Weakness continued for key benchmark indices which moved in a narrow range in mid-morning trade. The market breadth indicating the overall health of the market turned positive from negative. The Sensex was currently down 206.45 points or 0.76% at 26,854.59. The BSE Small-Cap index moved into the green from red. Key indices dropped as data showing a muted 0.5% growth in industrial production in July 2014 raised doubts about economic recovery. Weakness in Asian stocks also weighed on sentiment on the domestic bourses as a batch of weak data out of China raised concern of a sharp slowdown in the world's second-biggest economy. Metal and mining stocks declined as the latest economic data raised concerns about a slowdown in China. PSU OMCs edged higher ahead of a fortnightly revision in fuel prices.
Earlier, key indices had extended initial losses and hit two-week low after data showing muted industrial growth in July 2014 and on weak Asian stocks. The Sensex fell below the psychological 27,000 level.
In the foreign exchange market, the rupee weakened past 61 against the dollar as key equity benchmark indices dropped.
Brent crude oil prices dropped amid concerns that new sanctions against Russia will weaken oil demand amid ample supplies and a strong dollar.
At 11:14 IST, the S&P BSE Sensex was down 206.45 points or 0.76% at 26,854.59. The index dropped 248.02 points at the day's low of 26,813.02 in early trade, its lowest level since 1 September 2014. The index fell 62.97 points at the day's high of 26,998.07 in opening trade.
The CNX Nifty was down 58.25 points or 0.72% at 8,047.25. The index hit a low of 8,030 in intraday trade, its lowest level since 1 September 2014. The index hit a high of 8,077.30 in intraday trade.
The market breadth indicating the overall health of the market turned positive from negative in mid-morning trade. On BSE, 1,303 shares rose and 1,165 shares fell. A total of 84 shares were unchanged.
The BSE Mid-Cap index was off 13.64 points or 0.14% at 9,969.44. The BSE Small-Cap index was up 30.43 points or 0.27% at 11,197.22. Both these indices outperformed the Sensex.
Metal and mining stocks declined as a batch of weak data out of China raised concern of a sharp slowdown in the world's second-biggest economy. China is the world's largest consumer of steel, copper and aluminum. Sesa Sterlite (down 1.07%), JSW Steel (down 0.8%), Hindalco Industries (down 2.79%), Jindal Steel & Power (down 2.37%), Hindustan Zinc (down 0.21%), Bhushan Steel (down 5%), Tata Steel (down 1.76%), Steel Authority of India (Sail) (down 0.1%), National Aluminum Company (down 1.07%) and Hindustan Copper (down 1.15%) declined. But, NMDC rose 1.05%.
PSU OMCs edged higher ahead of a fortnightly revision in fuel prices. BPCL (up 0.44%), HPCL (up 1.01%) and Indian Oil Corporation (IOCL) (up 0.81%) gained. Lower crude oil prices could decrease under-recoveries of PSU OMCs on domestic sale of diesel, LPG and kerosene at controlled prices. However, weakness in rupee against the dollar will offset the benefit to that extent. A weak rupee raises cost of imports.
According to reports, for the first time in seven years PSU OMCs may cut diesel prices after a fortnightly revision in fuel prices. A recent sharp decline in crude prices could trigger cut in diesel price.
Bajaj Electricals jumped 5.19% after the company announced that the engineering and project business unit of the company has bagged eight new orders for rural electrification work in Jabalpur Distric from Madhya Pradesh Purva Kshetra Vidyut Vitaran Company and in Bhopal District from Madhya Pradesh Madhya Kshetra Vidyut Company, under Rajiv Gandhi Gram Vikas Yojana, aggregating to Rs 518.46 crore. The announcement was made after market hours on Friday, 12 September 2014.
In the foreign exchange market, the rupee weakened past 61 against the dollar as key equity benchmark indices dropped. The partially convertible rupee was hovering at 61.09, compared with its close of 60.66 during the previous trading session.
Industrial production (IIP) growth moderated to 0.5% in July 2014, from a revised 3.9% growth recorded in June 2014, data released by the government after trading hours on Friday, 12 September 2014, showed. The moderation in the IIP growth in July was mainly contributed by 1% decline in the manufacturing sectors output. On the other hand, the mining sector output increased 2.1%, while the electricity generation posted double-digit growth for second straight month at 11.7%.
