Key benchmark indices edged lower as Asian and European stocks dropped on speculation the Federal Reserve will soon start tapering monetary stimulus to the US economy after data overnight showed US manufacturing activity unexpectedly climbed last month. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The barometer index, the S&P BSE Sensex, shed 43.09 points or 0.21%, off close to 72 points from the day's high and up close to 37 points from the day's low. The market breadth, indicating the overall health of the market, was positive.
Bank stocks dropped. Realty stocks edged higher. State-run GAIL (India) rose after the company said that Prime Minister Dr. Manmohan Singh, has today, 3 December 2013, dedicated to the nation GAIL (India)'s 1,000 km-long natural gas pipeline from Dabhol in Maharashtra to Bangaluru in Karnataka during the inaugural ceremony of the 8th Asia Gas Partnership Summit (AGPS).
Indian stocks snapped three-day winning streak today, 3 December 2013. The Sensex had garnered 477.75 points or 2.34% in three trading sessions to settle at 20,898.01 on Monday, 2 December 2013, from a recent low of 20,420.26 on 27 November 2013. The Sensex has garnered 1,428.21 points or 7.35% in calendar 2013 so far (till 3 December 2013). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,406.21 points or 19.52%. From a record high of 21,321.53 on 3 November 2013, the Sensex has fallen 466.61 points or 2.19%.
Coming back to today's trade, the S&P BSE Sensex lost 43.09 points or 0.21% to settle at 20,854.92, its lowest closing level since 29 November 2013. The index lost 80.26 points at the day's low of 20,817.75 in late trade. The index rose 29.04 points at the day's high of 20,927.05 in mid-morning trade.
The CNX Nifty shed 16 points or 0.26% to settle at 6,201.85, its lowest closing level since 29 November 2013. The index hit a low of 6,191.40 in intraday trade. The index hit a high of 6,225.40 in intraday trade.
The BSE Mid-Cap index rose 0.23% and the BSE Small-Cap index rose 0.27%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,255 shares rose and 1,233 shares dropped. A total of 166 shares were unchanged. The breadth alternately swung between positive and negative zone during the trading session.
The total turnover on BSE amounted to Rs 2082 crore, higher than Rs 1958.42 crore on Monday, 2 December 2013.
The S&P BSE FMCG index (down 0.83%), the S&P BSE Consumer durables index (down 0.58%), the S&P BSE Bankex (down 0.56%), the S&P BSE Auto index (down 0.43%), the S&P BSE Capital goods index (down 0.32%) and the S&P BSE Healthcare index (down 0.23%), underperformed the Sensex.
The S&P BSE PSU index (down 0.21%), the S&P BSE Teck index (up 0.14%), the S&P BSE IT index (up 0.14%), the S&P BSE Power index (up 0.21%), the S&P BSE Metal index (up 0.24%), the S&P BSE Oil & Gas index (up 0.51%) and the S&P BSE Realty index (up 1.24%), outperformed the Sensex.
Among the 30-share Sensex pack, 19 stocks fell and rest rose.
Realty stocks edged higher. Unitech (up 4.53%), D B Realty (up 4.21%), DLF (up 2.16%), Prestige Estates (up 1.40%), Sobha Developers (up 1.06%), Sunteck Realty (up 0.78%) and Indiabulls Real Estate (up 0.5%), edged higher.
Banks stocks witnessed selling pressure. ICICI Bank (down 0.26%) and HDFC Bank (down 0.59%) declined.
Among PSU bank stocks, Bank of India (down 3.63%), UCO Bank (down 1.9%), Union Bank of India (down 1.53%), Allahabad Bank (down 0.97%), Punjab & Sind Bank (down 0.87%), Indian Overseas Bank (down 0.78%), Indian Bank (down 0.68%), State Bank of Mysore (down 0.47%), Bank of Baroda (down 0.46%), State Bank of India (down 0.46%), IDBI Bank (down 0.38%), Oriental Bank of Commerce (down 0.36%) and Corporation Bank (down 0.26%), edged lower.
The Reserve Bank of India (RBI) on Monday, 2 December 2013, placed on its website the Draft Report of the Internal Working Group (IWG) on Implementation of Countercyclical Capital Buffer (CCCB) in India. The IWG approached the implementation framework keeping two main issues in mind. First, the structural changes that the Indian economy has been going through should be considered in calibrating the indicator/s for CCCB imposition. Secondly, being an emerging economy, the maximum potential growth may not have been achieved by it so far and hence CCCB imposition should not stifle the possibility of the same.
