A bout of volatility was witnessed as key benchmark indices dropped once again after trimming intraday losses in afternoon trade. The barometer index, the S&P BSE Sensex, was hovering below the psychological 27,000 mark, after regaining that mark for a brief period in afternoon trade. The index had fallen below that level in mid-morning trade. The Sensex was currently down 70.11 points or 0.26% at 26,987.30. Key indices dropped on concerns that foreign investors may slowdown their purchases of emerging market stocks if the US Federal Reserve hikes interest rates earlier than expected. But, the broad market depicted strength. The market breadth indicating the overall health of the market was strong. The BSE Mid-Cap index was up 1%. The BSE Small-Cap index was up 1.35%. Both these indices outperformed the Sensex. Brent crude extended previous day's losses which will augurs well for India as the country imports about 80% of its crude oil requirement. Most capital goods stocks gained. Shares of fertiliser companies were in demand.
On the macro front, data due later this week and early next week is likely to show easing of inflation in August 2014 and a muted growth in industrial production in July 2014. Meanwhile, the government has kicked off a big-bang divestment programme by announcing stake-sale in ONGC, Coal India and NHPC.
Earlier, key indices had lost ground after a firm opening triggered by overnight drop in Brent crude oil prices and gains in US stocks.
In overseas markets, European stocks edged higher in early trade as investors awaited data on US jobless claims. Asian stocks were mixed after the latest data showed that China's inflation remained subdued last month.
In the foreign exchange market, the rupee edged higher against the dollar.
At 13:15 IST, the S&P BSE Sensex was down 70.11 points or 0.26% at 26,987.30. The index lost 152.91 points at the day's low of 26,904.50 in mid-morning trade, its lowest level since 2 September 2014. The index gained 93.37 points at the day's high of 27,150.78 at the onset of the trading session.
The CNX Nifty was down 15.65 points or 0.19% at 8,078.45. The index hit a low of 8,057.30 in intraday trade, its lowest level since 5 September 2014. The index hit a high of 8,127.95 in intraday trade.
The market breadth indicating the overall health of the market was strong on BSE. 1,844 shares gained and 1,012 shares fell. A total of 94 shares were unchanged.
The BSE Mid-Cap index was up 98.37 points or 1% at 9,949.16. The BSE Small-Cap index was up 148.23 points or 1.35% at 11,099.26. Both these indices outperformed the Sensex.
Most capital goods stocks gained. ABB India (up 0.77%), BEML (up 5.92%), L&T (up 0.46%), Siemens (up 0.69%) and Thermax (up 0.5%) gained. Bharat Heavy Electricals (Bhel) declined 0.34%.
Shares of fertiliser companies were in demand. Gujarat State Fertilisers and Chemicals (GSFC) (up 20%), Gujarat Narmada Valley Fertilizers & Chemicals (GNFC) (up 12.16%), Chambal Fertilisers & Chemicals (up 4.74%), Rashtriya Chemicals and Fertilisers (up 3.25%), Fertiliser and Chemicals Travancore (FACT) (up 9.54%), National Fertilizers (up 5.77%), Southern Petrochemicals Industries Corporation (SPIC) (up 8.38%) and Zuari Agro Chemicals (up 7.33%) jumped.
Ananth Kumar, Minister for Chemicals & Fertilizers, while speaking at the 4th National Conference on Agrochemicals 2014, in New Delhi last month reportedly said that the government proposes to come out with a new holistic fertiliser policy. In the Union Budget for the fiscal year ending 31 March 2015 (FY 2015) announced on 10 July 2014, Finance Minister Arun Jaitley said that the government will launch new urea policy.
Meanwhile, the government has kicked off a big-bang divestment programme by announcing stake-sale in ONGC, Coal India and NHPC. The Cabinet Committee on Economic Affairs (CCEA) on Wednesday, 10 September 2014, approved disinvestment of 10% stake in Coal India, 5% stake in ONGC and disinvestment of 11.36% stake in NHPC. The government will raise about Rs 46000 crore from the divestment in these three PSU based the closing price of the shares of these three PSUs on Wednesday, 10 September 2014.
