Indian stocks staged a strong intraday rebound as investors assessed the impact on monetary stimulus for the US economy as US lawmakers wrangled over the debt limit and as a partial US government shutdown entered a seventh day. The US Federal Reserve'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, and the 50-unit CNX Nifty, both, ended flat for the day after witnessing intraday volatility. The Sensex was provisionally down 0.10 points, up 267.97 points from the day's low and off 5.53 points from the day's high. The market breadth, indicating the overall health of the market, once again turned positive from negative in late trade.
Coal India dropped on reports that the government will offload its 5% stake in the company by way of follow-on public offer (FPO) in December. Bank pivotals declined. Private sector bank Axis Bank fell after two bulk deals. IT stocks gained as the rupee dropped against the dollar, with TCS and HCL Technologies hitting record high and Tech Mahindra striking 52-week high.
Key benchmark indices edged lower in early trade on weak Asian stocks. Weakness continued on the bourses in morning trade. Key benchmark indices cut losses after hitting fresh intraday low in mid-morning trade. Weakness continued on the bourses in early trade afternoon trade. The Sensex trimmed losses in afternoon trade. Key benchmark indices remained in red in mid-afternoon trade. The market staged strong intraday rebound in late trade as index heavyweights ITC and Reliance Industries cut intraday losses.
In the foreign exchange market, the rupee dropped against the dollar. The partially convertible rupee was hovering at 61.85, weaker than its close of 61.43/44 on Friday, 4 October 2013. The Reserve Bank of India (RBI) will look at easing restrictions on the forex futures market once the rupee stabilises, Deputy Governor H.R. Khan said on Monday, 7 October 2013. The RBI is also in talks with stock market regulator Securities and Exchange Board of India (Sebi) on making the dollar-rupee over-the-counter and futures market trades on a delivery basis, Khan said on the sidelines of an event. The central bank will look at the "whole gamut of futures market" once stability improves in the forex market, Khan added.
As per provisional closing, the S&P BSE Sensex was down 0.10 points to 19,915.85. The index lost 268.07 points at the day's low of 19,647.88 in mid-morning trade, its lowest level since 3 October 2013. The index rose 5.43 points at the day's high of 19,921.38 in late trade.
The CNX Nifty was up 1.95 points or 0.03% to 5,909.25. The index hit a low of 5,825.85 in intraday trade, its lowest level since 3 October 2013. The index hit a high of 5,912 in intraday trade.
The market breadth, indicating the overall health of the market, once again turned positive from negative in late trade. On BSE, 1,278 shares gained and 1,090 shares declined. A total of 154 shares were unchanged. Earlier, the breadth had turned negative from positive during mid-morning trade.
The total turnover on BSE amounted to Rs 1850 crore, lower than Rs 1872.73 crore on Friday, 4 October 2013.
Among the 30-share Sensex pack, 17 stocks gained and rest of them declined. Bharti Airtel (down 1.87%), Maruti Suzuki India (down 1.59%) and Tata Motors (down 0.41%) edged lower from the Sensex pack. Tata Steel (up 4.37%), Hindalco Industries (up 3.1%) and Jindal Steel & Power (up 1.71%) edged higher from the Sensex pack.
Index heavyweight and cigarette major ITC fell marginally by 0.03% to Rs 340. The stock hit high of Rs 341.95 and low of Rs 332.20.
Reliance Industries fell 1.1% to Rs 844. The stock hit high of Rs 852.50 and low of Rs 836.65.
IT stocks gained as the rupee dropped against the dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Infosys rose 0.81%. Infosys announces its Q2 results on Friday, 11 October 2013.
Wipro shed 0.19%. The company last week announced the changes in the top deck of the organisation. The company announced the appointment of Senior Vice President Shaji Farooq as the global head of its Banking, Finance Services and Insurance (BFSI) strategic business unit. Shaji, who is currently leading the company's Advanced Technologies Service Line and Go-To-Market transformation initiatives, will take over from Senior Vice President Soumitro Ghosh, who will now head Wipro Infotech, the India and Middle East business.
TCS surged 3.01% to Rs 2,094, also its record high.
HCL Technologies gained 1.95% to Rs 1,117. The stock hit record high of Rs 1,129 in intraday trade.
Tech Mahindra advanced 3.63% to Rs 1,449. The stock hit 52-week high of Rs 1,449.90 in intraday trade.
Axis Bank lost 2.19% to Rs 1,070. A bulk deal of 9.75 lakh shares was executed in the counter at Rs 1,051.60 per share in early trade. Another bulk deal of 4.19 lakh shares was executed in the counter at Rs 1,050.05 per share in early trade.
Coal India lost 2.97% to Rs 300.80 on reports that the company's 5% follow-on public offer (FPO) is likely to hit the market by the second week of December. The government, which currently holds a 90% stake in Coal India, intends to sell more than 31.5 crore shares through an offer for sale or OFS through the stock exchanges. Shares will be allotted to Coal India employees at a 5% discount to the lowest cut-off price. A maximum of 10% of the offer will be kept for employees, reports said.
L&T fell 1.47%. The company said during market hours that it has secured two engineering, procurement and construction (EPC) projects aggregating about Rs 1100 crore in the hydrocarbon segment in UAE and Qatar. These orders reinforce L&T's strategic objective of enhancing its global footprints, and reflect its capability to execute hydrocarbon projects in competitive international environment, L&T said in a statement.
At its board meeting on Saturday, 5 October 2013, market regulator Securities & Exchange Board of India (Sebi) approved the draft Sebi (Foreign Portfolio Investors) Regulations, 2013. The Sebi (Foreign Portfolio Investors) Regulations, 2013 have been framed keeping in view the provisions of Sebi (Foreign Institutional Investors) Regulations, 1995, qualified foreign investors (QFIs) framework and the recommendations of the "Committee on Rationalization of Investment Routes and Monitoring of Foreign Portfolio Investments".
