A recovery in the battered rupee, a slide in oil prices triggered by US President Barack Obama's comments on Wednesday, 28 August 2013, that he hasn't yet decided whether to launch an attack on Syria and weaker-than-expected report on US durable-goods orders which raised expectations that the Federal Reserve may delay plans to reduce its monetary stimulus to the US economy, aided a rally in Indian stocks. The rupee rose on the back of the Reserve Bank of India's (RBI) decision on Wednesday, 28 August 2013, to immediately start a facility to meet the daily dollar requirement of the country's three state-run refiners. The S&P BSE Sensex reclaimed the psychological 18,000 mark. The Sensex jumped 404.89 points or 2.25%, up close to 330 points from the day's low and off about 55 points from the day's high. The market breadth, indicating the overall health of the market, was positive.
The Sensex has risen 432.96 points or 2.41% in two trading sessions from a recent low of 17,968.08 on 27 August 2013. The Sensex has fallen 944.66 points or 4.88% in this month so far (till 29 August 2013). The Sensex has declined 1,025.67 points or 5.28% in calendar 2013 so far (till 29 August 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 2,042.58 points or 9.99%. From a 52-week low of 17,250.80 on 5 September 2012, the Sensex has risen 1,150.24 points or 6.67%.
Coming back to today's trade, the market was volatile as traders rolled over positions in the futures & options (F&O) segment from the near month August 2013 series to September 2013 series. The August 2013 derivatives contract expired today, 29 August 2013.
Hero MotoCorp rose amid high volatility. Telecom stocks rallied. Metal and mining stocks gained. L&T rose in choppy trade after a consortium of the company and Pipavav Defence and Offshore Engineering Company bagged an order worth over $170 million from ONGC. Index heavyweights ITC and Reliance Industries (RIL), both, moved higher.
The market edged higher in early trade as the rupee recovered after the Reserve Bank of India's move to provide dollars directly to oil companies. The Sensex regained the psychological 18,000 mark at the start of the day's trade. The market retained positive terrain in morning trade. The market extended intraday gains to hit fresh intraday high in mid-morning trade. The market strengthened further and hit fresh intraday high in early afternoon trade. Key benchmark indices extended gains to hit fresh intraday high in afternoon trade after European markets opened on a positive note. The market continued its upward march and hit fresh intraday high in mid-afternoon trade. The market trimmed gains after hitting fresh intraday high in late trade.
The battered rupee recovered after the Reserve Bank of India (RBI) on Wednesday, 28 August 2013, said it has started a facility to meet the daily dollar requirement of the country's three state-run refiners, with the latest RBI measure aimed at reducing currency market volatility. The partially convertible rupee was hovering at 66.54 against the dollar, sharply higher than its record closing low of 68.80/81 on Wednesday, 28 August 2013.
The Reserve Bank of India (RBI) on Wednesday, 28 August 2013, said that on the basis of assessment of current market conditions, RBI has decided to open a forex swap window to meet the entire daily dollar requirements of three public sector oil marketing companies (IOCL, HPCL and BPCL). Under the swap facility, the RBI will undertake sell/buy USD-INR forex swaps for fixed tenor with the oil marketing companies through a designated bank. The swap facility gets operationalized with immediate effect and will remain in place until further notice, the RBI said late on Wednesday, 28 August 2013, after the rupee fell by 3.7% on that day, its steepest one-day decline in years, as investors pull back from emerging markets in response to a likely US-led military intervention in Syria.
The S&P BSE Sensex jumped 404.89 points or 2.25% to 18,401.04, its highest closing level since 26 August 2013. The index surged 459.91 points at the day's high of 18,455.66 in late trade. The index rose 75.07 points at the day's low of 18,071.22 in opening trade.
The CNX Nifty jumped 124.05 points or 2.35% to 5,409.05, its highest closing level since 26 August 2013. The index hit a high of 5,428.90 in intraday trade. The index hit a low of 5,303 in intraday trade.
The BSE Mid-Cap index rose 1.47% and the BSE Small-Cap index rose 0.69%. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,274 shares rose and 990 shares fell. A total of 138 shares were unchanged.
The total turnover on BSE amounted to Rs 2180 crore, lower than Rs 2621.36 crore on Wednesday, 28 August 2013.
Among the sectoral indices on BSE, the S&P BSE Oil & Gas index (up 2.86%), the S&P BSE Metal index (up 2.38%) and the S&P BSE FMCG index (up 2.29%), outperformed the Sensex.
The S&P BSE Realty index (up 0.36%), the S&P BSE IT index (up 0.92%), the S&P BSE PSU index (up 1.05%), the S&P BSE Consumer Durables index (up 1.4%), the S&P BSE Teck index (up 1.45%), the S&P BSE Healthcare index (up 1.62%), the S&P BSE Bankex (up 1.64%), the S&P BSE Power index (up 1.86%), the S&P BSE Auto index (up 2.1%) and the S&P BSE Capital Goods index (up 2.2%), underperformed the Sensex.