Finance Minister Arun Jaitley was released from hospital on Wednesday, 10 September 2014, after a longer-than-expected stay for treatment. Media reports said that Jaitley will not be able to attend a meeting of finance ministers from the Group of 20 nations in Australia next week. Jaitley was admitted to a private hospital in New Delhi on 1 September 2014 for planned surgery to manage a long-standing diabetic condition. He had been expected to leave after a few days, a report indicated.
Brent crude extended previous day's losses. Brent for October settlement was off 31 cents at $97.73 a barrel. The contract fell $1.12 to settle at $98.04 a barrel yesterday, 10 September 2014, on rising supply and tepid demand. The price had slumped to $97.60 in intraday trade yesterday, the lowest intraday price since 18 April 2013.
Lower crude oil prices will help India in containing its fiscal deficit, current account deficit and fuel price inflation. India imports 80% of its crude oil requirement.
US President Barack Obama reportedly told Americans in a speech late on Wednesday, 10 September 2014 that he had authorized US air strikes for the first time in Syria and more attacks in Iraq in a broad escalation of a campaign against the Islamic State militant group. He said he would hunt down Islamic State militants "wherever they are," reports added.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 60.81, compared with its close of 60.955 on Wednesday, 10 September 2014.
Data due later this week and early next week is likely to show easing of inflation in August 2014 and a muted growth in industrial production in July 2014. The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India is seen decelerating to 7.8% in August 2014, from 7.96% in July 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will release the CPI data for August 2014 at 17:30 IST tomorrow, 12 September 2014. The Reserve Bank of India (RBI) is targeting CPI inflation at 8% by January 2015 and 6% by January 2016.
Meanwhile, the growth in industrial production is seen decelerating to 1.9% in July 2014, from 3.4% in June 2014, as per the median estimate of a poll of economists carried out by Capital Market. Industrial production growth had eased to 3.4% in June 2014, from 5% increase recorded in May 2014. The government will release the industrial production data for July 2014 at 17:30 IST tomorrow, 12 September 2014.
The annual rate of inflation based on the monthly Wholesale Price Index (WPI) is seen decelerating to 4.43% in August 2014, from 5.19% in July 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will release the WPI data for August 2014 at 12 noon on Monday, 15 September 2014.
European stocks snapped a four-day losing streak today, 11 September 2014, as investors awaited data on US jobless claims. Key benchmark indices in France, Germany and UK rose 0.05% to 0.26%.
Asian stocks were mixed today, 11 September 2014, after the latest data showed that China's inflation remained subdued last month. Key benchmark indices in South Korea, Japan and Indonesia were up 0.24% to 0.76%. Key benchmark indices in Singapore, China, Hong Kong and Taiwan were off 0.2% to 0.74%.
China's consumer price index rose 2% August 2014 from a year earlier, which was slower than 2.3% rise in July 2014, according to data released by the National Bureau of Statistics today, 11 September 2014. The producer price index fell 1.2% in August 2014, extending a decline to 30th month.
Meanwhile, China's central bank is reportedly set to withdraw cash from the financial system this week for the first time since early August, reflecting concerns about accelerating inflows of speculative funds.
In Japan, Bank of Japan Governor Haruhiko Kuroda reportedly assured Prime Minister Shinzo Abe today, 11 September 2014, that the central bank won't hesitate to take further action should a 2% inflation target become difficult to achieve. In a meeting with Abe, Kuroda reportedly exchanged views with Abe over recent economic conditions, and told the prime minister that the global economy is on a recovery path. The BOJ governor also talked about consumer spending before and after April's sales tax increase, reports further indicated.
Trading in US index futures indicated that the Dow could fall 12 points at the opening bell today, 11 September 2014. US stocks edged higher on Wednesday, 10 September 2014, helped by rebound in Apple shares.
Investors will look to next week's Federal Open Market Committee (FOMC) meeting for fresh guidance on US interest rates. At the end of a two-day meeting on 16-17 September 2014, the FOMC is widely expected to announce cut in Fed's monthly bond-buying program by another $10 billion to $15 billion, staying on track to end the program at its October meeting. The Fed is likely to raise short-term interest rates next year from their current near-zero levels, where they have been since December 2008
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