Volatility ruled the roost during the last one hour of trade as the key benchmark indices trimmed losses soon after extending intraday losses. The barometer index, the S&P BSE Sensex, trimmed losses after hitting its lowest level in more than nine weeks and the 50-unit CNX Nifty trimmed losses after hitting its lowest level in almost 10 weeks. The high volatility was triggered by traders rolling over of positions in the futures & options (F&O) segment from the near month January 2014 series to February 2014 series. The January 2014 F&O contracts expired today, 30 January 2014. The market breadth, indicating the overall health of the market, was weak. The Sensex was provisionally down 138.22 points or 0.67%, up 165.30 points from the day's low and off 19.33 points from the day's high. The market sentiment was hit adversely by the US Federal Reserve's decision of a further reduction in its monthly bond purchases and Fed's indication that it is likely to keep reducing its purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market. The BSE Small-Cap and Mid-Cap indices dropped more than 1% each.
Index heavyweight and cigarette major ITC recouped entire losses in late trade. Index heavyweight Reliance Industries fell in volatile trade. Crompton Greaves jumped after the company reported turnaround Q3 earnings after market hours on Wednesday, 29 January 2014. Realty stocks dropped.
Key benchmark indices edged lower in early trade on weak Asian stocks. Key benchmark indices extended initial losses and to hit fresh intraday low in morning trade. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than nine weeks. Key benchmark indices extended losses and hit fresh intraday low in mid-morning trade. Key benchmark indices trimmed losses in early afternoon trade after the Finance Ministry said in a statement that India's economy is better prepared for the consequences, if any, of reduction in bond purchases by the US Federal Reserve and that the Government of India and the Reserve Bank of India will continue to remain vigilant and will take whatever steps are necessary to ensure that there is stability in the financial markets. Weakness continued on the bourses in afternoon trade Key benchmark indices extended losses and hit fresh intraday low in mid-afternoon trade. Volatility ruled the roost during the last one hour of trade as the key benchmark indices trimmed losses soon after extending intraday losses. The barometer index, the S&P BSE Sensex, trimmed losses after hitting its lowest level in more than nine weeks and the 50-unit CNX Nifty hit trimmed losses after hitting its lowest level in almost 10 weeks.
After a monetary policy review, the Federal Open Market Committee (FOMC) on Wednesday, 29 January 2014, announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in economic activity and improvement in the labor market. In emerging markets, the reduction in bond purchases by the Fed has triggered worries of slowdown in capital inflows and fears of capital outflows. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets in recent years.
Investors pulled out more than $7 billion from exchange-traded funds (ETFs) investing in developing-nation assets this month, according to reports.
The South Africa Reserve Bank unexpectedly raised the repurchase rate to 5.5% from 5% on Wednesday, 29 January 2014, following Turkey's decision early this week to more than double its benchmark rate amid a rout in its currency.
As per provisional closing, the S&P BSE Sensex was down 138.22 points or 0.67% to 20,509.08. The index lost 303.52 points at the day's low of 20,343.78 in late trade, its lowest level since 25 November 2013. The index fell 118.89 points at the day's high of 20,528.41 in late trade.
The CNX Nifty was down 41.25 points or 0.67% to 6,079. The index hit a low of 6,027.25 in intraday trade, its lowest level since 22 November 2013. The index hit a high of 6,082.85 in intraday trade.
The BSE Small-Cap index was off 86.82 points or 1.38% at 6,187.13. The BSE Mid-Cap index was off 68.55 points or 1.09% at 6,213.95. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,715 shares declined and 865 shares rose. A total of 129 shares were unchanged.
The total turnover on BSE amounted to Rs 1963 crore, higher than Rs 1779 crore on Wednesday, 29 January 2014.
Among the 30 Sensex shares, 18 fell, 11 rose and one remained unchanged.
Index heavyweight and cigarette major ITC was unchanged at Rs 325, with the stock recovering sharply in late trade. The stock hit a high of Rs 325.60 and low of Rs 318.35.
Index heavyweight Reliance Industries fell 1.26% to Rs 826.20 in volatile trade. The stock hit a high of Rs 834.20 and low of Rs 823.
PSU OMCs dropped in choppy trade as higher crude oil prices and weakness in rupee against the dollar spared worries of higher cost of crude imports. PSU OMCs import majority of their crude oil requirements. BPCL (down 0.38%), HPCL (down 2.98%) declined. Indian Oil Corporation (IOC) rose 0.96%.
The three public sector oil marketing companies (PSU OMCs) -- BPCL, HPCL and IOC -- suffer revenue loss or under recoveries on domestic sale of diesel, LPG (cooking gas) and kerosene at a controlled price. The government decontrolled pricing of petrol in 2010.
Meanwhile, the government today, 30 January 2014, raised the cap on number of subsidised domestic LPG cylinders from 9 to 12 per year effective from 1 February 2014. The government agreed to demand from 9 to 12 after Congress Vice President Rahul Gandhi told Prime Minister Manmohan Singh the present allocation wasn't enough.
The hike will cost the government between Rs 3300 crore and Rs 4400 crore in additional subsidies it will have to pay state-run fuel retailers, according to estimates by the oil ministry. The government already pays about Rs 46000 crore every year to subsidize cooking gas.
