Key benchmark indices edged lower in choppy trade as European stocks dropped and after Indonesia's central bank surprised markets with a quarter-percentage-point increase in its benchmark policy rate. The rupee dropped against the dollar. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit nearly one-week low. The Sensex shed 215.57 points or 1.08%, up close to 105 points from the day's low and off about 270 points from the day's high. The market breadth, indicating the overall health of the market, was negative.
Indian stocks snapped five-day winning streak today, 12 September 2013. The Sensex had garnered 1,762.79 points or 9.66% in five trading days to settle at 19,997.45 on Wednesday, 11 September 2013, from a recent low of 18,234.66 on 3 September 2013. The Sensex has gained 1,162.16 points or 6.24% in September 2013 so far (till 12 September 2013). The Sensex has risen 355.17 points or 1.82% in calendar 2013 so far (till 12 September 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 661.74 points or 3.23%.
Coming back to today's trade, Hero MotoCorp dropped on profit booking. Index heavyweight and cigarette major ITC extended intraday gains in late trade. Another index heavyweight Reliance Industries (RIL) extended intraday losses in late trade. PSU OMCs dropped as crude rose and as the rupee fell against the dollar. Jaiprakash Associates tumbled after its wholly-owned subsidiary executed an agreement to sell its cement plant in Gujarat to UltraTech Cement.
In the foreign exchange market, the rupee weakened against the dollar. The partially convertible rupee was hovering at 63.50, weaker than its close of 63.38/39 on Wednesday, 11 September 2013. Earlier in the session, the rupee rose to 62.92, its highest since 19 August 2013.
The S&P BSE Sensex lost 215.57 points or 1.08% to settle at 19,781.88, its lowest closing level since 6 September 2013. The index lost 320.96 points at the day's low of 19,676.49 in late trade. The index rose 54.60 points at the day's high of 20,052.05 in early trade.
The CNX Nifty shed 62.45 points or 1.06% to 5,850.70, its lowest closing level since 6 September 2013. The index hit a low of 5,815.80 in intraday trade. The index hit a high of 5,932 in intraday trade, its highest level since 26 July 2013.
The BSE Mid-Cap index fell 0.04%. The BSE Small-Cap index gained 0.25%. Both these indices outperformed the Sensex.
The BSE Realty index (up 0.54%), BSE FMCG index (up 0.32%), BSE HealthCare index (down 0.13%), and BSE Power index (down 0.63%), outperformed the Sensex.
The BSE Metal index (down 2.53%), BSE Bankex (down 1.86%), BSE Consumer Durables index (down 1.84%), BSE Auto index (down 1.8%), BSE Oil & Gas index (down 1.68%), BSE PSU index (down 1.58%), BSE Capital Goods (down 1.25%), BSE Teck index (down 1.23%), and BSE IT index (down 1.2%), underperformed the Sensex.
The total turnover on BSE amounted to Rs 2811 crore, higher than Rs 2402 crore on Wednesday, 11 September 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,189 shares declined and 1,166 shares rose. A total of 148 shares were unchanged.
Among the 30-share Sensex pack, 23 stocks declined and rest of them gained.
Index heavyweight and cigarette major ITC rose 2.52% to Rs 338, with the stock extending gains in late trade. The stock was volatile. The stock hit a high of Rs 338.55 and low of Rs 329.40.
Reliance Industries fell 1.89% to Rs 870.55, with the stock extending fall in late trade. The stock was volatile. The stock hit a high of Rs 900 and low of Rs 870.
Hero MotoCorp lost 3.9% to Rs 2,007 on profit booking. The stock had hit a 52-week high of Rs 2,127.70 in intraday trade on Wednesday, 11 September 2013.
PSU OMCs dropped as crude rose and as the rupee fell against the dollar. US crude futures rose ahead of talks between the US and Russia to resolve the crisis in Syria, a conflict that has sparked concern Middle Eastern oil supplies may be disrupted. US crude oil futures for October delivery were up 21 cents at $107.77 a barrel. HPCL (down 3.94%) and BPCL (down 2.82%) declined. Indian Oil Corporation was unchanged at Rs 228.50.
PSU OMCs suffer under recoveries on domestic sale of diesel, LPG and kerosene at government controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.
