Sensex ekes out small gains after witnessing intraday volatility

A divergent trend was witnessed on the bourses as the S&P BSE Sensex provisionally closed with mild gains while the 50-unit CNX Nifty provisionally closed slightly in the red. The market witnessed high intraday volatility as traders roll over positions in the futures & options (F&O) segment from the near month August 2013 series to September 2013 series. The S&P BSE Sensex was provisionally up 19.69 points or 0.11%, off about 190 points from the day's high and up close to 50 points from the day's low. The market breadth, indicating the overall health of the market, was positive.

The Sensex gained for the third straight day in a row today, 26 August 2013.

Index heavyweight and cigarette maker ITC declined. Capital goods pivotals gained. Most metal and mining stocks also gained. Shares of Sesa Goa jumped ahead of its inclusion in the 30-share benchmark S&P BSE Sensex from Tuesday, 27 August 2013. Pharma stocks advanced.

The market edged higher in early trade on firm Asian stocks. The market extended initial gains to hit fresh intraday high in morning trade, with the Sensex and the 50-unit CNX Nifty, both, hitting their highest level in more than a week. The market trimmed gains to hit fresh intraday low in mid-morning trade. The market regained strength in early afternoon trade. Key benchmark indices slipped into the red in afternoon trade. The market regained positive terrain in mid-afternoon trade. High volatility was witnessed in late trade.

The market is expected to remain volatile this week 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 on Thursday, 29 August 2013.

Meanwhile, the rupee weakened against the dollar today, 26 August 2013. The partially convertible rupee was trading at 64.34 per dollar, sharply lower than its close of 63.20/21 on Friday, 23 August 2013.

As per provisional figures, the S&P BSE Sensex was up 19.69 points or 0.11% to 18,539.13. The index jumped 208.75 points at the day's high of 18,728.19 in morning trade, its highest level since 16 August 2013. The index fell 30.51 points at the day's low of 18,488.93 in afternoon trade.

The CNX Nifty was down 1.30 points or 0.02% to 5,470.45, as per provisional figures. The index hit a high of 5,528.70 in intraday trade, its highest level since 16 August 2013. The index hit a low of 5,454.45 in intraday trade.

The total turnover on BSE amounted to Rs 1828 crore, lower than Rs 1960.40 crore on Friday, 23 August 2013.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,289 shares rose and 1,000 shares fell. A total of 149 shares were unchanged.

Among the 30-share Sensex pack, 20 stocks rose and rest of them fell. Hero MotoCorp (up 2.36%), NTPC (up 2.54%) and Wipro (up 2.25%), edged higher from the Sensex pack.

Capital goods pivotals gained. L&T rose 0.58%. The company on 22 August 2013 announced that its construction division has won new orders valued at Rs 1504 crore across various business segments in August 2013.

Shares of power equipment major Bharat Heavy Electricals (Bhel) rose 5.86%, with the stock extending Friday's 8.1% jump.

Most metal and mining stocks rose. Shares of Sesa Goa jumped 8.57% ahead of its inclusion in the 30-share benchmark S&P BSE Sensex from tomorrow, 27 August 2013.

Shares of Sterlite Industries rose 2.89%.

Sesa Goa will replace Sterlite Industries in the Sensex from 27 August 2013. The move comes in the wake of the scheme of amalgamation between the two Vedanta group firms whereby Sterlite Industries has been merged with Sesa Goa.

Among other metal stocks, Jindal Steel & Power (up 1.93%), Hindalco Industries (up 0.39%), Sail (up 0.11%), and Hindustan Zinc (up 1.21%), edged higher.

But, Tata Steel fell 2.14% to Rs 276.20 in choppy trade, with the stock sliding after prior 2-day 13.83% rally. Shares of Tata Steel rallied 13.83% in two trading sessions to settle at Rs 282.25 on Friday, 23 August 2013, from a recent low of Rs 247.95 on 21 August 2013.

Pharma stocks also gained. Cipla (up 0.25%), Dr Reddy's Laboratories (up 1.11%), Ranbaxy Laboratories (up 4%) and Sun Pharmaceutical Industries (up 1.92%), gained.

