Key benchmark indices languished in negative terrain in mid-morning trade. The S&P BSE Sensex was down 92.34 points or 0.45%, off about 60 points from the day's high and about 30 points from the day's low. The market sentiment was hit adversely as the government revised downwards the GDP growth rate for the year ended 31 March 2013 (FY 2013) to 4.5% from 5% reported earlier. Weakness in Asian stocks also dampened sentiment on the domestic bourses.
Metal stocks edged lower as China's Purchasing Managers' Index fell to a six-month low in January. GAIL (India) hit 52-week high, with the stock extending its recent gains.
The market breadth, indicating the overall health of the market, was positive.
The market edged lower in early trade on weak Asian stocks. A recovery from lower level after initial losses proved short lived as key benchmark indices weakened once again. The Sensex languished in negative terrain in mid-morning trade.
The market sentiment was affected adversely by data showing that foreign funds were net sellers of Indian stocks on Friday, 31 January 2014. Foreign institutional investors (FIIs) sold shares worth a net Rs 652.97 crore on Friday, 31 January 2014, as per provisional data from the stock exchanges.
Asian stocks fell on Monday, 3 February 2014, as slowdown in Chinese manufacturing growth added to concern the global economic recovery is faltering.
At 11:26 IST, the S&P BSE Sensex was down 92.34 points or 0.45% to 20,421.51. The index fell 121.89 points at the day's low of 20,391.96 in early trade, its lowest level since 30 January 2014. The index declined 33.50 points at the day's high of 20,480.35 in early trade.
The CNX Nifty was down 25.70 points or 0.42% to 6,063.80. The index hit a low of 6,052.20 in intraday trade, its lowest level since 30 January 2014. The index hit a high of 6,074.85 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,073 shares rose and 885 shares declined. A total of 118 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks declined and rest of them rose. M&M (down 1.98%), Tata Motors (down 1.73%) and ICICI Bank (down 1.46%) edged lower from the Sensex pack.
Metal stocks edged lower as China's Purchasing Managers' Index fell to a six-month low in January. China is the world's largest consumer of copper and aluminum. Sesa Sterlite (down 0.65%), Steel Authority of India (Sail) (down 0.55%), JSW Steel (down 5.24%), Hindustan Copper (down 0.65%), NMDC (down 1.41%), Bhushan Steel (down 0.84%), Hindustan Zinc (down 0.35%), Tata Steel (down 1.91%), and Hindalco Industries (down 2.65%) edged lower.
Jindal Steel & Power shed 2.38%. The company after trading hours on Friday, 31 January 2014, said that the company has utilized more than 50% of the amount earmarked for share buyback as specified in the resolution passed by the Board of Directors at its meeting held on 30 August 2013, i.e., the minimum buy-back size of Rs 500 crore. Accordingly, a meeting of the duly authorized sub-committee of directors of the company is being convened on Tuesday, 4 February 2014, in order to consider, inter alia, determining the closing date of the buy-back offer of the company's equity shares, being a date earlier than the last date for the completion of buy-back offer mentioned in the announcement, i.e. 15 March 2014, Jindal Steel & Power said.
National Aluminium Company (Nalco) rose 0.3%.
GAIL (India) hit 52-week high, with the stock extending its recent gains. The stock was up at 0.29% to Rs 360.30. The scrip hit 52-week high of Rs 362.30 in intraday trade. A meeting of the Board of Directors of the company will be held Thursday, 6 February 2014, inter alia, to consider a proposal of declaration of interim dividend for the year ending 31 March 2014 (FY 2014). The company has fixed 11 February 2014 as the record date for the purpose of payment of interim dividend.
IDBI Bank lost 2.61% after net profit declined 75.05% to Rs 103.96 crore on 1.12% growth in total income to Rs 7149.88 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced on Saturday, 1 February 2014.
IDBI Bank's provisions and contingencies rose 7.31% to Rs 1033.36 crore in Q3 December 2013 over Q3 December 2012.
The bank's ratio of gross non-performing assets (NPAs) to gross advances increased to 5.44% as on 31 December 2013, from 4.98% as on 30 September 2013 and 3.67% as on 31 December 2012. The ratio of net NPAs to net advances increased to 2.93% as on 31 December 2013, from 2.82% as on 30 September 2013 and 1.93% as on 31 December 2012.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 62.63, compared with its close of 62.68/69 on Friday, 31 January 2014.
Bond prices rose on optimism demand for existing debt will increase as the government's annual borrowing program draws to a close. The finance ministry is scheduled to raise as much as Rs 10000 crore this week at the final auction of the year through March. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.7381%, lower than its close of 8.7696% on Friday, 31 January 2014. Bond yield and bond prices move in opposite direction.