Oil secretary Vivek Rae today, 12 September 2013, said that the government will decide on raising the retail prices of diesel and cooking gas (LPG) in a few weeks. A recent sharp recovery in the rupee, which had hit a record low of 68.85 to the dollar on August 28, and a fall in global crude prices following an easing of geopolitical tensions -- with an attack on Syria appearing less imminent -- have taken off some pressure from the government finances, Rae said.
Capital goods pivotals fell in choppy trade. L&T (down 0.34%) and Bhel (down 3.99%), edged lower.
Most IT stocks declined on recent strong rebound of the rupee against the dollar. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.
TCS shed 1.28%. The company on Tuesday, 10 September 2013, said it has bagged a five-year multi-million euros deal from Scandinavian Airlines (SAS) to help transform and optimise SAS' IT processes, applications and infrastructure. TCS will implement its proprietary cloud-based solutions to simplify and standardize the SAS IT landscape. The initiative is a part of the SAS "4 Excellence Next Generation" strategy, aimed at improving the competitiveness of the SAS Group. Through this partnership, SAS will also tap into TCS' Aviation and Digital Innovation Labs to develop solutions addressing the needs of the new digital consumer.
Wipro declined 1.1%.
Tech Mahindra dropped 1.63%. The company during market hours today, 12 September 2013, said it has been chosen as a strategic partner for application maintenance and development by Volvo Car Corporation. This partnership will provide Volvo Car Corporation with a service to maintain and develop a wide range of applications across the business and to develop and implement new applications as part of its drive to increase efficiency and reduce costs, Tech Mahindra said in a statement.
Infosys lost 1.67%. Infosys BPO during market hours today, 12 September 2013, announced that it has been selected by AkzoNobel, a leading global paint and coatings company and a major producer of specialty chemicals, to transform its finance and accounting (F&A) processes to deliver higher operational efficiencies and performance. Infosys BPO will play a key role in accelerating AkzoNobel's finance transformation program and streamline accompanying operations for AkzoNobel's decorative business in over 30 countries across Europe, the Middle East and Africa.
Zensar Technologies lost 0.18%. The company announced an agreement with Kapela Fund 1 and The Tomorrow Trust to set up a new Broad Based Black Economic Empowerment company in South Africa wherein Zensar will be the majority shareholder of the company, expanding Zensar's presence in South Africa with services in many areas to new customer segments. The announcement was made after market hours on Wednesday, 11 September 2013.
Dr. Ganesh Natarajan, Vice-Chairman and CEO, Zensar Technologies said: "This new company reiterates our commitment to South Africa and its transformational agenda will help consolidate our leadership in the region. We have had an extraordinary successful decade of operations in South Africa and established leadership in providing technology solutions to the Banking, Insurance, Retail, Manufacturing and Mining sector. This venture will help us expand our footprint into Government contracts and also enhance our standing in the Broad Based Black Economic Empowerment (BBBEE) code of the Government."
HCL Technologies rose 0.78%. HCL Technologies and Anglo American announced on Tuesday, 10 September 2013, that they have entered into an engagement whereby HCL will deliver IT services for Anglo American businesses across the globe. As a part of this contract, HCL will transform Anglo American's end user computing and data center landscape to improve operational efficiency, business agility and the user experience. The scope of the service covers end to end infrastructure services, including data centre and hosting services, email services, service desk, local area network and security management, end user computing and on-site IT services, utilizing hybrid on-premise and cloud delivery models.
Financial Technologies (India) (FTIL) spurted 18.25%. The stock surged on volume of 55.98 lakh shares, higher than average daily volume of 12.61 lakh shares in the past one quarter. The Securities and Exchange Board of India renewed the license of MCX Stock Exchange for a period of one year beginning 16 September 2013. Shares of MCX were locked at 5% upper circuit filter at Rs 482.70.
In an order issued late on Wednesday, 11 September 2013, the capital markets regulator the Securities and Exchange Board of India (Sebi) granted a one-year renewal of recognition from 16 September 2013 to MCX Stock Exchange (MCX-SX), promoted by Financial Technologies (India) (FTIL). The recognition was due to expire on 15 September 2013.
Sebi asked the MCX-SX shareholders to reconstitute its board and rejig its top management if necessary to improve governance standards within the stock exchange.
FTIL and MCX are the promoters of the MCX-SX stock exchange.
