Key benchmark indices slumped as a sharp slide in rupee against the dollar and profit booking after four-day rally dampened sentiment. Fears of a downgrade after Standard and Poor's reiterated that the nation's credit rating may be reduced to junk and intensifying tensions in Syria also impacted sentiment. The barometer index, S&P BSE Sensex and the CNX Nifty, both, settled at almost one-week low. The barometer index, the S&P BSE Sensex was down 651.47 points or 3.45%, off 772.65 points from the day's high and up 68.49 points from the day's low. The market breadth, indicating the overall health of the market, was weak. All the 13 sectoral indices on BSE logged decline.
The Sensex snapped four-day winning streak today, 3 September 2013. The Sensex had gained 918.05 points or 5.11% in four trading sessions to 18,886.13 on 2 September 2013 from a recent low of 17,968.08 on 27 August 2013. The Sensex lost 725.98 points or 3.75% in August 2013. The Sensex has declined 1,192.05 points or 6.14% in calendar 2013 so far (till 3 September 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 2,208.96 points or 10.81%. From a 52-week low of 17,250.80 on 5 September 2012, the Sensex has risen 983.86 points or 5.7%.
Coming back to today's trade, bank stocks tumbled. Pharma stocks edged lower. Index heavyweights, Reliance Industries and ITC, both, slumped. Capital goods pivotals declined. Realty stocks dropped. Metal stocks edged lower in volatile trade. Airline stocks were mostly higher.
A bout of volatility was witnessed as key benchmark indices slipped into the red after opening higher. It weakened and hit fresh intraday low in morning trade. It hovered in negative terrain in mid-morning trade. It slumped and hit fresh intraday low in early afternoon trade. Key benchmark indices hit their fresh intraday lows in afternoon trade after European stock markets opened lower. It further weakened and hit fresh intraday low in mid-afternoon trade.
The partially convertible rupee was trading at 67.95, sharply lower than Monday's close of 66. 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.
Standard and Poor's analyst Kim Eng Tan was reportedly quoted as saying that there is a more than one in three chance for India ratings cut within two years and that the possibility of a downgrade is higher than for Indonesia.
Meanwhile, geopolitical concerns weighed on sentiment after Russia reportedly announced that its missile early warning system had detected the launch of two missiles from the central part of the Mediterranean Sea fired towards the sea's eastern coastline. The launches took place on Tuesday and were detected by the early warning system in Armavir in southern Russia, the defence ministry said in a statement quoted by Russian news agencies. It said Defence Minister Sergei Shoigu had already reported to President Vladimir Putin about the event, which comes amid growing expectations of Western military action in Syria.
President Barack Obama on Saturday, 31 August 2013 had said he has decided military action is appropriate, but he would still seek congressional authorization on the use of US military force against Syria. Congressional leaders have agreed to debate and vote on the possible action when lawmakers return from recess on September 9. And, while lawmakers aren't due back in Washington until next week, the Senate Foreign Relations Committee said it would hold hearings on Syria today and tomorrow.
The S&P BSE Sensex was down 651.47 points or 3.45% to 18,234.66, its lowest closing since 28 August 2013. The index tumbled 719.96 points at the day's low of 18,166.17 in late trade, its lowest level since 29 August 2013. The index rose 121.18 points at the day's high of 19,007.31 in opening trade, its highest level since 16 August 2013.
The CNX Nifty was down 209.30 points or 3.77% to 5,341.45, its lowest closing since 28 August 2013. The index hit a low of 5,323.75 in intraday trade, its lowest level since 29 August 2013. The index hit a high of 5,580.95 in intraday trade, its highest level since 16 August 2013.
The total turnover on BSE amounted to Rs 2173 crore, higher than Rs 1721.63 crore on Monday, 2 September 2013.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,470 shares fell and 809 shares rose. A total of 137 shares were unchanged.
The BSE Mid-Cap index fell 1.86% and the BSE Small-Cap index declined 0.95%. Both these indices outperformed the Sensex.
