Weakness continued on the bourses in early afternoon trade. The barometer index, the S&P BSE Sensex, was down 233.97 points or 1.19%, off about 160 points from the day's high and up close to 20 points from the day's low. The market breadth, indicating the overall health of the market, was weak. Indian stocks dropped today, 30 September 2013, as Asian stocks fell and as US index futures pointed to a weak opening of US stocks later in the global day on concern the US government is headed for a shutdown amid a budget stalemate. The US Congress failed to agree on a new budget over the weekend, while the threat of new elections out of Italy and a report showing that China's manufacturing sector grew at a slower pace than expected also weighed on sentiment. In the foreign exchange market, the rupee dropped against the dollar.
Tata Steel extended intraday losses. Most auto stocks extended Friday's losses triggered by Reserve Bank of India (RBI) governor Raghuram Rajan's comments that the RBI is still worried about high inflation, even when taking out volatile food prices. Shares of Reliance Infrastructure (RInfra) dropped after credit rating agency CRISIL downgraded its rating on RInfra's debt programmes and long-term bank facilities to 'CRISIL A+/Negative' from 'CRISIL AA-/Negative'.
The market edged lower in early trade on weak Asian stocks. The market extended initial losses and hit fresh intraday low in morning trade. The barometer index, the S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their lowest level in nearly three weeks. The market trimmed losses after hitting fresh intraday low in mid-morning trade. Weakness continued on the bourses in early afternoon trade.
The market sentiment was hit adversely by data showing that foreign funds were net sellers of Indian stocks on Friday, 27 September 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 244.95 crore on Friday, 27 September 2013, as per provisional data from the stock exchanges.
In the foreign exchange market, the rupee weakened against the dollar, tailing global risk-off sentiment on a potential shutdown of the US government. The partially convertible rupee was hovering at 62.8725, compared with its close of 62.51/52 on Friday, 27 September 2013. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
The Reserve Bank of India (RBI) will unveil data on India's current account deficit and data on balance of payments at 17:00 IST today, 30 September 2013.
At 12:20 IST, the S&P BSE Sensex was down 233.97 points or 1.19% to 19,493.30. The index declined 252.41 points at the day's low of 19,474.86 in mid-morning trade, its lowest level since 10 September 2013. The index fell 75.96 points at the day's high of 19,651.31 in opening trade.
The CNX Nifty was down 69.90 points or 1.2% to 5,763.30. The index hit a low of 5,755.65 in intraday trade, its lowest level since 10 September 2013. The index hit a high of 5,810.20 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,185 shares fell and 742 shares rose. A total of 112 shares were unchanged.
Among the 30-share Sensex pack, 26 stocks fell and only four rose. Bharti Airtel (down 3.41%), Bhel (down 4.2%) and ICICI Bank (down 3.28%), declined.
Steel major Tata Steel dropped 5.11%, with the stock extending intraday losses.
Most auto stocks extended Friday's losses triggered by Reserve Bank of India (RBI) governor Raghuram Rajan's comments that the RBI is still worried about high inflation, even when taking out volatile food prices. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. Maruti Suzuki India (down 1.48%) and Tata Motors (down 1.28%), dropped.
M&M shed 2.75%. The company on Friday, 27 September 2013, said it would be raising the prices of its passenger as well as its commercial vehicles by up to 2% with effect from 1 October 2013. The company said that the increase would be in the range of Rs 6000 to Rs 20000 depending on the vehicle model. The increase is primarily due to higher input costs, devaluation of the rupee and increase in some raw material costs.
Two-wheeler stocks were mixed. Bajaj Auto rose 0.39%. Hero MotoCorp dropped 0.77%.
Auto companies will start unveiling monthly sales volume data for September 2013 from tomorrow, 1 October 2013.
Shares of Reliance Infrastructure (RInfra) dropped after credit rating agency CRISIL downgraded its rating on RInfra's debt programmes and long-term bank facilities to 'CRISIL A+/Negative' from 'CRISIL AA-/Negative'. The stock was off 4.4% at Rs 375.50. CRISIL said that the rating revision reflects lower revenue visibility in RInfra's engineering, procurement, and construction (EPC) business coupled with higher-than-expected exposure to group companies. The impact of these developments is partially offset by the incremental annual cash flow expected from the recovery of regulatory assets in its Mumbai distribution business, CRISIL said.
