A bout of volatility was witnessed as key benchmark indices recovered after paring initial gains after hitting fresh intraday high in morning trade. Indian stocks edged higher on expectations that the US government's partial shutdown and US political impasse could lead to the US Federal Reserve postponing tapering of monetary stimulus to the US economy. The rupee edged higher against the dollar. The barometer index, the S&P BSE Sensex, fell below the psychological 20,000 mark shortly after regaining that level in morning trade. The Sensex hit over one-week high. The 50-unit CNX hit 1-1/2-week high. The Sensex was up 81.41 points or 0.41%, up close to 115 points from the day's low and off close to 30 points from the day's high. The market breadth, indicating the overall health of the market, was strong.
Shares of Tata Motors struck record high. Among pharma stocks, Sun Pharmaceutical Industries hit record high. Among IT stocks, HCL Technologies scaled record high. Shares of PSU banks, two-wheeler makers and consumer durables makers rose after the finance ministry on Thursday, 3 October 2013, said that the government will provide additional amount of capital to state-run banks (PSU banks) to enable them to lend to borrowers in selected sectors such as two wheelers, consumer durables etc., at lower rates in order to stimulate demand.
The market moved into the positive terrain after opening lower. Volatility continued as key benchmark indices recovered after paring initial gains after hitting fresh intraday high in morning trade.
Indian stocks rose on expectations that the US government's partial shutdown and US political impasse could lead to the US Federal Reserve postponing tapering of monetary stimulus to the US economy. The longer the US federal government remains shut, the bigger the negative impact on US economic growth. Investors are worried that the US political impasse could lead to the US government defaulting on its debt. Failure to raise the debt limit has "the potential to be catastrophic," the US Treasury Department warned in a report on Thursday, 3 October 2013, that said credit markets could freeze and the value of the dollar could plummet. Atlanta Fed President Dennis Lockhart said on Thursday, 3 October 2013, that the shortage of "data would tend to make me somewhat more cautious" about reducing the pace of bond purchases. Less data is not helpful in gauging where the economy is and where it's going, Lockhart said in Atlanta. If the shutdown lingers until the next Fed policy-setting meeting on Oct. 29-30, it would be very hard to make a decision, he said.
The US Federal Reserve is buying $85 billion in Treasury and mortgage debt each month, and has pledged to keep its benchmark interest rate near zero as long as the jobless rate remains above 6.5% and the inflation outlook doesn't exceed 2.5%. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
In the foreign exchange market, the rupee strengthened against the dollar tracking global dollar weakness. The partially convertible rupee was hovering at 61.46, compared with its close of 61.735/745 on Thursday, 3 October 2013.
The market sentiment was boosted by data showing that foreign funds were net buyers of Indian stocks on Thursday, 3 October 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 997.21 crore on Thursday, 3 October 2013, as per provisional data from the stock exchanges.
At 10:20 IST, the S&P BSE Sensex was up 81.41 points or 0.41% to 19,983.48. The index jumped 111.81 points at the day's high of 20,013.88 in morning trade, its highest level since 24 September 2013. The index fell 33.24 points at the day's low of 19,868.83 in early trade.
The CNX Nifty was up 22.25 points or 0.38% to 5,931.95. The index hit a high of 5,942.25 in intraday trade, its highest level since 23 September 2013. The index hit a low of 5,889.95 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,072 shares rose and 585 shares fell. A total of 82 shares were unchanged.
Among the 30-share Sensex pack, 15 stocks rose and rest fell. M&M (up 2.09%), TCS (up 1.99%) and Cipla (up 1.7%), edged higher.
Tata Motors rose 4.36% to Rs 359.85 after hitting record high of Rs 364.70 in intraday trade. The company's British luxury car unit Jaguar Land Rover (JLR) on Wednesday, 2 October 2013, said it has appointed John Edwards into the role of Managing Director of the newly created Individual Products Division with immediate effect. The new division will be responsible for designing and creating a portfolio of brand extending products, ranging from high value halo vehicles to lifestyle merchandise products. In his new role, John will be responsible for the company's 'Engineered To Order' division, accessories, licensing & merchandise activities, vehicle operations and heritage vehicles across both brands, JLR said in statement.