Among the sectoral indices on BSE, the S&P BSE IT (down 1.41%), the S&P BSE Auto (down 1.54%), the S&P BSE PSU (down 1.55%), the S&P BSE Teck (down 2%), the S&P BSE Healthcare (down 2.19%), the S&P BSE Metal index (down 2.77%), the S&P BSE Power (down 2.89%), outperformed the Sensex
The S&P BSE Capital Goods (down 3.62%), the S&P BSE Oil & Gas (down 3.63%), the S&P BSE FMCG (down 3.89%), the S&P BSE Realty (down 4.39%), the S&P BSE Consumer Durables (down 4.61%) and the S&P BSE Bankex (down 5.06%), underperformed the Sensex.
Among the 30-share Sensex pack, 28 stocks fell and only two of them rose. Bharti Airtel (down 5.26%), Hindustan Unilever (down 4.45%) and Tata Power Company (down 3.96%) edged lower from the Sensex pack.
Index heavyweight and cigarette maker ITC tumbled 4.48%.
Another index heavyweight Reliance Industries dropped 6.33%.
Bank stocks tumbled. Among private sector banks, ICICI Bank (down 5.1%), HDFC Bank (down 4.18%), Axis Bank (down 10.42%), Yes Bank (down 10.08%), and Kotak Mahindra Bank (down 4.44%), edged lower
State Bank of India (SBI) declined 3.41%. The bank said after market hours on Monday, 2 September 2013 that it has acquired 23% shares of Bank State Bank of India, Indonesia (BSBII) in a recent deal with P. T. Ravindo Jaya. As per the present State Bank of India holds 99% in BSBII and P. T. Ravindo Jaya holds 1%.
Among other PSU bank stocks, Bank of Baroda, Canara Bank, Union Bank of India, Bank of India, and Punjab National Bank shed by 3.29% to 7.07%. TCS lost 2.69%. The company said during market hours today, 3 September 2013 that it has been selected by Norway's largest financial group, DNB to drive the company's strategic transformation by leveraging information technology (IT). It is a six year managed services contract.
Tech Mahindra rose 1.69% after the central bank allowed the company to raise the purchasing limit of shares by foreign institutional investors in the company by up to 35% of the paid up capital. Tech Mahindra has passed resolutions at the board of directors' level and a special resolution by the shareholders, agreeing to enhancing the limit for the purchase of its equity shares and convertible debentures by Foreign Institutional Investors (FIIs), through primary market and stock exchanges up to 35% of the paid up capital of the company under Portfolio Investment Scheme, the Reserve Bank of India (RBI) said in a notification. As of 30 June 2013, FIIs held 26.80% stake in the company.
MphasiS rose 2.12% to Rs 442.25
Zensar Technologies shed 0.72%. The company said it has launched insourcing services division to provide comprehensive services to global conglomerates to set up captive centres in India. The announcement was made during trading hours today, 3 September 2013.
Zensar Technologies said that the business of setting up global in-house centres which started many years ago has been getting significant traction over the past few years and continues to mature. This is evident from the growth of captive units and their contribution to India exports. Captive revenues have grown from $3 billion in 2003 to $13.9 billion in 2012. MNCs setting up their captive centres in India indicate that the quality of work in India is on the rise, say experts, Zensar Tech said in a statement.
Dr. Ganesh Natarajan, Vice Chairman & CEO, Zensar said, "As per the McKinsey-Nasscom survey, 52% of companies with captives in India intend to increase their offshore penetration by 15-30% over the next two to three years. It is also expected that almost all Fortune 500 companies will establish their own captives and/or shared services centres by 2020. Recognizing the significant market potential in this space, we have established a separate business unit Insourcing Services' that specializes in closely partnering with large multinational organizations to jointly build enhanced value propositions by utilizing global talent and leveraging a global footprint."
Hero MotoCorp dropped 6.31% as the stock turned ex-dividend today, 3 September 2013, for a dividend of Rs 60 per share for the year ended 31 March 2013.
Mahindra & Mahindra (M&M) rose 0.33%. The company's total auto sales declined 17% to 37,897 units in August 2013 over August 2012. The company announced the auto sales on Sunday, 1 September 2013. M&M's sales of Passenger Vehicles segment (which includes the UVs and Verito) declined 28% to 15,821 units in August 2013 over August 2012. The company's domestic sales declined 18% to 35,159 units in August 2013 over August 2012. The sale of four-wheeler commercial segment which includes passenger and load vehicles fell 4% to 13,718 units while that of three-wheelers declined 14% to 5,149 units in August 2013 over August 2012. Exports declined 9% to 2,738 units in August 2013 over August 2012.