Meanwhile, the regulator has asked MCX-SX's shareholders to report to Sebi its findings as well as remedial actions within 30 days from the approval.
Metal stocks declined as metal prices fell in global commodities markets. Jindal Steel and Power (JSPL) shed 1.04%. The company has reportedly signed an initial agreement to set up a 350-megawatt power plant in Liberia.
Sesa Goa lost 2.81%. Liberian President Ellen Johnson Sirleaf on Wednesday, 11 September 2013, said that Sesa Goa will start iron-ore mining operation in the Western Clusters project in Liberia by the end of this year. The Western Clusters project has iron-ore resources in excess of one billion metric tons and salable product of 330 million tons. Sesa Goa had spent about $123.5 million to purchase the entire stake in the project. Indian iron-ore suppliers such as Sesa Goa are looking to expand overseas as mining in India is hit by court restrictions following investigations into illegal mining.
Among other metal stocks, Hindustan Zinc (down 0.08%), NMDC (down 0.8%), Sail (down 2.96%), Hindalco Industries (down 2.76%), JSW Steel (down 3.16%), Tata Steel (down 4.13%) edged lower.
Jaiprakash Associates tumbled 11.75% after Jaypee Cement Corporation (JCCL), a wholly-owned subsidiary of the company, executed an agreement to sell its cement plant in Gujarat to UltraTech Cement. The enterprise value of the deal is Rs 3800 crore, besides the actual net working capital. Over the past decade, Jaiprakash Associates increased its cement capacity from 4.4 MT in 2002 to 36.8 MT, and post this deal will continue to remain the third largest cement manufacturer in the country, the company said.
Shares of UltraTech Cement rose 0.16%.
Some power generation stocks rose on reports that the power ministry has made a proposal to mix imported and locally produced natural gas and supply it to electricity producers at a subsidized price, a plan that could help boost power production but hurt the government's already-weak finances.
NTPC (up 0.94%), Adani Power (up 0.43%), NHPC (up 0.85%), Tata Power Company (up 2.25%), and Torrent Power (up 0.55%), gained.
Realty stocks extended recent gains. HDIL (up 2.9%), D B Realty (up 1.93%), Sobha Developers (up 0.32%) and Unitech (up 1.72%), gained. But, DLF fell 0.93%.
Bank pivotals fell. SBI (down 1.82%), ICICI Bank (down 1.88%), and HDFC Bank (down 1.57%) edged lower.
IDFC rose 2.82% after the central bank withdrew restrictions placed on the purchase of the company's shares by foreign investors. The Reserve Bank of India (RBI) on Wednesday, 11 September 2013, lifted restrictions placed on foreign institutional investors (FIIs) buying shares in IDFC as the overall foreign shareholding fell below the prescribed limit of 54%. The Reserve Bank of India (RBI) made the announcement after market hours on Wednesday, 11 September 2013.
Total foreign holding in IDFC was 53.18% as at 30 June 2013, of which 52.89% was held by FIIs.
Pharma stocks rose on fresh buying. Cipla (up 1.77%), Dr Reddy's Laboratories (up 0.06%), Glenmark Pharmaceuticals (up 1.17%), Lupin (up 0.81%) and Ranbaxy Laboratories (up 1.75%) gained.
But, Sun Pharmaceutical Industries fell 1.09%.
MTNL jumped 20% on reports that a group of ministers (GoM) would be meeting today, 12 September 2013 to look into affairs of Bharat Sanchar Nigam (BSNL) and MTNL. The GoM is likely expected to consider structural reforms of the two telecom companies. Excess human resource, surrendering of BWA spectrum and writing off the losses on books will be key agendas of the meeting, reports added.
On the macro front, the government will unveil data on industrial production for July 2013 at 17:30 IST today, 12 September 2013. Industrial production is seen contracting 0.8% in July 2013, as per the median estimate of a poll of economists carried out by Capital Market. Industrial production registered a contraction of 2.2% in June 2013.
Consumer price inflation is expected to remain high at 9.6% in August 2013, as per the median estimate of a poll of economists carried out by Capital Market. Inflation based on the combined consumer price index (CPI) for urban and rural India had decelerated to 9.64% in July 2013 from 9.87% in June 2013. The government will unveil data on combined consumer price index (CPI) for urban and rural India for August 2013 at 17:30 IST today, 12 September 2013.
