The market may extend Tuesday's (27 August 2013) steep losses on weak Asian stocks. Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could fall 70 points at the opening bell. Higher Asian stocks dropped for a second day on Wednesday on concern the US will take military action against Syria.
The market is expected to remain volatile as traders roll over positions in the futures & options (F&O) segment from the near month August 2013 series to September 2013 series. The near month August 2013 derivatives contract expire tomorrow, 29 August 2013.
IT stocks may gain as rupee hit record low below 66 against the dollar on Tuesday, 27 August 2013. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
PSU OMCs may fall and shares of oil exploration firms could rise as crude oil prices climbed. US crude oil futures soared to an 18-month high on Tuesday as traders worried that a potential military strike against Syria could disrupt the region's oil supplies. US crude oil futures for October delivery surged 2.9%, to $109.01 a barrel, their highest close since February 2012. Higher crude oil prices could increase under-recoveries of PSU OMCs. PSU OMCs suffer under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol. The weakness in rupee also raised concerns about increased costs of importing oil. PSU OMCs import about 70-75% of their crude oil needs and rely heavily on foreign currency borrowings, which largely remain unhedged. The rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.
Key benchmark indices plunged on Tuesday, 27 August 2013, as the passage of the food bill in Lok Sabha raised fears that the government might face more subsidy burden. The S&P BSE Sensex fell 590.05 points or 3.18% to 17,968.08 on that day, its lowest closing level since 21 August 2013.
Foreign institutional investors (FIIs) sold shares worth a net Rs 1373.99 crore on Tuesday, 27 August 2013, as per provisional data from the stock exchanges.
Asian stocks dropped for a second day on Wednesday on concern the US will take military action against Syria. Key benchmark indices in Singapore, Taiwan, Hong Kong, Indonesia, China, South Korea and Japan fell by 0.07% to 2.52%.
US stocks fell hard on Tuesday, with the Dow Jones Industrial Average ending at a two-month low, as unease over possible US action against Syria shook global markets.
US President Barack Obama is working with allies including the UK and France to reach agreement on limited action against Syria after concluding the regime used chemical weapons against civilians, fanning concern unrest may disrupt Middle East oil supplies.
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