The draft report on CCCB suggests that while the credit-to-GDP gap shall be used for empirical analysis to facilitate CCCB decision, it may not be the only reference point in the CCCB framework for banks in India and the credit-to-GDP gap may be used in conjunction with other indicators like Gross Non-Performing Assets (GNPA) growth for CCCB decisions in India. The lower threshold (or L) of the CCCB when the buffer is activated may be set at 3 percentage points of the credit-to-GDP gap, provided its relationship with GNPA remains significant and the upper threshold (or H) may be kept at 15 percentage points of credit-to-GDP gap, according to the draft report. The CCCB shall increase linearly from 0 to 2.5 per cent of the risk weighted assets (RWA) of the bank based on the position of gap between 3 percentage points and 15 percentage points. However, if the gap exceeds 15 percentage points, the buffer shall remain at 2.5 per cent of the RWA. If the gap is below 3 percentage points then there will not be any CCCB requirement, according to the draft report.
The supplementary indicators shall include incremental C-D ratio for a moving period of three-years (along with its correlation with credit-to-GDP ratio gap and GNPA growth), Industry Outlook (IO) assessment index (along with its correlation with GNPA growth) and interest coverage ratio (along with its correlation with credit-to-GDP gap). In due course, indices like House Price Index/RESIDEX and Credit Condition Survey may also form a part of the supplementary indicators for CCCB decision, according to the draft report on CCCB. The Reserve Bank of India may apply discretion in terms of use of indicators while activating or adjusting the buffer, according to the draft report. The CCCB framework in India may be operated in conjunction with sectoral approach that has been successfully used in India over the period of time, it said. The same set of indicators that are used for activating CCCB may be used to arrive at the decision for the release phase of the CCCB. However, instead of hard rules-based approach, flexibility in terms of use of judgement and discretion may be provided to the Reserve Bank of India for operating the release phase of CCCB. Further, the entire CCCB may be released promptly at a single point in time, according to the draft report. For all banks operating in India, CCCB shall be maintained on solo basis as well as on consolidated basis in India, it said. The indicators and thresholds used for CCCB decisions may be subject to continuous research and empirical testing for their usefulness and new indicators may be explored to support CCCB decisions, it said.
The Reserve Bank of India on Monday, 2 December 2013, also released on its website the draft framework for dealing with Domestic Systemically Important Banks (D-SIBs). The draft framework discusses the methodology to be adopted by the Reserve Bank of India for identifying the D-SIBs and proposes regulatory/supervisory policies which D-SIBs would be subjected to. The assessment methodology adopted by RBI is primarily based on the BCBS methodology for identifying the Global Systemically Important Banks (G-SIBs) with suitable modifications to capture domestic importance of a bank, the RBI said in a press release. The indicators which would be used for assessment are size, interconnectedness, substitutability and complexity. Based on the sample of banks chosen for computation of their systemic importance, a relative composite systemic importance score of the banks will be computed, the RBI said. The RBI will determine a cut-off score beyond which banks will be considered D-SIBs. Based on their systemic importance scores, banks will be plotted into different buckets. D-SIBs will be required to have additional Common Equity Tier 1 capital requirement ranging from 0.2% to 0.8% of risk weighted assets, the RBI said. D-SIBs will also be subjected to differentiated supervisory requirements and higher intensity of supervision based on the risks they pose to the financial system, the RBI said. The computation of systemic importance scores will be carried out at yearly intervals, the central bank said in a statement. The names of the banks classified as D-SIBs will be disclosed in the month of August every year starting from 2015, the RBI said.
State-run Canara Bank declined 1.93%. The bank has announced reduction in interest rates on some bulk deposits i.e. on deposits of Rs 1 crore and above. Interest rate on deposits of the maturity bucket 61 days to 90 days has been reduced to 7.75% from 8.75%. Interest rate on deposits of the maturity bucket 91 days to 120 days has been reduced to 8.5% from 9%. Interest rate on deposits of the maturity bucket 121 days to 179 days has been reduced to 8.75% from 9%. Interest rate on deposits of the maturity bucket of above 1 year to less than 2 years has been reduced to 9% from 9.1%. The revised rates are applicable from today, 3 December 2013.
