Auto stocks move higher

Key benchmark indices regained strength after trimming intraday gains in mid-morning trade as investors took solace from the government keeping its borrowing target for the fiscal year through March 2014 unchanged at Rs 5.79 lakh crore on Monday, 23 September 2013. The barometer index, the S&P BSE Sensex was currently above the psychological 20,000 mark, having alternately moved above and below that mark in intraday trade. The Sensex was up 103.46 points or 0.52%, up close to 220 points from the day's low and off about 45 points from the day's high. The market breadth, indicating the overall health of the market, was positive.

Auto stocks gained on renewed buying. PSU bank stocks declined.

A bout of volatility was witnessed in early trade as key benchmark indices reversed initial losses triggered by weak Asian stocks. Key benchmark indices extended initial gains and hit fresh intraday high in morning trade. The Sensex moved past the psychological 20,000 level. Key benchmark indices regained strength after trimming intraday gains in mid-morning trade.

The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month September 2013 series to October 2013 series. The September 2013 F&O contracts expire on Thursday, 26 September 2013.

At 11:20 IST, the S&P BSE Sensex was up 103.46 points or 0.52% to 20,004.42. The index jumped 149.46 points at the day's high of 20,050.42 in morning trade. The index declined 118.18 points at the day's low of 19,782.78 in early trade, its lowest level since 18 September 2013.

The CNX Nifty was up 35.55 points or 0.6% to 5,925.30. The index hit a high of 5,938.40 in intraday trade. The index hit a low of 5,854.55 in intraday trade, its lowest level since 18 September 2013.

The market breadth, indicating the overall health of the market, was positive. On BSE, 964 shares rose and 749 shares dropped. A total of 143 shares were unchanged.

Among the 30-share Sensex pack, 18 stocks rose and rest of them fell. Tata Power Company (up 2.15%), Bhel (up 1.96%) and GAIL (India) (up 1.93%), edged higher.

PSU bank stocks declined. State Bank of India (SBI) dropped 1.72% after ratings agency Moody's downgraded its outlook on the bank's financial strength rating to 'negative' from 'stable'. Moody's also downgraded SBI's unsecured debt rating on par with the sovereign foreign currency bond rating. SBI's standalone credit profile continues to face negative pressures, and it will have to compete with other public sector lenders for capital injection from the government, Moody's said. SBI's impaired loan ratio of 8.6% at end-June is below the 11.5% average for Indian public sector banks rated by Moody's.

SBI on 18 September 2013 said it has raised the base rate by 10 basis points (bps) to 9.8% per annum (pa) from 9.7% and the benchmark prime lending rate by 10 bps to 14.55% from 14.45% with effect from 19 September 2013. The bank also raised interest rates for retail term deposits.

Among other PSU bank stocks, Indian Bank, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank dropped by 0.33% to 3.24%.

Ratings agency Fitch downgraded some ratings for Indian Bank, Punjab National Bank and Bank of Baroda on expectations of a further deterioration in asset quality and a sharp deceleration on economic growth.

Auto stocks gained on renewed buying. Maruti Suzuki India (up 2.55%) and Tata Motors (up 2.16%) edged higher. Eicher Motors jumped 5.9%. Ashok Leyland was up 2.38%.

Mahindra & Mahindra (M&M) rose 0.85%. M&M announced during trading hours on Monday, 23 September 2013, the appointment of Dr. Pawan Goenka to the board of the company as Executive Director (ED), the first ED appointment to the board since 1992. He has been designated Executive Director and President (Automotive & Farm Equipment Sectors), with effect from Monday, 23 September 2013.

Most 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. Bajaj Auto gained 0.42%. TVS Motor Company advanced 0.15%. Hero MotoCorp fell 0.23%.

Tata Steel rose 0.39%. The company on Monday, 23 September 2013, said that a Memorandum of Settlement dated 23 September 2013 has been signed between the company and the Tata Workers' Union for annual bonus for the accounting year 2012-2013. As per the Memorandum of Settlement, the total payout for 30,824 eligible employees of all applicable divisions/units of the company on account of annual bonus for the year 2012-13 will be Rs 180.50 crore, Tata Steel said. Out of this, for divisions at Jamshedpur including the tubes division, an amount of Rs 103.60 crore approximately will be distributed as annual bonus amongst 17,254 employees. Since majority of the employees company are drawing salaries/wages higher than the limit laid down in the Payment of Bonus Act, 1965, they are not eligible for bonus under the Act. However, respecting its old traditions, the company is going to pay bonus to all employees in the unionised category, Tata Steel said in a statement.