CRISIL's ratings continue to reflect RInfra's stable cash flows supported by its leading market position in the regulated electricity distribution market in Mumbai, and its relatively healthy financial flexibility. These rating strengths are partially offset by the company's exposure to risks related to the infrastructure project development business, and high financial exposure to group companies, CRISIL said.
SKS Microfinance rose 1.8% after the company today, 30 September 2013, announced the conclusion of a securitization transaction for Rs 321 crore, rated A1+ (SO) by a leading rating agency, with a major public sector bank. The announcement was made before market hours today, 30 September 2013. SKS Microfinance said that the transaction is possibly the first substantial securitization deal in FY 2014 in the microfinance sector.
Mr. S. Dilli Raj, Chief Financial Officer, SKS Microfinance said, "This fiscal we could complete the first securitization transaction in Q2 itself as against Q3 in FY 2013. The present transaction generates liquidity of Rs 321 crore for SKS Microfinance, and enables the company to extend micro loans to 4,75,000 rural women entrepreneurs. Notably, 29% of the pool is from loans extended to women entrepreneurs from Scheduled Castes and Scheduled Tribes, 17% from minorities, 37% from Backward Castes and the remaining 17% from women belonging to the other castes. The entire pool thus qualifies for weaker section treatment for the bank."
Another significant aspect to be noted is that the transaction further corroborates the fact that securitization is emerging as a meaningful financial inclusion tool, SKS said in a statement.
The government said on Friday that it will allow unlisted Indian companies to list directly and raise capital overseas to retire debt or for acquisitions or operational needs abroad. The move comes at a time when the government is battling to trim the current account deficit and attract dollar inflows.
A finance ministry statement said unlisted Indian companies would be allowed for two years, on a pilot basis, to list and raise capital abroad without the requirement of prior or subsequent listing in the country. "At present, unlisted companies that are incorporated in India are not allowed to directly list in overseas markets without prior or simultaneous listing in Indian markets," the statement said. After the initial two year period, the impact of this arrangement will be reviewed. While raising resources abroad, the listing company shall be fully compliant with the FDI policy in force, the finance ministry said. In case funds raised are not utilized abroad such companies would be asked to remit the money back to India within 15 days and these funds would be parked only in AD category banks recognized by RBI.
Asian stocks fell on Monday, 30 September 2013, on concern the US government is headed for a shutdown amid a budget stalemate. Key benchmark indices in Japan, Hong Kong, Taiwan, Indonesia, Singapore and South Korea fell 0.62% to 2.06%. China's Shanghai Composite rose 0.39%
A Chinese manufacturing gauge unexpectedly rose less than a preliminary estimate in September, highlighting challenges for Premier Li Keqiang in sustaining a rebound from a two-quarter economic slowdown. The Purchasing Managers' Index from HSBC Holdings Plc and Markit Economics rose to 50.2 in September from 50.1 in August. The final number was less than last week's 51.2 preliminary reading. A similar gauge from the government is due tomorrow, 1 October 2013.
China opened a new free trade zone in Shanghai on Sunday in what has been hailed as potentially the boldest reform in decades, and gave fresh details on plans to liberalise regulations governing finance, investment and trade in the area. The Shanghai FTZ, which covers an area of nearly 29 sq km on the eastern outskirts of the commercial hub, was approved by China's State Council, or cabinet, in July. Some Chinese and foreign firms are already setting up subsidiaries in the zone. A total of 25 companies so far have been approved to start operations in a variety of sectors, alongside 11 financial institutions, most of which are domestic banks but including the mainland subsidiaries of Citibank and DBS.
Trading in US index futures indicated that the Dow could fall 115 points at the opening bell on Monday, 30 September 2013. US stocks Friday closed a downcast week on a sour note, declining amid relentless partisan squabbling over a budget bill to avert a partial US government shutdown.
Republican-led House voted Sunday to delay President Barack Obama's health-care law by one year. If the two sides can't agree by the Tuesday-morning deadline, thousands of government employees will be unable to work. There's one more vote before the shutdown would take place.
Even if Congress resolves the budget fight by the Oct. 1 deadline, US lawmakers would move to the next fiscal dispute over raising the $16.7 trillion debt ceiling.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. 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.
In Europe, Italian Prime Minister Letta said he will ask for a vote of confidence on Oct. 2, speaking on Rai 3 television. The Italian government has been torn apart by legal troubles facing former leader Silvio Berlusconi, whose criminal tax-fraud conviction subjects him to expulsion proceedings in parliament. Berlusconi allies have said they planned to quit the cabinet.
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