Market drifts lower in choppy trade

Key benchmark indices edged lower in choppy trade on bets today's report on US private-sector payrolls and the US government's data on monthly payroll due on Friday, 6 December 2013, will add to signs the US economic recovery is gaining momentum and spur the Federal Reserve to start reducing stimulus to the US economy. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The barometer index, the S&P BSE Sensex, was provisionally down 127.07 points or 0.61%, up close to 55 points from the day's low and off close to 135 points from the day's high. The market breadth, indicating the overall health of the market, was negative.

Indian stocks fell for the second day in a row today, 4 December 2013.

Index heavyweight and cigarette maker ITC dropped. Realty stocks edged lower in choppy trade. Auto stocks declined. Index heavyweight Reliance Industries (RIL) dropped in volatile trade.

The market edged lower in early trade on weak Asian stocks. Key benchmark indices hovered in negative terrain in morning trade. A bout of volatility was witnessed as key benchmark indices edged lower once again after recouping almost entire intraday losses in mid-morning trade. Key benchmark indices extended losses and hit fresh intraday low in early afternoon trade. The Sensex moved a narrow range in negative zone in afternoon trade. The Sensex moved into the positive zone for a brief period in mid-afternoon trade. A bout of volatility was witnessed as key benchmark indices extended losses and hit fresh intraday low in mid-afternoon trade. High volatility was witnessed in late trade as the Sensex trimmed losses after hitting fresh intraday low.

As per provisional figures, the S&P BSE Sensex was down 127.07 points or 0.61% to 20,727.85. The index lost 181.30 points at the day's low of 20,673.62 in late trade, its lowest level since 29 November 2013. The index rose 8.45 points at the day's high of 20,863.37 in mid- afternoon trade.

The CNX Nifty was down 33.10 points or 0.53% to 6,168.75, as per provisional figures. The index hit a low of 6,149.90 in intraday trade, its lowest level since 29 November 2013. The index hit a high of 6,209.15 in intraday trade.

The total turnover on BSE amounted to Rs 1965 crore, lower than Rs 2095.27 crore on Tuesday, 3 December 2013.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,343 shares fell and 1,135 shares rose. A total of 181 shares were unchanged.

Among the 30-share Sensex pack, 18 stocks fell and rest rose. Hindalco Industries (down 2.14%), ONGC (down 1.63%) and ICICI Bank (down 1.51%) edged lower from the Sensex pack.

Index heavyweight and cigarette maker ITC shed 1.85% at Rs 313.30. The scrip hit high of Rs 319.65 and low of Rs 312.15.

Realty stocks edged lower in choppy trade. DLF (down 2.08%), D B Realty (down 4.04%) and HDIL (down 4.69%) edged lower.

Unitech plunged 9.25%. The Life Insurance Corporation is reportedly likely to declare real estate firm Unitech a defaulter for non-payment of interest on a Rs 200 crore loan. Unitech had taken the loan in 2007 from LIC Housing Finance in 2007. The loan portfolio was later shifted to parent LIC. The state-owned insurer has also issued a notice to the company barring it from selling the Noida Sector 96 land, which has been pledged as collateral against the loan. The company had issued an advertisement seeking buyers for parts of the property. LIC has made it clear that the land cannot be sold unless Unitech repays the loan.

Auto stocks dropped. Tata Motors (down 1.57%), M&M (down 0.7%) and Maruti Suzuki India (down 1.41%) dropped.

Shares of two wheeler makers also declined. Hero MotoCorp (down 0.89%) and Bajaj Auto (down 1.06%) declined.

Index heavyweight Reliance Industries (RIL) fell 0.34% to Rs 859. The stock hit high of Rs 867.25 and low of Rs 853.80.

Shares of state-run Power Grid Corporation (PGCIL) rose 1.9% to Rs 95.60 as the company's follow-on public offer (FPO) was almost fully bid. The FPO of PGCIL was subscribed 99% by 15:00 IST on day two of the FPO today, 4 December 2013. The FPO received bids for 77.99 crore shares till 15:00 IST today, 4 December 2013, compared with 78.70 crore shares on offer, as per NSE data.

The FPO closes tomorrow, 5 December 2013, for institutional investors and on Friday, 6 December 2013, for retail investors and employees of the company. The price band for the FPO has been set at Rs 85 to Rs 90 per share. A discount of Rs 4.50 per share on the final issue price discovered through the book-building route will be available to retail investors and eligible employees of the company.

PGCIL is issuing a total of 78.70 crore shares through the FPO, which includes 60.18 crore fresh equity shares and disinvestment by the Government of India (GoI) of 18.51 crore equity shares held by the President of India, acting through the Ministry of Power. After the successful divestment, GoI's holding in PGCIL will come down to 57.89% from the present level of 69.42%.

PGCIL, a navaratna public sector undertaking under the ministry of power, is the country's central transmission utility (CTU). The company owns and operates more than 90% of India's inter-state and interregional electric power transmission systems (ISTS). As principal electric power-transmission company of the country, it owns and operates 102109 circuit kilometers of electrical transmission lines and 172 electrical substations with a total transformation capacity of 172378 MVA as end of Sep 30, 2013.

Essar Oil rose 1.2% to Rs 54.95 after the company said it has received a notice from promoter company, Essar Energy Holdings seeking conversion of FCCBs aggregating $262 million into equity shares. The announcement was made during trading hours today, 4 December 2013.