Farm Equipment Sector (FES), a part of the Mahindra Group, announced its domestic tractor sales rose 9% to 13543 units in August 2013 over August 2012. The company's overall sales have also grown by 7% standing at 14158 units during August 2013 over August 2012. Exports for the month of August 2013 stood at 615 units.
Speaking on the monthly performance, Rajesh Jejurikar, Chief Executive, Tractor and Farm Mechanization, Mahindra & Mahindra said, "Our domestic growth of 9% in August 2013 and consistent performance over the last five months is heartening. We believe the Kharif sowing having crossed the 1000 lac hectare mark, normal monsoons and prospects of the approaching festive season are clear indicators of stronger growth for the overall agricultural sector in the coming months".
TVS Motor Company fell 4.99% after a foreign brokerage downgraded the stock to 'underweight' from 'equalweight' and cut its price target to Rs 28 from Rs 41 earlier. The broker noted that TVS Motor Company could suffer from slowing volumes, rising capacity and low pricing power. It added that the Indonesian unit of TVS Motor could continue to post losses as demand growth moderates amid rising inflation and interest rates.
Steel Strips Wheels jumped 4.7% after the company said its wheel sales rose 16% to 9.71 lakh units in August 2013 over August 2012. The company announced August sales during trading hours today, 3 September 2013.
Exports spurted 140% to 179,940 units in August 2013 over August 2012. Strong performance is expected to continue with more new export business coming on-stream and ramping up of existing businesses will result in higher volumes going forward in FY 2014. These will hence improving profitability going forward, SSWL said in a statement.
Tractor segment sales grew 49% on the back of very good demand from all across the customers and various new developments coming on-stream for supply, SSWL said. Good monsoon will keep the demand high and the company expects to reach greater benchmarks with every passing month, SSWL said in a statement.
Two & three wheeler segment sales rose 41% and is expected to show similar momentum going forward, the company said. SSWL said it expects these numbers will see upward momentum going forward as few more new businesses will add volumes. Commercial vehicle segment is still soft and is recovering slowly and the company said it is very hopeful that all the new developed wheels will push volume higher along with improvement in the industry.
SSWL said that the company's focus will remain on improving market share and product mix portfolio to maximize profitability.
SSWL said it expects to achieve 10 lakh wheel sale mark in October 2013 which again would be a record monthly sale number. The performance is very satisfactory given the conditions prevailing in the Automotive Industry and the company said it expects to maintain the growth momentum on the back of good overall growth and new business starts.
Metal stocks reversed intraday gain. Hindalco Industries (down 4.23%), Jindal Steel & Power (down 3.36%), NMDC (down 4.56%), Sesa Goa (down 3.23%), JSW Steel (down 6.2%), and Tata Steel (down 2.71%) edged lower.
Steel Authority of India (Sail) declined 2.85%. The company said its steel sales rose 16% to 10.86 lakh tonnes in August 2013 over August 2012. Sail said in a statement that the rise in sales was mainly on account of increase in flat product sales, which went up by 26% during the period under review. While long products saw a growth of 3%, retail sales at 53,800 tonnes in August were up by 62% on a month-to-month basis. Concerted efforts to harness the rising dollar materialised in a significant growth in exports to a level of 31,000 tonnes, a corresponding period last year (CPLY) growth of 36%, the company said in a statement.
Capital goods pivotals dropped. L&T lost 4.73% The company said during market hours on Monday, 2 September 2013 that its construction business secured new orders worth Rs 1141 crore in August 2013 in various business segments.
Bharat Heavy Electricals (Bhel) fell 1.66%. The company said during market hours on Monday, 2 September 2013 that the Board for Industrial and Financial Reconstruction (BIFR) vide order dated 29 August 2013 sanctioned the Modified Draft Rehabilitation Scheme envisaging merger of Bharat Heavy Plate and Vessels (BHPV) with Bhel.