Reserve Bank of India Governor Raghuram Rajan on Wednesday, 11 September 2013, said that India's slowing economy and its massive current account and fiscal deficits are not structural problems and can be fixed with modest reforms. This is not to say that ambitious reform is not good, or is not warranted to sustain growth for the next decade. But India does not need to become a manufacturing giant overnight to fix its current problems, Rajan wrote in commentary published on the Project Syndicate website. He said the slowdown in the economy was paradoxically the effect of substantial fiscal and monetary stimulus that the policymakers had injected into its economy in the aftermath of the 2008 financial crisis. The resulting growth spurt led to inflation, especially because the world did not slide into a second Great Depression, as was originally feared, he said. So monetary policy has since remained tight, with high interest rates contributing to slowing investment and consumption, he wrote. Economic growth would slow to a 5% to 5.5% pace, he said, adding that was "not great, but certainly not bad for what is likely to be a low point in economic performance".
European stocks reversed initial gains on Thursday, 12 September 2013, as output by factories in the euro zone fell sharply in July to the lowest level in more than three years, raising new questions about the bloc's ability to keep a modest economic recovery alive. Key benchmark indices in France, UK and Germany fell by 0.02% to 0.35%.
Eurostat said industrial production across the euro-zone fell 1.5% in July from June, the biggest fall since September last year. Production was down 2.1% compared with July 2012. The last time the level of output was lower was in April 2010. Sizable declines in output by German, Italian and to a lesser extent French factories were responsible for much of July's weakness. These economies are the euro zone's three largest and make up about two-thirds of its total output.
Italy's industrial production fell unexpectedly in July, declining 1.1% on the month in seasonally-adjusted terms, as output fell in all the main sectors apart from energy, national statistics institute Istat said Thursday. Industrial output in the euro zone's third-largest economy fell 4.3% in July from the same month a year earlier, using workday-adjusted terms for the annualized figure, Istat said. This marks the 23rd consecutive decline. June's monthly figure was revised lower to a 0.2% increase from the earlier estimate of a 0.3% increase, Istat said.
French consumer prices rose in August from July, led by an increase in the price of clothes and shoes, statistics showed Thursday. The consumer price index in the euro zone's second largest economy rose 0.5% in August from the previous month. Prices were 0.9% higher than in August 2012, France's statistics bureau Insee said.
Asian stock markets edged higher Thursday, 12 September 2013, with energy stocks offering a bright spot after an increase for oil futures. Key benchmark indices in Indonesia, Taiwan, Hong Kong, South Korea, China, and Singapore rose by 0.01% to 0.64%. Japan's Nikkei Average fell 0.26%.
Bank Indonesia surprised markets on Thursday by raising its benchmark interest rate by a quarter of a percentage point, while central banks in the Philippines, South Korea and New Zealand all kept rates on hold. Indonesia's central bank Bank Indonesia raised its benchmark interest rate by 25 basis points to 7.25% on Thursday. The move comes as a surprise to market participants who widely expected the central bank to keep rates on hold after it raised the benchmark rate by 50 basis points in late August in an attempt to prop up the beleaguered rupiah. Bank Indonesia also raised the key money market Fasbi rate to 5.5%.
Japanese core machinery orders stayed flat in July from the previous month, the government said Thursday, following a 2.7% decrease in June, suggesting businesses are still cautious about increasing investment despite a weaker yen and economic stimulus programs in place to support Japan's economic recovery. Unadjusted core orders also rose 6.5% from the year-earlier month.
Trading in US index futures indicated that the Dow could fall 7 points at the opening bell on Thursday, 12 September 2013. US stocks ended mostly higher on Wednesday, 11 September 2013, with the Dow industrials tallying a third day of triple-digit gains, as reduced worry about Syria countered Apple Inc.'s sharp drop.
On Thursday, Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov meet in Geneva to discuss how to handle Syria's chemical weapons. Earlier in the week, Syria accepted a Russian proposal to give up its chemical arms to the international community to avert a US military attack, with President Barack Obama subsequently asking Congress to delay a vote on an intervention. The US says President Bashar al-Assad's regime used sarin gas outside of Damascus on Aug. 21, killing more than 1,400 people.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled next week, considered by many to provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program. The FOMC holds a two-day policy meeting on Tuesday 17 September and Wednesday 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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