State-run GAIL (India) rose 2.97% to Rs 343.35, with the stock extending intraday gains in late trade. Prime Minister Dr. Manmohan Singh, today, 3 December 2013, dedicated to the nation GAIL (India)'s 1,000 km-long natural gas pipeline from Dabhol in Maharashtra to Bangaluru in Karnataka during the inaugural ceremony of the 8th Asia Gas Partnership Summit (AGPS). Speaking on the occasion, the Prime Minister said that GAIL had witnessed rapid growth over the years to become a diversified conglomerate. "Today, GAIL is one of our best Public Sector Enterprises and has been categorized as a Maharatna," he said.
The Dabhol-Bangaluru pipeline has connected South India to the national gas grid for the first time, GAIL (India) said. It has been constructed at an investment of Rs 4500 crore with a design capacity of 16 MMSCMD of natural gas which can produce 3,000 MW of clean energy. The pipeline passes through Belgaum, Dharwad, Gadag, Bellary, Devanagere, Chitradurga, Tumkur, Ramanagaram, Bengaluru Rural and Bengaluru Urban districts.
Maruti Suzuki India rose 0.14% to Rs 1,663.70 on hopes imports of parts would be less costly after the Japanese yen hit a six-month low against the dollar. Maruti sources a large portion of its parts from Japan.
Hero MotoCorp fell 0.72% to Rs 2,048.15. Hero MotoCorp (HMCL) announced during trading hours today, 3 December 2013, that it has formed a joint venture (JV) with Milan-headquartered Magneti Marelli (MM) to develop and manufacture new generation two-wheeler fuelling systems. The new entity, to be called HMC-MM Auto, is HMCL's first joint venture since commencing its solo journey a little over two years ago. HMCL will hold majority stake of 60% in the new company while Magneti Marelli will hold the rest 40%. There will be a total equity injection of $8.5 million as envisaged by Hero MotoCorp and Magneti Marelli in a ratio of 60:40 over a three-year period. The total investment is likely to be around $27 million over the next 10-year period.
HMC-MM Auto will also develop its own autonomous development centre. As Hero expands its global footprint at a fast pace, this will enable the company to develop products featuring appropriate technology for different customers in geographies across the world, Hero MotoCorp said in a statement. HMC-MM Auto will help build electronic fuel injection (EFI) systems which will offer distinct advantages to the engines used in Hero's two-wheelers, such as adaptability to different working climates, altitudes, improved performance and fuel efficiency, environmental regulations and gasoline blends. Additional functionality such as Immobilisers, traction and slip control, multi map, flexi fuel and multi fuel management etc. will also be available with the above technology, Hero MotoCorp said.
Above all, the joint venture will bring key engine-related technology within the Hero Group, thereby reducing dependence on external vendors, the company said in a statement.
Eicher Motors rose 2.71% to Rs 5,141.70 after hitting record high of Rs 5,294.95 in intraday trade today, 3 December 2013.
CEAT rose 2.56% to Rs 300.35 after hitting record high of Rs 303.70 in intraday trade.
Idea Cellular declined 0.28% to Rs 175.05. The company said after market hours on Monday, 2 December 2013, that it has received a communication from Department of Telecommunication (DoT), Ministry of Communications & IT, on imposition of financial penalty of Rs 600 crore for alleged violation of terms and conditions of CMTS/UAS licenses while acquiring erstwhile Spice Communications. Idea said Spice Communications (Spice) was amalgamated with Idea effective 1 March 2010, after approval of the merger by Gujarat High Court on 26 November 2009 and Delhi High Court on 5 February 2010. Subsequently, in the matter of transfer of Telecom CMTS/UASL licenses held by Spice to Idea, the Division Bench of Delhi High Court vide its order passed on 13 July 2012 had directed DoT to give its final decision on transfer of operational Spice licenses of Punjab and Karnataka in the name of Idea. Now, vide the latest communication received from the DoT dated 29 November 2013, the DoT has written to the company that the DoT is prepared to take the merger of companies i.e. Spice Communications with Idea Cellular on record and change the name of two Spice UAS licenses of Punjab and Karnataka service areas subject to Idea paying financial penalty of Rs 600 crore besides other list of compliances within next 15 days.
Idea Cellular said that the company is preparing to take necessary steps to challenge the DoT letter at appropriate forum.
Sun TV Network clocked a highest turnover of Rs 63.19 crore on BSE. Tata Motors (Rs 57.12 crore), State Bank of India (Rs 40.96 crore), Tata Steel (Rs 40.95 crore) and ICICI Bank (Rs 36.92 crore), were the other turnover toppers on BSE in that order.