Another data released by the government after trading hours on Friday, 12 September 2014, showed that the annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India eased to 7.8% in August 2014, from 7.96% July 2014. The rate of inflation based on the combined consumer food price indices (CFPI) for urban and rural India accelerated to 9.42% in August 2014, from 9.36% in July 2014, the data showed. Core CPI inflation which excludes food and energy prices, eased to 6.9% in August 2014, from 7.4% in July 2014.
The government will release the data on inflation based on the Wholesale Price Index (WPI) for August 2014 at 12 noon today, 15 September 2014. The annual rate of inflation based on the monthly Wholesale Price Index (WPI) is seen decelerating to 4.43% in August 2014, from 5.19% in July 2014, as per the median estimate of a poll of economists carried out by Capital Market.
Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said at a banking conference today, 15 September 2014, that India's macroeconomic indicators are improving and inflation has been coming down consistent with the central bank's forecast, but investment growth needs to pick up. Rajan, however, said Friday's industrial output and inflation data suggested that recovery was "uneven."
Today is the due date for the second installment of advance tax payment by corporates. The advance tax data could provide cues about Q2 September 2014 corporate earnings. Advance taxes are collected in four installments -- 15% by 15 June; 40% by 15 September; 75% by 15 December and 100% by 15 March.
Brent crude oil futures edged lower amid concerns that new sanctions against Russia will weaken oil demand amid ample supplies and a strong dollar. Brent for October settlement was down 54 cents at $96.57 a barrel. The contract fell 97 cents to settle at $97.11 on Friday, 12 September 2014. The more active contract Brent for November settlement was down 57 cents at $97.39 a barrel.
On Friday, 12 September 2014, the United States reportedly imposed sanctions on Gazprom, Gazprom Neft, Lukoil, Surgutneftegas and Rosneft, banning Western firms from supporting their activities in exploration or production from deep water, Arctic offshore or shale projects following similar sanctions by the European Union (EU) earlier on that day. The new measures, designed to put further pressure on President Vladimir Putin over Russia's actions in Ukraine, are a major broadening of the previous sanctions, which only banned the export of high technology oil equipment into Russia.
Meanwhile, in its quarterly report released yesterday, 14 September 2014, the Bank for International Settlements (BIS) has reportedly warned that international borrowing and low volatility are increasing risk for emerging-market assets. International borrowing by companies in some emerging markets now matches the output of their economies, leaving bondholders more vulnerable to interest rate or currency shocks, the BIS has said, according to reports. The BIS, known as the central bankers' bank, hosts the Basel Committee on Banking Supervision which sets global capital standards.
Asian stocks fell today, 15 September 2014, after a batch of weak data out of China raised concern of a sharp slowdown in the world's second-biggest economy. Key benchmark indices in Indonesia, South Korea, Taiwan, Singapore and Hong Kong were off 0.19% to 0.75%. China's Shanghai Composite was up 0.13%.
Factory production in China rose 6.9% in August from a year earlier, the statistics office reported on 13 September 2014, down from 9% in July. It was the slowest pace outside the Lunar New Year holiday period of January and February since December 2008. Growth in fixed-asset investment slowed to 16.5% in August, while retail sales expanded 11.9% in August, easing from 12.2% in July.
Trading in US index futures indicated that the Dow could fall 53 points at the opening bell on Monday, 15 September 2014. US stocks edged lower on Friday, 12 September 2014, as investors looked ahead to a Federal Reserve meeting due on 16-17 September 2014.
Investors will look to Federal Open Market Committee (FOMC) meeting for fresh guidance on US interest rates. A policy meeting of the Federal Open Market Committee (FOMC) will be held on 16 and 17 September 2014. At the end of a two-day meeting, the FOMC is widely expected to announce cut in Fed's monthly bond-buying program by another $10 billion to $15 billion, staying on track to end the program at its October meeting. The Fed is likely to raise short-term interest rates next year from their current near-zero levels, where they have been since December 2008.
The Fed will also announce US economic projections after the policy meet. Fed now releases economic projections four times a year (March, June, September, and December). Traditionally, the Fed forecasts covered GDP, the PCE price index, and the civilian unemployment rate. However, the forecast report additionally now includes forecasts for the appropriate timing of the next change in the fed funds rate and the expected fed funds rate at the end of the next two years. The policy meet will be followed by a press conference by Federal Reserve Chairwoman Janet Yellen on 17 September 2014.
The Federal Reserve after two-day policy meeting on 30 July 2014, said it would reduce its purchases of mortgage and Treasury bonds by $10 billion to $25 billion monthly from $35 billion earlier, as widely expected.
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