Crompton Greaves jumped 9.57%. The company after market hours on Wednesday, 29 January 2014 reported consolidated net profit of Rs 62.02 crore in Q3 December 2013 as compared to net loss of Rs 189.36 crore in Q3 December 2012. Total income rose 12.99% to Rs 3392.35 crore in Q3 December 2013 over Q3 December 2012.
Realty stocks dropped. DLF (down 4.22%), Indiabulls Real Estate (down 5.41%), HDIL (down 6.67%), D B Realty (down 1.94%) and Unitech (down 0.8%) declined.
In the foreign exchange market, the rupee edged lower against the dollar, tracking weakness in emerging markets after the Federal Reserve further pruned its monetary stimulus. The partially convertible rupee was hovering at 62.77, compared with its close of 62.41/42 on Wednesday, 29 January 2014.
India has no target for the rupee's exchange rate and the currency will remain rangebound, the economic affairs secretary said, despite recent global market volatility. "We are vigilant...we believe that we are capable of withstanding (the impact of the Fed tapering)," Arvind Mayaram said.
Indian government bond prices dropped after the Federal Reserve further pruned its monetary stimulus. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.8451%, higher than its close of 8.7743% on Wednesday, 29 January 2014. Bond yield and bond price move in opposite direction. The sentiments are also cautious ahead of bond auction of Rs 14000 crore dated securities scheduled for tomorrow, 31 January 2014.
India's economy is better prepared for the consequences, if any, of reduction in bond purchases by the US Federal Reserve, India's Finance Ministry said in a statement issued today, 30 January 2014. "We have added to our foreign exchange reserves which stand at $295 billion. FDI and FII inflows continue to be robust, liquidity is comfortable, stronger regulations have been put in place in the capital markets, the investment cycle appears to have turned positive, credit demand from key sectors is strong, and WPI inflation has moderated. The Current Account Deficit which was earlier estimated at $70 billion is now expected to be below $50 billion in 2013-14. Therefore, there should be no undue concern over external factors", the Finance Ministry said.
Fed's decision on Wednesday, 29 January 2014, to reduce bond purchases by $10 billion a month to $65 billion was expected and should not in any way surprise or affect the Indian markets, the Finance Ministry said. "However, both the Government of India and the Reserve Bank of India will continue to remain vigilant and will take whatever steps are necessary to ensure that there is stability in the financial markets", the Finance Ministry said in a statement.
European stocks edged lower on Thursday, 30 January 2014, after data showed the Chinese manufacturing sector contracted in January and the US Federal Reserve tapered its asset-purchase program further. Key benchmark indices in UK, France and Germany were off 0.3% to 0.33%.
Spain's economic recovery picked up the pace in the fourth quarter, as expected, posting its second quarterly positive reading after a two-year recession, the country's statistics institute INE said Thursday. Spain's gross domestic product rose 0.3% in the fourth quarter from the third, INE said, in its preliminary GDP estimate for the quarter. This is in line with a previous estimate by the country's central bank, and statements made by Finance Minister Luis de Guindos.
GDP contracted 0.1% in the fourth quarter from the same period of 2012, INE said, with a better contribution from internal demand offset by a smaller contribution from the export sector. For the whole of 2013, the Spanish economy--the euro zone's fourth-largest--contracted 1.2%, INE added.
The quarterly reading compares with meager 0.1% growth in the third quarter from the second, and a 1.1% contraction in the third quarter from the same quarter of 2012.
Asian stocks dropped on Thursday, 30 January 2014, after the US Federal Reserve pressed on with cuts to US economic stimulus and as a report showed China's manufacturing industry contracted. Key benchmark indices in Hong Kong, China, Singapore, Japan and Indonesia fell by 0.48% to 2.45%. Stock markets in South Korea and Taiwan are closed today, 30 January 2014. Stock markets in Taiwan are closed until 4 February 2014 for the Lunar New Year holiday.
The final reading on HSBC Holdings Plc and Markit Economics Ltd.'s January purchasing managers' index for Chinese manufacturing was 49.5, the first contraction in six months, from 50.5 in December. Readings above 50 indicate expansion.
China's markets close from tomorrow until 7 February 2014 for the Lunar New Year holiday, while Hong Kong is shut until 4 February 2014.
Trading in US index futures indicated that the Dow could advance 31 points at the opening bell on Thursday, 30 January 2014. US stocks sank on Wednesday, 29 January 2014, as earnings forecasts from Yahoo! Inc. and AT&T Inc. disappointed investors. The Federal Reserve on Wednesday, 29 January 2014, took another gradual step toward exiting its controversial bond-buying program, remaining stoic in the face of market turmoil. As expected, the Fed decided to reduce the pace of monthly asset purchases to $65 billion, from January's $75 billion. The Fed will purchase mortgage-backed securities at a pace of $30 billion per month and add to its holdings of Treasurys at a pace of $35 billion per month beginning in February.
The Fed also signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in economic activity and improvement in the labor market.
In addition to proceeding with plans to scale back its bond buying, the Fed made no changes to its other main policy plank: its pledge to keep interest rates low for some time to come. It has pledged to hold rates steady "well past" the point that the unemployment rate falls below 6.5% as long as inflation remains low.
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