Key benchmark indices lauguished in red in early afternoon trade after Markit Economics said business conditions in the Indian private sector economy continued to deteriorate in December 2013. The barometer index, the S&P BSE Sensex, was down 64.31 points or 0.31%, off 126.77 points from the day's high and up 46.39 points from the day's low. The market breadth, indicating the overall health of the market, was strong. In the foreign exchange market, the rupee edged lower against the dollar as the US Federal Reserve prepared to start cutting bond purchases amid data that signaled the recovery of the world's biggest economy is picking up speed.
Hero MotoCorp reversed initial gain in volatile trade. Sun Pharmaceutical Industries extended initial gain. Telecom stocks were mostly lower after the Delhi High Court today, 6 January 2014, upheld the TDSAT order of an audit of private telecom companies and allowed the Comptroller and Auditor General to audit the accounts of the companies. Shares of realty firm Sobha Developers dropped after the company said that its sales volume declined in Q3 December 2013 over Q3 December 2012.
Key benchmark indices reversed direction after a positive start. Key benchmark indices cut losses after hitting fresh intraday low in morning trade. Key benchmark indices hovered in negative zone in mid-morning trade after Markit Economics said business conditions in the Indian private sector economy continued to deteriorate in December 2013. Key benchmark indices lauguished in red in early afternoon trade.
Foreign institutional investors (FIIs) sold shares worth a net Rs 18.06 crore on Friday, 3 January 2014, as per provisional data from the stock exchanges.
At 12:15 IST, the S&P BSE Sensex was down 64.31 points or 0.31% to 20,787.02. The index fell 110.70 points at the day's low of 20,740.63 in morning trade. The index rose 62.46 points at the day's high of 20,913.79 in opening trade, its highest level since 2 January 2014.
The CNX Nifty was down 17.70 points or 0.28% to 6,193.45. The index hit a low of 6,176.15 in intraday trade. The index hit a high of 6,224.70 in intraday trade, its highest level since 2 January 2014.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,329 shares gained and 864 shares fell. A total of 125 shares were unchanged.
The total turnover on BSE amounted to Rs 1196 crore by 12:20 IST, compared with Rs 891 crore by 11:20 IST.
Among the 30-share Sensex pack, 19 stocks declined and rest of them gained.
Tata Power Company (down 2.02%), ICICI Bank (down 1.63%) and Infosys (down 1%) edged lower from the Sensex pack.
Hero MotoCorp fell 1.18% to Rs 2,071.70, with the stock reversing initial gain in volatile trade. The stock hit a high of Rs 2,100 and low of Rs 2,065.50 so far during the day.
Sun Pharmaceutical Industries rose 1.41% to Rs 588.15, with the stock extending initial gain. The stock hit a high of Rs 589 and low of Rs 579.30 so far during the day.
Telecom stocks were mostly lower after the Delhi High Court today, 6 January 2014, upheld the TDSAT order of an audit of private telecom companies and allowed the Comptroller and Auditor General to audit the accounts of the companies. Idea Cellular (down 0.89%), Tata Teleservices (Maharashtra) (down 2.26%) and Reliance Communications (down 0.57%) declined. Bharti Airtel (up 0.32%) and MTNL (up 0.85%) rose.
The telecom companies, who are being investigated in connection with the 2G spectrum scam or the arbitrary allocation of spectrum to private companies at throwaway prices, had argued that the government's auditor cannot examine private entities. The court today rejected that contention. The CAG had in 2010 sought the revenue details of the companies to examine whether they under-reported their revenues. The auditor said since the companies are in a revenue sharing arrangement with the government, they can be subjected to a state audit as well.
After the high court refused to stop the audit, the companies moved Supreme Court, which referred their case back to the high court.
Realty stocks declined on profit booking. DLF (down 0.98%), Indiabulls Real Estate (down 0.88%), HDIL (down 1.12%), and Unitech (down 0.33%) fell.