KPIT Technologies rose 0.38% to Rs 133.20. Two block deals were executed on the counter on BSE. One block deal of 7 lakh shares at Rs 132.50 per share at 9:53 IST and another block deal of 2.4 lakh shares at Rs 132.50 per share at 10:00 IST.

Gati surged 5.01% after the company said that the Arbitral Tribunal passed its verdict in the long pending arbitration proceedings between Air India and the company. The announcement was made after market hours on Monday, 23 September 2013.

The Arbitral Tribunal has passed its verdict dated 17 September 2013 directing Air India to pay a net sum of Rs 26.82 crore towards claims, damages interest and costs to Gati. Also, the Arbitral Tribunal has said that in the event of Air India failing to comply with the award within 30 days, Air India shall be liable to pay future interest at 18% per annum thereafter, Gati said in a statement.

In May 2007, Gati partnered with Air India for dedicated freighter service. Due to certain dispute the service had to be discontinued from March 2009. The matter was referred to Arbitration for adjudication of disputes between Air India and Gati.

Bond prices rose after the government kept the borrowing target for the fiscal year through March 2014 unchanged at Rs 5.79 lakh crore ($92.49 billion). The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.8164%, slightly lower than its close of 8.8505% on Monday, 23 September 2013. Bond prices and bond yields are inversely related.

Economic Affairs Secretary Arvind Mayaram said on Monday, 23 September 2013, that the government will raise Rs 3.44 lakh crore by the end of September. That will be Rs 5000-crore short of the target it had initially set for the first half of the fiscal year, Mr. Mayaram said. The shortfall will be made up in the October-March period, taking the total borrowing during the second half to Rs 2.35 lakh crore, he said.

Mr. Mayaram said that the government would cut spending if revenue falls short of the budget projections, but won't breach the full-year fiscal-deficit target which is 4.8% of gross domestic product for this year. The gap was 4.9% last fiscal year. Last week, the government announced austerity measures to slash nonessential spending, as it sought to reinforce its commitment to meeting the deficit target.

There had been concerns off late that the heavy spending on social-development programs at a time when the government's revenue growth has been hit by a slowdown in the economy would mean that the government may have to increase its borrowing this year. Data late August showed the government's fiscal deficit between April and July reached about 63% of the target it had set for the full fiscal year.

In the foreign exchange market, the rupee trimmed initial losses against the dollar. The partially convertible rupee was hovering at 62.615, compared with its close of 62.60/61 on Monday, 23 September 2013.

Asian stocks dropped on Tuesday, 24 September 2013, following overnight decline in the US stocks. Key benchmark indices in China, Indonesia, Japan, Hong Kong, Singapore, and South Korea were off 0.03% to 0.9%. Taiwan's Taiwan Weighted rose 0.02%.

Trading in US index futures indicated that the Dow could fall 11 points at the opening bell on Tuesday, 24 September 2013. US stocks fell on Monday after notching three weeks of gains, as investors heard from Federal Reserve officials and worried about another standoff in Washington. Addressing business leaders in New York Monday morning, Fed Bank of Atlanta President Dennis Lockhart said the economy is losing some steam. Fed Bank of New York President William Dudley told an audience at the Fordham University Graduate School of Business that an accommodative monetary policy is still needed. In a speech about US banking in San Antonio, Federal Reserve Bank of Dallas President Richard Fisher said he advocated slowing down the pace of central-bank asset purchases at last week's policy session.

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.

Political showdown in Washington over the US budget also weighed on US stocks on Monday, 23 September 2013. House Speaker John Boehner and his Republican caucus are pushing the federal government closer to a shutdown in a fight over funding and the debt limit, Democrats Max Baucus and Patty Murray said in a letter to colleagues yesterday, 23 September 2013.

In Europe, German Chancellor Angela Merkel on Sunday, 22 September 2013, won re-election by the largest amount in more than 20 years.

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