Unitech reported highest volumes of 81.91 lakh shares on BSE. Dhanus Technologies (38.88 lakh shares), Sintex Industries (34.57 lakh shares), NIIT (30.57 lakh shares) and Parikh Herbals (28.45 lakh shares),were the other volume toppers on BSE in that order.
In the foreign exchange market, the rupee edged lower against the dollar on speculation the Federal Reserve will soon start tapering monetary stimulus to the US economy after data overnight showed US manufacturing activity unexpectedly climbed last month. The partially convertible rupee was hovering at 62.36, compared with its close of 62.315/325 on Monday, 2 December 2013.
The Reserve Bank of India (RBI) after trading hours on Monday, 2 December 2013, said that based on preliminary figures, India's current account deficit (CAD) narrowed sharply to $5.2 billion or 1.2% of GDP in Q2 September 2013, from $21 billion or 5% of GDP in Q2 September 2012. The CAD was also much lower than 4.9% of GDP in Q1 June 2013, the RBI said. The lower CAD was primarily on account of a decline in the trade deficit as merchandise exports picked up and imports moderated, particularly gold imports. The merchandise trade deficit (BoP basis) contracted to $33.3 billion in Q2 September 2013, from $47.8 billion a year ago. Net invisibles during Q2 September 2013 improved, essentially reflecting a rise in net services exports, the RBI said. Net services exports at $18.4 billion recorded a growth of 12.5% year-on-year in Q2 September 2013, mainly on account of 'computer services'.
Contraction in the trade deficit coupled with a rise in net invisibles receipts resulted in a reduction of the CAD to $26.9 billion or 3.1% of GDP during the period April-September 2013, from $37.9 billion or 4.5% of GDP during the period April-September 2012, the RBI said.
The Eight Core Industries having a combined weight of 37.9% in the Index of Industrial Production (IIP) contracted by 0.6% in October 2013, compared with a growth of 7.8% growth in October 2012, posting lowest growth in last 12-months.
The Reserve Bank of India (RBI) announces next Mid-Quarter Review of Monetary Policy for 2013-14 on 18 December 2013. The Third Quarter Review of Monetary Policy for 2013-14 is scheduled 28 January 2014.
European stocks edged lower on Tuesday, 3 December 2013, as investors remained cautious ahead of the closely watched US nonfarm-payrolls report at the end of the week, which could weaken or strengthen the case for the Federal Reserve to taper its asset purchases. Key benchmark indices in France, Germany and UK were off 0.77% to 1.71%.
Asian stocks edged lower on Tuesday, 3 December 2013, after stronger US manufacturing data boosted speculation the Federal Reserve may pare stimulus to the US economy sooner than anticipated. Key benchmark indices in Indonesia, Hong Kong, Taiwan, Singapore and South Korea were down 0.03% to 1.05%. Key benchmark indices in China and Japan rose 0.6% to 0.69%. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
China's non-manufacturing purchasing managers' index fell to 56 last month from 56.3 in October, according to a report released today by the National Bureau of Statistics and the China Federation of Logistics and Purchasing. A reading above 50 indicates expansion.
Australia's central bank left its benchmark interest rate unchanged at a record low and said the currency is still uncomfortably high, even after a 4% decline since its previous meeting. Governor Glenn Stevens and his board kept the overnight cash-rate target at 2.5%, the Reserve Bank of Australia said in a statement today in Sydney.
Trading in US index futures indicated that the Dow could slide 52 points at the opening bell on Tuesday, 3 December 2013. US stocks dropped on Monday amid data showing manufacturing unexpectedly climbed last month and reports on holiday retail sales. The Institute for Supply Management's factory index rose to 57.3 in November from 56.4 a month earlier, the Tempe, Arizona-based group's report showed. Manufacturing accounts for about 12% of the economy. A separate report from Markit Economics showed the final November index of US manufacturing increased to 54.7 from 51.8 the previous month.
Purchases at US stores and websites fell 2.9 percent to $57.4 billion during the four days beginning with the Nov. 28 Thanksgiving holiday, according to a survey commissioned by the National Retail Federation.
Investors are keeping a close watch on economic data in the United States as the Federal Reserve monitors the pace of recovery to gauge when it will begin to reduce monetary stimulus for the US economy, which has been aimed at encouraging growth. The US government will release the influential US non-farm payrolls data for November 2013 on Friday, 6 December 2013. The Fed has said improvement in the labor market is a key factor in its policy assessment.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.
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