Key benchmark indices hovered in negative terrain in morning trade. Weakness in Asian stocks weighed on sentiment adversely. The barometer index, the S&P BSE Sensex, was down 36.38 points or 0.17%, off close to 40 points from the day's high and up about 50 points from the day's low. The market breadth, indicating the overall health of the market, was negative. In the foreign exchange market, the rupee edged lower against the dollar.
Asian stocks edged lower on Tuesday, 10 December 2013, on heightened speculation that the Federal Reserve may be about to start cutting back on its stimulus program. 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.
Shares of power generation and distribution firms declined after the Central Electricity Regulatory Commission (CERC) released draft regulations which will decide power tariffs for a period of five years from 1 April 2014. Capital goods pivotals declined.
The market edged lower in early trade. Key benchmark indices hovered in negative terrain in morning trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 2473.17 crore on Monday, 9 December 2013, as per provisional data from the stock exchanges.
At 10:20 IST, the S&P BSE Sensex was down 36.38 points or 0.17% to 21,290.04. The index fell 87.40 points at the day's low of 21,239.02 in morning trade, its lowest level since 6 December 2013. The index rose 1.33 points at the day's high of 21,327.75 in early trade.
The CNX Nifty was down 17.90 points or 0.28% to 6,346. The index hit a low of 6,335.60 in intraday trade, its lowest level since 6 December 2013. The index hit a high of 6,362.25 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 923 shares fell and 713 shares rose. A total of 126 shares were unchanged.
From the 30-share Sensex pack, 17 stocks fell and rest rose. ICICI Bank (down 2.09%), Jindal Steel & Power (down 1.3%) and ONGC (down 1.26%) edged lower.
Capital goods pivotals declined. Bhel fell 4.48% to Rs 164 on profit booking after the stock jumped 17.28% in the preceding eight sessions to Rs 171.70 on 9 December 2013, from a recent low of Rs 146.40 on 27 November 2013.
Shares of engineering and construction major L&T fell 2.52%.
Shares of power generation and distribution firms declined after the Central Electricity Regulatory Commission (CERC) released draft regulations which will decide power tariffs for a period of five years from 1 April 2014. GVK Power & Infrastructure (down 2.77%), Tata Power Company (down 2.08%), Torrent Power (down 2.2%), NTPC (down 10.33%), Adani Power (down 2.96%), Power Grid Corporation of India (down 2.27%), Reliance Infrastructure (down 0.44%), NHPC (down 1.37%), and Reliance Power (down 0.99%) declined.
CERC's draft regulations will decide power tariffs for the five-year 2014-2019 period and will impact regulated power generating and transmission companies like NTPC, NHPC, Sutlej Jal Vidyut Nigam and Torrent Power. The main highlight of this CERC's draft is that power tariffs are set to get cheaper. Further, CERC has not changed the operating and maintenance expenses.
In the foreign exchange market, the rupee edged lower against the dollar on heightened speculation that the Federal Reserve may be about to start cutting back on its stimulus program. The partially convertible rupee was hovering at 61.245, compared with its close of 61.13/14 on Monday, 9 December 2013.
The Congress has retained power in Mizoram with a landslide victory in the Assembly elections held on 25 November 2013, the results of which were declared on Monday, 9 December 2013. In the elections to the 40-member Assembly, the Congress has won 33 of the 39 seats declared so far. Chief Electoral Officer of Mizoram Ashwani Kumar told to media reporters that the results of Lawngtlai East constituency would be announced only on December 12 as re-polling would be held on December 11 in one polling booth where the Electronic Voting Machine failed.
Earlier, the Congress had performed poorly with the Bharatiya Janata Party (BJP) securing emphatic victory in assembly elections in Madhya Pradesh and Rajasthan, a narrower one in Chhattisgarh and emerged as the single largest party in a hung Delhi assembly, giving the party and its leader Narendra Modi confidence and momentum going into next year's general elections. Counting of votes for assembly elections in Rajasthan, Delhi, Madhya Pradesh and Chattisgarh took place on Sunday, 8 December 2013.
On macro front, 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.
Asian stocks edged lower on Tuesday, 10 December 2013, on heightened speculation that the Federal Reserve may be about to start cutting back on its stimulus program. Key benchmark indices in Taiwan, South Korea, Singapore, Japan and Hong Kong were off 0.08% to 0.43%. Key benchmark indices in China and Indonesia were up 0.17% to 1.14%. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
Trading in US index futures indicated that the Dow could gain 11 points at the opening bell on Tuesday, 10 December 2013. US stocks eked out small gains on Monday, 9 December 2013, as investors weighed the timing of any cuts to Federal Reserve monetary support amid budget negotiations in Washington.
Fed Bank of St. Louis President James Bullard on Monday, 9 December 2013, said that the odds of a reduction to Fed's bond purchases have risen along with gains in the labor market. Any cut should be small because inflation is slow, he said. "A small taper might recognize labor-market improvement while still providing the committee the opportunity to carefully monitor inflation during the first half of 2014. Should inflation not return toward target, the committee could pause tapering at subsequent meetings," said Bullard, who votes on policy this year but not next.
Dallas Fed President Richard Fisher said that tapering needs to begin "as soon as possible" in an economy that doesn't need any more monetary stimulus. Fisher votes on policy next year.
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 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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