Shares of PSU banks, two-wheeler makers and consumer durables makers rose after the finance ministry on Thursday, 3 October 2013, said that the government will provide additional amount of capital to state-run banks (PSU banks) to enable them to lend to borrowers in selected sectors such as two wheelers, consumer durables etc., at lower rates in order to stimulate demand. While this will bring relief to the consumers, especially the middle class, it is also expected to give a boost to capacity addition, employment and production, the finance ministry said in a statement. This decision is based on the discussions between Dr. Raghuram Rajan, Governor, Reserve Bank of India (RBI), and the Union Finance Minister, Mr. P. Chidambaram. At the end of September 2013, growth of gross bank credit stood at about 18%, year-on-year. However, credit growth is sluggish in some sectors leading to the conclusion that demand in these sectors remains subdued, the finance ministry said. It may be recalled that in the Union Budget for 2013-14, a sum of Rs 14000 crore was provided for capital infusion in PSU banks. This amount will be enhanced sufficiently, the finance ministry said.
Among two-wheeler makers, Bajaj Auto (up 1.1%) and Hero MotoCorp (up 1.2%), gained.
Among PSU bank stocks, State Bank of India, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank gained 0.15% to 2.56%.
Among consumer durables makers, Videocon Industries, Hitachi Home & Life Solutions (India), Voltas and Whirlpool of India rose 0.7% to 2.64%.
Sun Pharmaceutical Industries rose 1.01% to Rs 606.60 after hitting record high of Rs 608.60 in intraday trade. The company, through its subsidiary, announced the formation of a joint venture with Intrexon Corporation after market hours on Tuesday, 1 October 2013, to develop controllable gene-based therapies for the treatment of ocular diseases that cause partial or total blindness in millions of people worldwide. Initial targets are dry age-related macular degeneration (AMD), glaucoma and retinitis pigmentosa. The joint venture will leverage Sun Pharma's global capabilities and experience in developing and manufacturing complex dosage forms and specialty pharmaceuticals for niche therapy areas. Intrexon and Sun Pharma will share in both the financing of, and the revenues from, the joint venture.
Through an Exclusive Channel Collaboration (ECC), the joint venture will have access to Intrexon's full suite of proprietary synthetic biology technologies, including the RheoSwitch Therapeutic System (RTS) platform. RTS is a clinically validated method for controlling the location, concentration and timing of protein expression. RTS may address a long-standing limitation of current approaches by enabling patients to receive a targeted biologic therapy without having to endure a lifetime of injections. In addition to the initial targets, the companies intend to further expand the future pipeline of targeted ocular diseases to potentially include wet AMD, macular edema, non-infectious uveitis and diabetic retinopathy.
HCL Technologies rose 0.13% to Rs 1,105.35 after hitting record high of Rs 1,116.25 in intraday trade today, 4 October 2013.
Markit Economics will unveil the result of a monthly survey on the performance of India's services sector for September 2013 today, 4 October 2013.
Asian stocks fell on Friday, 4 October 2013, as concern grew that the US political impasse could lead to the government defaulting on its debt, sparking a recession. Key benchmark indices in Hong Kong, Japan, Taiwan, South Korea and Indonesia fell 0.03% to 0.64%. Singapore's Straits Times rose 0.05%. Markets in mainland China are closed till 7 October 2013 for National Day holidays.
The Bank of Japan kept its monetary policy unchanged on Friday following its meeting, and said in an accompanying statement that the economy is recovering moderately. In terms of the inflation outlook, the central bank noted that consumer prices excluding fresh food is in the range of 0.5% to 1%, and that inflation expectations appear to be rising on the whole. The Bank of Japan has set a 2% inflation target, which it aims to reach by 2015.
Trading in US index futures indicated a flat opening of US stocks on Friday, 4 October 2013. US stocks dropped on Thursday as investors worried that a budget stalemate in Congress would become entangled with much more critical legislation to raise the federal borrowing limit. The standoff between congressional Democrats and Republicans to pass an emergency funding bill, which has led to a third day of a partial US government shutdown, continued with little sign of progress toward a solution.
The failure of US lawmakers to avert a government shutdown fueled concern they won't be able to agree on raising the nation's $16.7 trillion debt limit later this month. The Treasury Department warned that a federal default could lead to a recession as bad as the 2008 financial crisis or worse. "Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments and slow economic growth could last for more than a generation," the Treasury said in its report. "In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth -- with many private-sector analysts believing that it would lead to events of the magnitude of late 2008 or worse, and the result then was a recession more severe than any seen since the Great Depression," the department said.
A report on Thursday showed fewer Americans than forecast filed applications for unemployment benefits last week. Jobless claims rose to 308,000 in the week ended Sept. 28, from a revised 307,000, the Labor Department said. US payrolls data won't be released as scheduled today because of the government shutdown. The department said that an alternative date for the September payrolls report and jobless rate hasn't been scheduled.
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.
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