Key benchmark indices hit their fresh intraday lows in afternoon trade after European stock markets opened lower. A weakness in rupee against the dollar also hurt sentiment. The barometer index, the S&P BSE Sensex was down 401.78 points or 2.13%, off about 523 points from the day's high and up close to 22 points from the day's low. The market breadth, indicating the overall health of the market, was negative.
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.
The partially convertible rupee was trading 67.32 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.
At 13:15 IST, the S&P BSE Sensex was down 401.78 points or 2.13% to 18,484.35. The index fell 424.01 points at the day's low of 18,462.12 in afternoon trade, its lowest level since 30 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 135.05 points or 2.43% to 5,415.70. The index hit a low of 5,413.55 in intraday trade, its lowest level since 30 August 2013. The index hit a high of 5,580.95 in intraday trade, its highest level since 16 August 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,212 shares fell and 823 shares rose. A total of 121 shares were unchanged.
Among the 30-share Sensex pack, 23 stocks fell and rest of them rose. Hero MotoCorp (down 4.57%), HDFC (down 4.27%), Reliance Industries (down 3.36%), Sun Pharmaceutical Industries (down 2.63%), ICICI Bank (down 2.6%), HDFC Bank (down 2.55%) and Hindustan Unilever (down 2.45%), edged lower from the Sensex pack.
Coal India (up 3.3%), Tata Motors (up 2.04%), Sesa Goa (up 1.51%), Bhel (up 1.45%), Tata Power (up 0.07%), TCS (up 0.02%) and Wipro (up 0.01%), edged higher from the Sensex pack.
IndusInd Bank (down 5.92%), Crompton Greaves (down 5.80%), Pipavav Defence & Offshore Engineering Company (down 4.92%), Rural Electrification Corporation (down 4.91%) and Piramal Enterprises (down 4.76%), were among the major lowers from the BSE's 'A' group.
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 financial markets were trading lower in early trade 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 0.10% to 0.27%.
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 was down 0.01%.
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 116 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.
President Barack Obama on Saturday, 31 August 2013 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.
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