Key benchmark indices edged lower in choppy trade after Prime Minister's Economic Advisory Council (PMEAC) sharply trimmed India's GDP growth forecast to 5.3% for the year ending 31 March 2014 (FY 2014) from earlier estimate of 6.4% and said that the current stance of monetary policy has to continue until stability in the rupee is achieved. The market sentiment was also hit by stronger-than-expected US jobless-claims data released on Thursday, 12 September 2013, which triggered speculation that the Federal Reserve would begin trimming its monetary stimulus at next week's meeting. The BSE Sensex was provisionally down 64.37 points or 0.33%, off 181.86 points from the day's high and up 41.83 points from the day's low. The market breadth, indicating the overall health of the market, was positive.
Index heavyweight and cigarette major ITC edged lower in choppy trade. IT stocks declined on recent strong rebound of the rupee against the dollar. Two-wheeler stocks rose on expectations of pick up in sales during the upcoming festive season and on hopes good rains this year will boost rural sales.
A bout of volatility was witnessed as the key benchmark indices reversed initial losses triggered by weak Asian stocks. Key benchmark indices pared gains after striking fresh intraday high in morning trade. Key benchmark indices reversed intraday gains after Prime Minister's Economic Advisory Council (PMEAC) sharply trimmed India's GDP growth forecast to 5.3% for the year ending 31 March 2014 (FY 2014) from earlier estimate of 6.4% and said that the current stance of monetary policy has to continue until stability in the rupee is achieved. Key benchmark indices regained positive zone in early afternoon trade. The Sensex once again slipped into the red in afternoon trade. The Sensex alternately moved between gains and losses in mid-afternoon trade.
In the foreign exchange market, the rupee weakened against the dollar. The partially convertible rupee was hovering at 63.72, weaker than its close of 63.50/51 on Thursday, 12 September 2013.
As per provisional closing, the S&P BSE Sensex was down 64.37 points or 0.33% to 19,717.51. The index gained 117.49 points at the day's high of 19,899.37 in morning trade. The index fell 106.20 points at the day's low of 19,675.68 in mid-morning trade, its lowest level since 10 September 2013.
The CNX Nifty was down 4.20 points or 0.07% to 5,846.50. The index hit a high of 5,884.30 in intraday trade. The index hit a low of 5,822.90 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,356 shares gained and 1,035 shares fell. A total of 165 shares were unchanged.
The total turnover on BSE amounted to Rs 1839 crore, lower than Rs 2817.90 crore on Thursday, 12 September 2013.
Among the 30-share Sensex pack, 17 stocks gained and rest of them declined.
Index heavyweight and cigarette major ITC lost 1.67% to Rs 330.40. The stock was volatile. The scrip hit high of Rs 338.90 and low of Rs 329.80.
IT stocks declined on recent strong rebound of the rupee against the dollar. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.
Wipro lost 3.81%.
TCS shed 0.36%. The company on Tuesday, 10 September 2013, said it has bagged a five-year multi-million euros deal from Scandinavian Airlines (SAS) to help transform and optimise SAS' IT processes, applications and infrastructure. TCS will implement its proprietary cloud-based solutions to simplify and standardize the SAS IT landscape. The initiative is a part of the SAS "4 Excellence Next Generation" strategy, aimed at improving the competitiveness of the SAS Group. Through this partnership, SAS will also tap into TCS' Aviation and Digital Innovation Labs to develop solutions addressing the needs of the new digital consumer.
Infosys lost 1.2%. Infosys BPO during market hours on Thursday, 12 September 2013, announced that it has been selected by AkzoNobel, a leading global paint and coatings company and a major producer of specialty chemicals, to transform its finance and accounting (F&A) processes to deliver higher operational efficiencies and performance. Infosys BPO will play a key role in accelerating AkzoNobel's finance transformation program and streamline accompanying operations for AkzoNobel's decorative business in over 30 countries across Europe, the Middle East and Africa.
HCL Technologies declined 2.74%. The company said during market hours today, 13 September 2013, that SPIELO International UK (SPIELO), a subsidiary of GTECH S.p.A., has contracted with the company to provide technical operations services that have been previously provided in house. Under the terms of the agreement, SPIELO affiliate Boss Media AB expects to transfer to HCL the employment of approximately 160 technical operations service employees currently based in Vaxjo, Sweden. The agreement is subject to certain closing conditions.
Under a multi-year services agreement, HCL will provide software services relating to, among other matters, Boss Media's existing systems. All services provided by HCL under this agreement will be subject to oversight, direction and management of SPIELO.
HCL will also provide coding and technical services subject to SPIELO's strict Quality Assurance standards. SPIELO will continue to own all current and future Intellectual Property, customer contracts and agreements, and will continue to be fully responsible for providing its customers with product specifications, design, deliveries, and ongoing service.
Negotiations with trade union representatives have been initiated, with the goal of transferring the affected employees to HCL by 1 November 2013. The closing of the agreement is expected following the completion of the employee transfer.
Tech Mahindra dropped 1.53%. The company during market hours on Thursday, 12 September 2013, said it has been chosen as a strategic partner for application maintenance and development by Volvo Car Corporation. This partnership will provide Volvo Car Corporation with a service to maintain and develop a wide range of applications across the business and to develop and implement new applications as part of its drive to increase efficiency and reduce costs, Tech Mahindra said in a statement.