Among the 30-share Sensex pack, 24 stocks rose and rest of them fell.
HDFC rose 6.30% to Rs 695.30 on bargain hunting after slipping 12.1% in prior two sessions.
Hero MotoCorp rose 1.4% to Rs 1,940, with the stock paring gains after hitting a 52-week high of Rs 2,026 in intraday trade today, 29 August 2013.
Metal and mining stocks rose. JSW Steel (up 6.62%), Hindalco Industries (up 4.65%), NMDC (up 3.49%), Jindal Steel & Power (up 2.05%), Hindustan Zinc (up 2.03%) and Bhushan Steel (up 0.63%), edged higher.
Sesa Goa surged 13.54%. The stock replaced Sterlite Industries in the 30-share benchmark S&P BSE Sensex early this week. Sesa Goa replaced Sterlite Industries (India) in the Sensex on 27 August 2013 following the scheme of amalgamation between the two Vedanta group firms, whereby Sterlite Industries (India) merged with Sesa Goa. Trading in Sterlite stopped from 27 August 2013.
However, Coal India (down 1.65%), Sail (down 1.48%) and Tata Steel (down 0.38%), edged lower.
Telecom stocks rallied. Bharti Airtel (up 3.89%), Idea Cellular (up 4.49%), and Reliance Communications (up 8.23%) gained.
IT major Wipro rose 0.64% to Rs 474.40 after hitting a 52-week high of Rs 479.50 in intraday trade. Wipro today, 29 August 2013, announced the launch of a range of information technology (IT) products for the aviation industry. The extensive product portfolio aims to address critical airline business functions, which have a direct bearing on service quality, operational efficiency and strategic decision making. These products provide competitive advantage to an airline through comprehensive functional features complimented by open technology platforms. Functionally rich and user-friendly, the innovative and technologically advanced products are expected to fill gaps in the IT applications portfolios of many airlines and provide an edge over competitors, Wipro said in a statement. In September 2012, Wipro entered into a strategic partnership with Qatar Airways to research and develop the portfolio by bringing together Wipro's expertise in application management and support, and Qatar Airways' aviation systems' expertise, resulting in new software products for the airline industry.
Among other IT shares, HCL Technologies (up 4.02%), MphasiS (up 2.92%), TCS (up 2.18%), CMC (up 1.35%), Oracle Financial Services Software (up 0.96%) and Hexaware Technologies (up 0.78%), edged higher.
However, Infosys (down 0.36%) and Tech Mahindra (down 0.24%), edged lower.
Capital goods pivotals recovered after recent fall. Bhel rose 2.89% to Rs 117.50.
Shares of L&T were up 2.47% to Rs 722.15. The stock was volatile. The scrip hit high of Rs 732.50 and low of Rs 714.25.
Among other capital goods shares, AIA Engineering (up 7.25%), Crompton Greaves (up 5.61%), Havells India (up 4.66%), Jindal Saw (up 3.57%), BEML (up 2.53%), Bharat Electronics (up 2.19%), ALSTOM India (up 2.11%) and SKF India (up 1.38%), edged higher.
Shares of Pipavav Defence and Offshore Engineering Company fell by maximum permissible 5% of the day at Rs 55.10 on BSE. The company during trading hours said a consortium of the company and L&T has bagged an order worth over $170 million from ONGC. Pipavav Defence also said that the order book of the company has now crossed Rs 12000 crore.
Index heavyweight and cigarette maker ITC rose 2.65%. The board of ITC at its meeting held on Wednesday, 28 August 2013 approved the demerger of the non-engineering business comprising safety matches business and agri (forestry) business of Wimco (a subsidiary of the company) into the company and the related scheme of arrangement (scheme) between Wimco and the company. The scheme, which is subject to approvals as necessary, will take effect from 1 April 2013. Upon the scheme becoming effective, the shareholders of Wimco will be entitled to 2 (two) ordinary shares of Rs 1 each of ITC for every 77 (seventy seven) equity shares of Rs 1 each of Wimco held by them on record date. ITC made the announcement during trading hours on Wednesday, 28 August 2013.
Among other FMCG shares, Marico (up 3.88%), Hindustan Unilever (up 2.22%), Godrej Consumer Products (up 2.13%), Dabur India (up 2.11%), Jyothy Laboratories (up 1.81%), Britannia Industries (up 1.79%), Tata Global Beverages (up 1.36%), GlaxoSmithKline Consumer Healthcare (up 1.16%), Nestle India (up 1.05%), Bata India (up 0.92%), Bajaj Corp (up 0.9%), Colgate-Palmolive (India) (up 0.49%) and Procter & Gamble Hygiene & Healthcare (up 0.35%), edged higher.
Reliance Industries (RIL) gained 4.22% to Rs 845.35, with the stock extending intraday gains in late trade.