Sobha Developers lost 2.04% after the company said that its sales volume declined 17.77% at 0.74 million square feet in Q3 December 2013 over Q3 December 2012. The announcement was made after market hours on Friday, 3 January 2014.
Sobha Developers' sales value declined 5.83% at Rs 502.30 crore in Q3 December 2013 over Q3 December 2012. Average price realization rose 14.82% at Rs 6,786 per square feet in Q3 December 2013 over Q3 December 2012.
During the quarter (Q3 December 2013), the company has launched Elan (a joint development residential project with Lakshmi Machine Works) in Coimbatore having a total saleable area of 0.32 million square feet (msf) and Sobha Estate (plotted development) in Mysore having a total saleable area of 0.13 msf. Both the new launches have generated a positive response from the customers, Sobha Developers said in a statement.
Sobha Developers said that it remains upbeat about the company's key South Indian markets despite a lower sales volume during the quarter. The company also anticipates an uptick in the sales momentum in the coming quarters due to proposed new launches across its existing markets.
Sobha Developers had at the beginning of the fiscal set a guidance of new sales area of 4.20 msf valued at Rs 2600 crore for the current fiscal (FY 2014). At the close of three quarters of FY 2014, the company has registered new sales area of 2.66 msf valued at Rs 1737 crore. While the company is able to maintain better sales realizations and generated consistent operational cash flows, it remains cautious about achieving its guidance set for the current fiscal, Sobha Developers said in a statement.
MOIL rose 1.24% after the company revised prices of various grades of manganese ore for the January-March 2014 quarter. The company made the announcement after market hours on Friday, 3 January 2014.
MOIL said the price of the Ferro grade Manganese Ore has been increased by 3% and price of SMAGR & Fines have been increased by 7.5% in the January-March 2014 quarter over the prices in October-December 2013 quarter. The prices of Electrolytic Manganese Dioxide (EMD) have been increased by 5% over the prices for October-December 2013 quarter, the company said.
RPP Infra Projects was locked at 20% upper circuit at Rs 60.40 after the company said it has recently secured few contracts in Tamil Nadu, taking the company's order book to Rs 650 crore. The company announced the new orders during trading hours today, 6 January 2014.
In the foreign exchange market, the rupee edged lower against the dollar as the US Federal Reserve prepared to start cutting bond purchases amid data that signaled the recovery of the world's biggest economy is picking up speed. The partially convertible rupee was hovering at 62.265, weaker than its close of 62.16/17 on Friday, 3 January 2014.
Bond prices rose after strong bidding at bond auction held on Friday, 3 January 2014. The yield on 10-year federal paper, 8.83% GS 2023, was hovering at 8.8147%, lower than its close of 8.8343% on Friday, 3 January 2014. Bond yield and bond prices are inversely related.
Markit Economics today, 6 January 2014, said that business conditions in the Indian private sector economy continued to deteriorate in December 2013. At 48.1, the seasonally adjusted HSBC India Composite Output Index posted below the crucial 50 threshold for the sixth consecutive month. The index dropped from November's 48.5, indicating a slightly faster rate of contraction. While manufacturing production expanded, services output fell in December 2013, Markit Economics said.
Adjusted for seasonal factors, the HSBC Services Business Activity Index fell from 47.2 in November to 46.7 in the latest month, indicating a solid and accelerated rate of contraction. This was the sixth consecutive monthly drop in output levels, which is the longest period of continuous reduction since the 2008/2009 global financial crisis, Markit Economics said. Underpinning the latest fall in services output was a solid decrease in incoming new work. New business contracted at the quickest pace since September, with panelists reporting an increasingly fragile economy and competitive pressures, Markit Economics said. There were a few mentions that the upcoming elections had also contributed to the latest drop in new orders. Across the private sector as a whole, new business decreased at a faster, but moderate pace.
Four of the six broad areas of the service economy registered lower output volumes, while new business contracted in five categories. As with the trend for output, the sharpest decline in new orders was noted at Hotels & Restaurants. The Post & Telecommunication sub-sector remained resilient, with growth of both business activity and new orders recorded.
