2014/15, a World Bank report said. India is benefiting from a "Modi dividend", the report said, with economic activity buoyed by expectations from the newly elected government of Prime Minister Narendra Modi. Over the next year or so economic growth should be supported by the recovering US economy that would provide a market for Indian merchandise and service exports, the report said. Private investment is expected to pick up thanks to the government's business orientation, and declining oil prices should boost private sector competitiveness, the report said. But economic reforms will be needed for India to achieve its full long-term growth potential, the report argued.
Meanwhile, indicating a sharp improvement for the second consecutive quarter, the CII Business Confidence Index (CII-BCI) for July-September quarter shot up to 57.4, up from 53.7 in April-June quarter and 49.9 in January-March quarter this year. During the same quarter last fiscal, the index had touched the all-time low value of 45.7. The number 50 is the dividing line on the index between positive and weak business confidence. The result of the 88th Business Outlook Survey based on responses from over 150 industry members was declared on Monday, 6 October 2014.
Cumulative rainfall during this year's monsoon from 1 June 2014 up to 30 September 2014 was 12% below the Long Period Average (LPA), India Meteorological Department said on 1 October 2014. India's farming sector accounts for around 14% of the economy, but two-thirds of the nation's 1.2 billion people depend on farming for a livelihood and more than half of its arable land needs the summer rains.
European stocks declined today, 7 October 2014, as a report showed German industrial production contracted the most in more than five years. Key benchmark indices in France, Germany and UK were off 0.8% to 1.22%.
The latest data showed that industrial output in Germany declined sharply in August, marking the second consecutive day of rough economic numbers for Europe's largest economy. In adjusted terms, factory output was down 4% in August. Meanwhile, July's figure was downwardly revised to growth of 1.6% from the 1.9% gain originally reported.
Meanwhile, a senior British banker has pleaded guilty to manipulating the Libor interest-rate benchmark, marking the first UK person to admit to rigging the lending rate, according to media reports on Tuesday. The court didn't allow publication of the identity of the banker, but said on Oct. 3 he admitted to charges of conspiracy to defraud filed by the UK's Serious Fraud Office in its two-year investigation into alleged Libor rigging. Two men in the US have already pleaded guilty to the offence.
Asian stocks ended mixed today, 7 October 2014. Key benchmark indices in Hong Kong, Indonesia and South Korea rose 0.23% to 0.92%. Key benchmark indices in Japan, Taiwan and Singapore shed 0.16% to 0.67%. China's Shanghai Composite was closed for holiday.
The Bank of Japan today, 7 October 2014, kept its policy unchanged as widely expected, adding no new easing. In his remarks to the parliament, the central bank's governor, Haruhiko Kuroda voiced approval of the yen's relatively weak level and said Japan remained on track to reach its goal of sustained 2% consumer inflation.
Trading in US index futures indicated that the Dow could fall 89 points at the opening bell today, 7 October 2014. US stocks edged lower in volatile trade on yesterday, 6 October 2014, as investors resorted to profit taking after last week's rally.
The US Federal Reserve will tomorrow, 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. Policy makers next begin their two-day meeting on 28 October 2014.
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