Rural Electrification Corporation lost 4.65%. The company after market hours today, 3 September 2013 said that REC Transmission Projects Company (RECTPCL), a 100% subsidiary of REC has transferred its wholly owned subsidiary, namely Vizag Transmission (VTL) incorporated for establishment of transmission system for system strengthening in southern region for import of power from eastern region to "M/s Power Grid Corporation of India", successful bidder selected through "tariff based competitive bidding guidelines for transmission services" issued of Ministry of Power, Govt. of India, substantially upon the terms & conditions as detailed in the share purchase agreement executed between the RECTPCL, VTL and M/s Power Grid Corporation of India. RECTPCL has received an acquisition price of Rs 15.41 crore from M/s Power Grid Corporation of India towards acquisition of VTL along with its all assets and liabilities, the company said in a statement.
Pharma stocks edged lower. Cipla (down 3.15%), Dr Reddy's Laboratories (down 3.07%), Ranbaxy Laboratories (down 5.6%) and Sun Pharmaceutical Industries (down 3.37%), declined.
Lupin rose 2.61% to Rs 840.35
Realty stocks declined. DLF (down 7.06%), Sobha Developers (down 2.63%), D B Realty (down 1.07%) and Unitech (down 7.49%), declined.
Airline stocks were mostly higher. Jet Airways (up 0.36%) and Kingfisher Airlines (up 5%) gained. SpiceJet fell 1.81%.
Jet fuel prices have been hiked by a steep 7% taking the rates to a high of over Rs 75,000 per kilolitre. This is the fourth consecutive monthly hike in the aviation turbine fuel prices, which have now gone up by over 20 per cent since June. Aviation Turbine Fuel, or ATF, price at Delhi was hiked by Rs 4,827.94 per kilo liter (kl), or 6.87 per cent, to Rs 75,031.09 per kl, according to Indian Oil Corp, the nation's largest fuel retailer. The increase has been effected from September 1. Aviation turbine fuel or jet fuel constitutes more than 50% of operating cost for airliners. Prices of jet fuel are directly linked to crude oil prices.
On macro front, the combined index of eight core industries rose 3.1% in July 2013 over July 2012. The eight core industries have a combined weight of 37.90% in the Index of Industrial Production (IIP).
The Rajya Sabha on Monday approved a $20 billion scheme to distribute subsidised wheat and rice to 80 crore people, backing an anti-malnutrition drive that investors fear will mean missing the fiscal deficit target. The Food Security Bill is seen as a vote winner by the ruling Congress party as it prepares for elections due by May next year. But investors reacted negatively to the plan when the lower house approved it last weak, on worries the government will struggle to contain the cost of subsidies. The scheme has now been passed by both houses. Before becoming law it must be signed by the president, a formality.
Europe's stock markets edged lower on Tuesday ahead of monetary policy decisions in Japan, the euro zone and the UK on Thursday and the US employment report on Friday. Key benchmark indices in UK, France and Germany were down 0.03% to 0.21%.
Asian stocks climbed on Tuesday on evidence of a pickup in global manufacturing. Key benchmark indices in China, Hong Kong, South Korea, Japan, Indonesia, and Taiwan rose by 0.46% to 2.99%. Singapore's Straits Times fell 0.03%.
China's official purchasing managers' index (PMI) for the non-manufacturing sector dipped slightly to 53.9 in August from July's 54.1, the National Bureau of Statistics (NBS) said on Tuesday. A reading above 50 indicates activity in the sector is accelerating, while one below 50 indicates it is slowing. The services sector index followed the bureau's manufacturing PMI on Sunday, which showed China's factory activity expanded at the fastest pace in more than a year in August with a jump in new orders.
Australia's central bank left its key interest rate unchanged on signs of a pickup in housing and as a slide in the currency eases pressure on the economy before an election that polls suggest will change the government. Governor Glenn Stevens and his board kept the overnight cash-rate target at a record-low 2.5%, the Reserve Bank of Australia said in a statement today in Sydney.
Trading in US index futures indicated that the Dow could gain 104 points at the opening bell on Tuesday, 3 September 2013. US stock markets remained closed on Monday, 2 September 2013, for the Labor Day holiday.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled this 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.
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