Outstanding business at both service providers and manufacturers increased in December, leading to a further accumulation of unfinished work in the Indian private sector. Although modest, the overall rate of increase was above the long-run survey average.
December data indicated that private sector employment rose. The latest increase in payroll numbers was broad-based with both manufacturers and service providers posting job creation.
Average purchase costs at services companies rose further in December, amid reports of higher prices paid for fuel, food, transportation and electricity. But, the rate of cost inflation was only moderate and the weakest since July, Markit Economics said. Input price inflation in the private sector as a whole eased to a six-month low. Additional cost burdens were passed on, as prices charged by private sector firms were raised for the fifty-fifth consecutive month in December. The latest increase in tariffs was, however, marginal and below its average.
Indian service providers remained upbeat about the prospects for business activity in 2014, Markit Economics said. Furthermore, the degree of confidence was the strongest in five months. Positive sentiment was linked by companies to forecasts of better economic conditions and hopes of higher demand. Some firms also mentioned that output is anticipated to grow after the elections.
Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "The service sector continues to face head winds, with weakening new business dragging down activity. On a positive note, inflation pressures are easing and optimism about the coming year is rising".
The next major trigger for the stock market is Q3 December 2013 corporate earnings. Investors and analysts will closely watch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year and/or the next year. The Q3 earnings season begins later this week when IT major Infosys and private sector bank IndusInd Bank unveil their earnings on Friday, 10 January 2014.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
Asian stocks declined on Monday, 6 January 2014, as a gauge of China's services industries dropped, signaling growth may slow in the world second-biggest economy. Key benchmark indices in Taiwan, Hong Kong, Singapore, China, Japan and Indonesia fell by 0.11% to 2.35%. South Korea's Seoul Composite rose 0.37%.
A private index of China's services industry released today, 6 January 2014, by HSBC and Markit Economics fell to 50.9 last month from 52.5 in November. A number above 50 indicates expansion. China's official nonmanufacturing PMI fell to 54.6 in December from 56.0 in November, according to a statement on Friday, 3 January 2014, from the China Federation of Logistics and Purchasing.
China is due to publish December trade data on Wednesday, 8 January 2014, and December inflation figures on Thursday, 9 January 2014.
Trading in US index futures indicated that the Dow could drop 8 points at the opening bell on Monday, 6 January 2014. US stocks ended a choppy trading session mostly lower on Friday, 3 January 2014, after Federal Reserve Chairman Ben Bernanke defended the extraordinary measures undertaken by the central bank to boost the economic recovery. Bernanke, in a speech in Philadelphia four weeks before his term expires, said the economy "has made considerable progress." He cited payroll employment rising by 7.5 million since 2010 and growth in 16 of the 17 quarters after the recession ended as evidence the Fed's policies have succeeded. "The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for US economic growth in coming quarters," Bernanke said.
The US central bank will make its first Treasuries purchase under the smaller program on 6 January 2014, buying as much as $1.5 billion of securities due from February 2036 to November 2043. The Federal Reserve said after a two-day monetary policy review on 18 December 2013 that it will cut its monthly bond purchases to $75 billion from $85 billion starting in January 2014 amid an improved outlook for the job market in the world's largest economy. The US central bank is poised to continue winding down its stimulus measures gradually this year.
The central bank will release minutes of its December Federal Open Market Committee policy meeting on Wednesday, 8 January 2014.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014.
The US government will unveil the influential non-farm payroll report for December 2013 on Friday, 10 January 2014.
The US Senate on Monday evening was slated to vote, and likely approve, the nomination of Janet Yellen as the Fed's new chief. She would succeed Fed Chairman Ben Bernanke on Feb. 1 if confirmed.
In Europe, the European Central Bank holds a monetary policy meeting on Thursday, 9 January 2014. UK's central bank -- Bank of England -- also undertakes monthly monetary policy review on the same day.
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