Sebi said that existing FIIs, sub accounts and qualified foreign investors (QFIs) shall be merged into a new investor class termed as Foreign Portfolio Investors (FPIs). Sebi approved designated depository participants (DDPs) shall register FPIs on behalf of Sebi subject to compliance with KYC requirements. The Sebi board also took note of the fact that instructions regarding risk-based KYC for FPIs have already been issued by Sebi on 12 September 2013.
Sebi said that FPIs shall be required to seek registration in any one of the categories viz. Category I Foreign Portfolio Investor -- which shall include Government and Government related foreign investors etc; Category II Foreign Portfolio Investor -0 which shall include appropriately regulated broad based funds, appropriately regulated entities, broad based funds whose investment manager is appropriately regulated, university funds, university related endowments, pension funds etc; and Category III Foreign Portfolio Investor -- which shall include all others not eligible under Category I and II foreign portfolio investors.
Sebi said that all existing FIIs and sub accounts may continue to buy, sell or otherwise deal in securities under the FPI regime. Further, all existing Qualified Foreign Investors (QFIs) may continue to buy, sell or otherwise deal in securities till the period of one year from the date of notification of this regulation. In the meantime, they may obtain FPI registration through DDPs. The registration granted to FPIs by the DDPs on behalf of Sebi shall be permanent unless suspended or cancelled by Sebi. FPIs shall be allowed to invest in all those securities, wherein Foreign Institutional Investors (FIIs) are allowed to invest.
The market regulator said Category I and Category II FPIs shall be allowed to issue, or otherwise deal in offshore derivative instruments (ODIs), directly or indirectly. However, the FPI needs to be satisfied that such ODIs are issued only to persons who are regulated by an appropriate foreign regulatory authority after ensuring compliance with know your client norms.
The CII ASCON survey for July-September 2013 quarter indicates a scenario of subdued growth with green shoots of recovery continuing to be elusive in the near future. The Survey reveals that the number of sectors reporting negative growth in July-September 2013 quarter of the current year has increased significantly over the corresponding period of last year. This is despite the fact that the government has introduced various economic reform measures to seize the declining growth. "This continuous deterioration in the economy since the last fiscal is reflective of downbeat sentiment within industry. With economic slowdown showing no signs of bottoming out in the near future, industry is cautious in moving ahead. This calls for a concerted effort from policy makers to stay the course on reforms. No doubt, the government has reiterated its support to industry in form of steps taken to accelerate rupee valuation, increase exports, rev up foreign investment, etc. However, the focus has to be on clearing projects and ensuring that once cleared the investments do take place." said Mr Chandrajit Banerjee, Director General, CII.
The sluggish performance of both producer as well as consumer goods indicate subdued demand conditions in the economy which going forward does not sound optimistic for revival of growth in the coming quarters as well. The Survey respondents have raised concerns over the deteriorating macroeconomic conditions owing to multiple factors, both domestic and global. On the external front, global economic uncertainties, depreciation value of rupee, rising oil prices has contributed to the weak economic environment. These concerns have further contributed to the weakening of domestic economy leading to lowering investments, decline in exports, soaring inflation, stalled investments, and subdued consumption, among others. Respondents have stressed on the need for reviving the investments in the economy to boost demand.
RBI governor Raghuram Rajan on Friday, 4 October 2013, said that there is no reason to dispute the government's estimate of 5-5.5 percent economic growth for the current fiscal year. A pick-up in exports and strong agriculture growth would help the government meet its growth estimate, said Rajan while speaking at Raipur after the Reserve Bank of India's board meeting. He also said the RBI had so far received $5.6 billion through the two swap windows the bank announced last month to attract foreign flows.
On the political front, the Election Commission on Friday, 4 October 2013, announced the schedule for assembly elections in five states. While Chhattisgarh will have a two-phase polling on 11 November and 19 November 2013, the remaining states will have a single-phase poll. Delhi and Mizoram will go to polls on 4 December 2013, Madhya Pradesh on 25 November 2013 and Rajasthan on 1 December 2013. Counting of all assembly elections in all five states will be held on 8 December 2013.
European stocks dropped on Monday, 7 October 2013, as US House Speaker John Boehner ruled out raising the US government's debt limit without setting preconditions. Key benchmark indices in France, Germany and UK were off 0.84% to 1.38%.
Asian markets edged lower on Monday, 7 October 2013, as lawmakers in Washington remain deadlocked over extending the nation's debt limit to avoid default. Key benchmark indices in Singapore, Taiwan, Hong Kong, Indonesia, Japan and South Korea fell by 0.05% to 1.22%. Mainland Chinese markets, which have been closed since Oct. 1 for the National Day holidays, resume trading tomorrow, 8 October 2013.
Trading in US index futures indicated that the Dow could fall 135 points at the opening bell on Monday, 7 October 2013. Republican House Speaker John Boehner vowed on Sunday not to raise the US debt ceiling without a "serious conversation" about what is driving the debt, while Democrats said it was irresponsible and reckless to raise the possibility of a US default. Republicans and Democrats also traded blame for a shutdown that has brought much of the government to a standstill for nearly a week. Republicans are seeking concessions in exchange for raising the nation's $16.7 trillion debt limit. If the borrowing cap is not increased, the United States could go into default.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. The lack of data may make it harder for the Federal Reserve to assess the economy's strength as policy makers mull the timing of reductions in bond buying. Government data from payrolls to retail sales will be delayed as long as the shutdown continues. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.
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