Two-wheeler stocks rose on expectations of pick up in sales during the upcoming festive season and on hopes good rains this year will boost rural sales. The festive season starts with the Durga Puja in October. The festival is followed by Dussehra and Diwali. Hero MotoCorp (up 1.5%), Bajaj Auto (up 1.35%) and TVS Motor Company (up 5.4%) gained.
Simplex Infrastructures was locked at 10% upper circuit at Rs 71.80 after the company said that its promoters acquired in aggregate 3.61 lakh equity shares or 0.73% stake of the company between 2 September and 12 September 2013. The announcement was made during trading hours today, 13 September 2013.
Prime Minister's Economic Advisory Council (PMEAC) today, 13 September 2013, sharply trimmed India's GDP growth forecast to 5.3% for the year ending 31 March 2014 (FY 2014) from earlier estimate of 6.4% and said that the current stance of monetary policy has to continue until stability in the rupee is achieved. The full impact of various measures taken over the last six months will be reflected later in this year, PMEAC said. Depreciation of the rupee may put some upward pressure on inflation, it said. On balance, WPI inflation by end March 2014 will be around 5.5% as against the average of 7.4% in 2012-13 and 5.7% at end March 2013.
Controlling current account deficit (CAD) remains main concern at present, the council said. Current account deficit is projected at $70 billion (3.8% of GDP) in 2013-14 against an estimated $88.2 billion (4.8% of GDP) in 2012-13, it said. The CAD may go even below $70 billion in 2013-14 if the recent trends in exports and imports are maintained through the year, the PMEAC said.
For India, the short-term problem is of financing the large CAD. The medium term objective should be to compress CAD to 2.5% of GDP and ensure price stability, the council said. Containing fiscal deficit within the budgeted estimate could be a challenge, it said adding discretionary expenditure budgeted may need to be compressed, and subsidies restructured.
Industrial production for June 2013 was revised upwards to de-growth of 1.8% from de-growth of 2.2% reported earlier. Industrial production growth for April 2013 was revised downward to 1.5% from 1.9% reported earlier. On cumulative basis, industrial production registered a contraction of 0.2% for the period April-July 2013 over the corresponding period of the previous year.
The rate of inflation based on the consumer price index decelerated in August 2013, data released by the government after trading hours on Thursday, 12 September 2013, showed. The rate of inflation based on the combined consumer price index (CPI) for urban and rural India decelerated to 9.52% in August 2013 from 9.64% in July 2013. Inflation for the category 'food and beverages' stood at 11.06% in August 2013, the data showed.
The Reserve Bank of India on Thursday, 12 September 2013, announced the details of its committee constituted to examine the current monetary policy framework and recommend ways to revise and strengthen it to make it more transparent and predictable. RBI Governor Raghuram Rajan, who took over on Sept. 4, had announced the committee would be headed by Deputy Governor Urjit Patel. The panel will review the objectives, structure, operating framework and instruments of monetary policy, particularly the multiple indicator approach and the liquidity management framework, the RBI said. It will also identify regulatory, fiscal and other impediments to monetary policy transmission, and recommend measures to improve transmission. The committee is expected to submit its report within three months, the RBI said.
European stocks dropped on Friday, 13 September 2013, as investors were hesitant of making any major moves ahead of US data out later in the day which could weaken or strengthen the case for the Federal Reserve to start scaling back its asset purchases. Key benchmark indices in France, Germany and UK were down by 0.12% to 0.26%.
Asian shares were mostly lower on Friday, 13 September 2013, as investors fretted stronger-than-expected US jobless-claims data on Thursday has increased the odds the Federal Reserve would begin trimming its monetary stimulus at next week's meeting. Key benchmark indices in Taiwan, Hong Kong, China, Singapore, South Korea fell by 0.02% to 0.86%. Key benchmark indices in Indonesia and Japan rose by 0.12% to 0.43%.
Trading in US index futures indicated a flat opening of US stocks on Friday, 13 September 2013. US stocks declined on Thursday, 12 September 2013, with the S&P 500 snapping its seven-session winning streak, as investors worried about developments related to Syria and Federal Reserve policy moves.
Among US data out later on Friday are retail sales for August and consumer sentiment for September.
First-time claims for unemployment benefits declined by 31,000 to 292,000 in the week ending Sept. 7, but processing glitches involving two states clouded the reading, the US Labor Department reported on Thursday, 12 September 2013.
The US and Russia began talks on Thursday on Moscow's plan for Syria to surrender its chemical weapons as Damascus formally applied to join a global poison gas ban, but US Secretary of State John Kerry held fast to the position that the US may still use military force if diplomacy fails. Separately, Syria's President Bashar al-Assad reportedly said that the US needs to give up "its policy of threats" and stop shipping arms to Syrian rebels before his government surrenders its chemical weapons.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled next week, considered by many to provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program. The FOMC holds a two-day policy meeting on Tuesday 17 September and Wednesday 18 September 2013 to decide on interest rates in the United States. The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.
US President Barack Obama reportedly plans to name former US Treasury Secretary Lawrence Summers as the next chairman of the US Federal Reserve Board of Governors. An announcement is expected as early as late next week, following the conclusion of the Fed's policy meeting on Wednesday, 18 September 2013, a Japanese newspaper report said. Treasury Undersecretary Lael Brainard, who served as an economic adviser under the Clinton administration, will likely be named the central bank's vice chairman, the report said. Summers would succeed Fed Chairman Ben Bernanke, whose term expires in January 2014. Summers and current Fed Vice Chairman Janet Yellen had been considered the front-runners to become the Fed's next chief.
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