Most realty stocks fell after the government introduced the land acquisition bill in the Lok Sabha. Parsvnath Developers (down 4.54%), Phoenix Mills (down 3.06%), Oberoi Realty (down 2.67%), D B Realty (down 1.79%), Sunteck Realty (down 1.4%), Anant Raj Industries (down 0.72%), Peninsula Land (down 0.64%), DLF (down 0.42%) and Godrej Properties (down 0.28%), edged lower.
Prestige Estates (up 5.27%), HDIL (up 4.86%), Sobha Developers (up 3.57%), Indiabulls Real Estate (up 1.55%) and Unitech (up 0.94%), edged higher.
The land acquisition bill, which provides extra protection for landowners whose property is bought for industrial development, was introduced in Lok Sabha today, 29 August 2013. The bill proposes to establish new rules for compensation for land acquired for infrastructure projects and industry, a move seen as raising costs but potentially reducing protests that have plagued India's industrialization drive. The bill calls for taking the consent of 80% of land owners for acquiring land for private projects and of 70% landowners for public-private projects.
Global rating agency Moody's Investors Service today, 29 August 2013, said that the Indian government's plan to provide cheap grains to the poor is credit negative and will exacerbate the government's weak finances. The measure is credit negative for the Indian government because it will raise government spending on food subsidies to about 1.2% of GDP per year from an estimated 0.8% currently, exacerbating the government's weak finances, Moody's said. Moody's currently has a "Baa3" sovereign rating on India, or its lowest investment-grade rating, with a stable outlook. The Lok Sabha passed the Food Security Bill early this week.
Crude oil prices dropped after US government data showed crude stockpiles gained the most in four months in the US, the world's largest oil consumer. US crude oil futures for October delivery were off 83 cent or 0.75% at $109.27 a barrel.
Oil futures had surged during the past two trading sessions as the US moved closer to military action against Syrian government targets in retaliation for their alleged use of chemical weapons on civilians. However, late Wednesday, US President Barack Obama said in an interview with PBS Newshour that he had yet to make a decision on his nation's response. At the same time, the UK indicated it would wait until a parliamentary vote, likely early next week, before joining any US effort in Syria, according to reports. At the same time, the chances that a Syria strike could spark a wider conflict appeared to rise, as officials from the Syria regime and its ally Iran suggested they might attack Israel if the US takes military action.
European stocks edged higher on Thursday, 29 August 2013, as shares of Vodafone Group PLC surged after the company confirmed media reports that it is in talks with Verizon Communications Inc. to sell its 45% stake in their joint-venture company, Verizon Wireless. Key benchmark indices in UK, France and Germany were up 0.13% to 0.54%.
German unemployment unexpectedly increased in August for the first time in three months even as Europe's largest economy expands. The number of people out of work increased by a seasonally adjusted 7,000 to 2.95 million, the Nuremberg-based Federal Labor Agency said today.
Spain's recession eased in the second quarter as domestic demand stabilized and exports surged, supporting the government's forecast that the fourth-largest economy in the euro area will recover this year. Exports rose 6% after a 3.8% decline in the previous quarter, while household spending contracted 0.1% from the three months through March, when it shrank 0.5%, the Madrid-based National Statistics Institute said today. Gross domestic product fell 0.1% in the second quarter, the office said, confirming a July 30 estimate.
Asian stocks rose on Thursday, 29 August 2013, as a weaker-than-expected report on US durable-goods orders triggered speculation that the Federal Reserve may delay plans to reduce its monetary stimulus to the US economy. Speculation that geopolitical tensions arising from a possible US-led military strike against Syria may also lead the Fed hold off the reduction in stimulus aided gains in Asian stocks. Key benchmark indices in Singapore, Hong Kong, South Korea, Indonesia, Taiwan and Japan rose by 0.84% to 1.92%. China's Shanghai Composite fell 0.19%.
Indonesia's central bank today, 29 August 2013, raised its benchmark interest rates by 50 basis points to 7%, a move intended to support the declining rupiah and reduce the country's current-account deficit.
The Philippine economy expanded above 7% for a fourth straight quarter, defying a regional slowdown to cement its role as Southeast Asia's best performer as President Benigno Aquino boosts investment. Gross domestic product rose 7.5% in the three months through June from a year earlier, compared with a 7.7% gain in the previous quarter, the National Statistical Coordination Board said in Manila today.
Trading in US index futures indicated that the Dow could gain 20 points at the opening bell on Thursday, 29 August 2013. US stocks on Wednesday advanced for the first session this week, with oil producers leading the gains as the price of crude settled at a more-than-two-year high.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled next month, with their focus squarely on the timing of tapering of Federal Reserve's bond purchases. The FOMC holds a two-day policy meeting on 17-18 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.
Brazil's central bank on Wednesday raised its key lending rate by a half percentage point, reinforcing a commitment to curb worrisome inflation despite parallel concerns over the pace of economic growth. In a widely expected move, the central bank's monetary policy committee voted unanimously to raise the Selic interest rate to 9% from the previous 8.5%, the fourth increase since April.
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