Indian manufacturers signalled a further improvement in operating conditions during January, according to a survey. The headline HSBC India Purchasing Managers' Index (PMI) posted a reading of 51.4 for January 2014, up from 50.7 for December 2013. The latest reading was the highest since March 2013, but pointed to a marginal pace of expansion that was well below the series average (55.1). January saw new orders expand at the quickest rate in ten months, with survey participants reporting stronger demand from both domestic and overseas clients.
Concurrently, new business from abroad grew at a solid pace that was the fastest since June last year. Subsequently, Indian manufacturers raised their production levels for the third successive month. The rate of output growth was solid and the strongest since February 2013.
Sector data indicated that consumer goods continued to outperform the remaining two monitored categories, while operating conditions deteriorated at capital goods producers. Growth rates for output and new orders in the consumer goods sub-category surpassed those seen at intermediate goods companies.
Employment rose for the fourth month running in January, with all three broad areas of the manufacturing economy posting job creation. Despite being slight, the overall rate of expansion was broadly in line with the long-run series average. Companies operating in the Indian manufacturing sector signalled pressure on operating capacity in January, as backlogs of work increased solidly. Moreover, the latest increase in unfinished work was the eighteenth in as many months. All three market groups posted higher work-in-hand, with the sharpest increase noted at consumer goods firms.
Meanwhile, supplier performance improved in the latest month for the first time since September 2013. Anecdotal evidence suggested that shorter delivery times reflected a greater availability of raw materials at vendors.
Amid reports of new business gains, purchasing activity in the Indian manufacturing economy rose at the start of 2014, although the pace of expansion was only slight and well below the series average. Growth of buying activity was largely centred on the consumer goods sub-sector. Pre-production stocks increased at consumer goods producers, but fell at both capital and intermediate goods firms. This resulted in an overall decline of stocks of purchases across the Indian manufacturing economy as a whole.
Average input costs rose in January, with manufacturers reporting higher prices for a range of raw materials, including metals, chemicals and energy. The rate of cost inflation remained robust. Consequently, companies raised their tariffs again. Although the strongest in three months, the latest rise in output charges was moderate and much weaker than seen for input costs.
Commenting on the India Manufacturing PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "Manufacturing activity moved into higher gear led my faster growth in new orders. However, inflation pressures also firmed, suggesting that the RBI has to keep up its inflation guards".
The First Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation, for the year 2012-13 released on Friday, 31 January 2014, showed India GDP revised down to 4.5% in 2012-13 from 5% earlier and as against a growth of 6.7% in the year 2011-12. The downward revision was mainly due to lower than provisionally estimated output in primary and secondary sectors. The data also showed lower-than-estimated growth numbers for exports, capital investment and consumption sectors, thereby pointing out to deeper underlying weaknesses.
The Eight Core Industries having a combined weight of 37.9% in the Index of Industrial Production (IIP) increased by 2.1% in December 2013 compared with a growth of 7.5% growth in December 2012 and 1.7% growth in November 2013, data released by the government after trading hours on Friday, 31 January 2014, showed.
The fiscal deficit reached Rs 5.16 lakh crore during April-December 2013, or 95.2% of the full-year target, compared with 78.8% a year earlier, data released by the government after trading hours on Friday, 31 January 2014, showed. Factory gate duties were down 6.9% at Rs 1.02 lakh crore during April-December from the year-earlier period, while customs tax receipts rose 4.3% to Rs 1.24 lakh crore -- much lower than the 13.6% annual growth target.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Sighting elevated consumer price inflation, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
Asian stocks fell on Monday, 3 February 2014, after a slowdown in Chinese manufacturing growth added to concern the global economic recovery is faltering. Key benchmark indices in Indonesia, Japan, Singapore and South Korea shed by 0.38% to 1.69%.
China's markets remain closed until 7 February 2014 for the Lunar New Year holiday, while markets in Hong Kong and Taiwan markets are shut until 4 February 2014.
A Chinese manufacturing gauge fell to a six-month low in January as output and orders slowed, adding to signs that government efforts to rein in excessive credit will cool growth in the world's second-largest economy. The Purchasing Managers' Index was at 50.5 in January 2014, compared with December's 51 reading, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Feb. 1 in Beijing. The survey showed jobs and export orders shrinking, amplifying risks of a deeper slowdown as Communist Party leaders clamp down on the $6 trillion shadow-banking industry and interbank borrowing costs rise. A separate private manufacturing gauge released by HSBC Holdings Plc and Markit Economics on Jan. 30 pointed to the first contraction in six months.
Growth in China's services sector cooled in January to its slowest pace in at least a year, data showed on Monday, the latest sign that the Chinese economy lost momentum last month in the run-up to the Lunar New Year holiday. The official non-manufacturing Purchasing Managers' Index slipped to 53.4 from December's 54.6, the lowest reading in at least a year but still above the 50-point level that indicates growth.
Trading in US index futures indicated that the Dow could advance 28 points at the opening bell on Monday, 3 February 2014. US stocks fell sharply on Friday amid continued unease over emerging markets and a number of high-profile earnings disappointments.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing bond purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market.
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