Essar Oil said it will allot 3.88 crore equity shares at Rs 138 per share on conversion of 1,150 foreign currency convertible bonds (FCCBs) of $100,000 each aggregating to $115 million which were issued on 15 June 2010 to Essar Energy Holdings. The company will also allot 4.5 crore equity shares at Rs 153 per share on conversion of 1,470 FCCBs of $100,000 each aggregating to $147 million which were issued on 9 July 2010 to Essar Energy Holdings.

In the foreign exchange market, the rupee reversed initial losses against the dollar. The partially convertible rupee was currently hovering at 62.22, compared with its close of 62.36/37 on Tuesday, 3 December 2013.

Indian government bond prices dropped as crude oil futures rose on Tuesday, 3 December 2013, and on bets today's report on US private-sector payrolls and the US government's data on monthly payroll due on Friday, 6 December 2013, will add to signs the US economic recovery is gaining momentum and spur the Federal Reserve to start reducing stimulus to the US economy. The yield on 10-year benchmark federal paper, 7.16% GS 2023, was hovering at 9.0875%, higher than its close of 9.069% on Tuesday, 3 December 2013. Bond yield and bond prices are inversely related.

The Organization of Petroleum Exporting Countries (OPEC) holds a meeting in Vienna on today, 4 December 2013, to decide production quota. The OPEC is expected to assess the impact of rising US oil production and the potential return of Iranian oil barrels to the market. OPEC countries will have to accommodate any additional oil supply into the market without changes to the cartel's overall production ceiling of 30-million-barrels-a-day, Venezuela Oil Minister Rafael Ramirez said on 28 November 2013.

The downturn in services activity eased slightly in November although a dearth of new orders prompted firms to rein in hiring plans, a business survey showed on Wednesday. The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, nudged up to 47.2 last month from 47.1 in October. While the services PMI reading was a little better than the previous month, it has now spent five straight months below the 50 mark that divides contraction from growth, prompting firms to freeze hiring plans. The employment sub-index fell to 49.9 in November from 50.1.

New business in November fell at a slightly slower pace than in October, but it was the fifth month running that demand has declined. For inflation, the survey showed a mixed picture, with firms ramping up their prices faster despite some moderation in rising input costs.

Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "Service sector activity remains subdued, but would at least appear to be stabilizing. The inflation picture is a bit mixed, with prices charged rising at a faster pace while input price inflation eased somewhat. Looking ahead, economic activity is expected to remain soft in coming months as high inflation, tighter financial conditions, and structural constraints continue to weigh on growth".

The Reserve Bank of India (RBI) announces next Mid-Quarter Review of Monetary Policy for 2013-14 on 18 December 2013. The Third Quarter Review of Monetary Policy for 2013-14 is scheduled 28 January 2014.

On the political front, Delhi goes to polls today, 4 December 2013. Polls for assembly election in Chattisgarh, Rajasthan, Madhya Pradesh and Mizoram are already over. Counting of votes for assembly elections in Delhi, Madhya Pradesh, Chhattisgarh and Rajasthan takes place on 8 December 2013. Counting of votes for assembly elections in Mizoram takes place on 9 December 2013.

The outcome of the assembly elections could provide clues as to which party comes to power in the national elections that are due by May 2014. Many investors are hoping the state elections will show strong support for the Bharatiya Janata Party whose prime ministerial candidate Narendra Modi is considered a pro-business leader.

The winter session of parliament begins tomorrow, 5 December 2013. The session will end on 20 December 2013. It will have 12 sittings in which government is likely to introduce a bill to create a separate Telangana.

European stocks rose on Wednesday, 4 December 2013, as investors awaited reports on US jobs, services and home sales. Key benchmark indices in France, UK and Germany were up 0.05% to 0.34%.

The European Central Bank (ECB) holds its monthly monetary policy meeting tomorrow, 5 December 2013. The ECB unexpectedly cut the benchmark interest rate by a quarter-percentage point last month to a record-low 0.25% after inflation slowed in October to the least in four years.

UK's central bank -- Bank of England -- is also expected to keep its key policy rate steady at 0.5% after a monetary policy review tomorrow, 5 December 2013.

Asian stocks fell on Wednesday, 4 December 2013, with investors awaiting influential US job data later this week that may provide further evidence as to when the Federal Reserve will reduce stimulus to the US economy. Key benchmark indices in Indonesia, Hong Kong, Japan, Singapore and South Korea were down 0.76% to 2.17%. Key benchmark indices in China and Taiwan rose 0.3% to 1.31%. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.

Chinese President Xi Jinping said the environment for economic and social development next year isn't optimistic.

Trading in US index futures indicated that the Dow could advance 28 points at the opening bell on Wednesday, 4 December 2013. US stocks declined for a third day on Tuesday, 3 December 2013, as investors assessed reports on car and retail sales before US jobs data later this week that may offer clues on when the Federal Reserve will reduce stimulus.

Investors are keeping a close watch on economic data in the United States as the Federal Reserve monitors the pace of recovery to gauge when it will begin to reduce monetary stimulus for the US economy, which has been aimed at encouraging growth. The US government will release the influential US non-farm payrolls data for November 2013 on Friday, 6 December 2013. The Fed has said improvement in the labor market is a key factor in its policy assessment.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.

Brazil's economy contracted in the third quarter for the first time since early 2009, falling short of expectations yet again as plunging investment underscored eroding confidence in what was recently one of the world's most promising emerging markets. The economy shrank 0.5% between July and September from the prior three months, government statistics agency IBGE said on Tuesday.

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