Index heavyweight and cigarette maker ITC dropped 0.41%. The company said after market hours on Friday, 23 August 2013, that a meeting of the board of directors of the company will be held on 28 August 2013, to consider a proposal for demerger of the non-engineering business comprising safety matches business and agri (forestry) business of Wimco (a subsidiary of the company) into the company. ITC along with Russell Credit, ITC's wholly owned subsidiary, holds 98.21% of the equity share capital of Wimco.

Shares of Axis Bank skidded 5%.

ONGC fell 3.71%. The company on Sunday, 25 August 2013, said that its overseas investment arm ONGC Videsh (OVL) has signed definitive agreements on 24 August 2013 with Anadarko Mombique Area 1 Limitada (Anadarko) to acquire a direct 10% participating interest in the Rovuma Area 1 Offshore Block in Mozambique (Area 1) for $2.64 billion.

The acquisition is subject to the approvals of the Governments of Mozambique and India, relevant regulatory approvals, pre-emption rights and other customary conditions. The transaction is subject to usual closing conditions and has long stop date of 28 February 2014.

The acquisition of an additional 10% interest in Area 1 follows the company's earlier announcement of a joint acquisition, with Oil India (OIL), of an indirect 10% interest in Area 1, from Videocon Mauritius Energy. BPRL Ventures Mozambique B.V. (BPRL), another Indian PSU already holds a 10% interest in Area 1. Area 1 covers approximately 2.6 million acres in the deep-water Rovuma Basin offshore Mozambique and represents the largest gas discovery in offshore East Africa with estimated recoverable resources of 35 to 65 trillion cubic feet. The partners in Area 1 include Anadarko, operator of the project, ENH, Mitsui, BPRL, Videocon and PTTEP. Area 1 has the potential to become one of the world's largest LNG producing hubs.

The Area 1 LNG project is strategically located to supply LNG to India at a competitive price. Participation of Indian PSUs in the project will facilitate access of LNG to the growing Indian gas market. Indian PSUs would need to devote significant funding and technical resources to the development of the project, which will also enhance the strong links between Mozambique and India.

The acquisition of an interest in Area 1 would mark OVL's entry into this emerging world-class offshore gas basin with significant future upside potential, and is consistent with OVL's quest of adding high quality international assets to its existing E&P portfolio, OVL said. The acquisition would increase OVL's reserve and resource base significantly. The project would also be an important milestone in reaching OVL's long-term production targets of 20 MMTOE by FY'18 and 60 MMTOE by FY'30.

Mr Sudhir Vasudeva, Chairman, OVL said: "We are very pleased to have agreed with Anadarko the terms to acquire a direct 10% interest in Area 1 to add to the 10% interest OVL has agreed to jointly acquire with OIL recently. As a result of both transactions, OVL will own a significant interest in this strategic project in Mozambique. Area 1 has potential to become one of the world's largest LNG projects and today's acquisition marks a further significant step by OVL/ONGC group towards the energy security of our country. OVL is delighted to partner with Anadarko and other project participants to develop this world-class asset".

Power Finance Corporation down 3.79% on high volumes. On BSE, 13.79 lakh shares changed hands on the counter, compared with average daily volume of 4.5 lakh shares in the past one quarter.

Global credit rating agency Fitch ratings today, 26 August 2013, said it was getting more challenging for India to meet its fiscal deficit target in the current fiscal year ending March 2014 with revenues slowing. The rating agency is also monitoring India's growth, inflation, public finances and the current account deficit and its funding. Last week, Fitch said India and Indonesia are not at immediate risk of credit rating downgrades, but warned it could act if the governments of these countries fail to calm current financial market tensions.

European stock markets dropped on Monday, 26 August 2013, as investors awaited durable-goods data from the US to gauge if they weaken or strengthen the case for the Federal Reserve to taper its asset purchases. Key benchmark indices in Germany and France were down by 0.22% and 0.67%. UK markets were closed for a bank holiday.

Asian stocks rose for a second day on Monday, 26 August 2013, after a slump in US home sales eased speculation the Federal Reserve will reduce economic stimulus next month. Key benchmark indices in Singapore, Hong Kong, China, Taiwan and South Korea were up by 0.28% to 1.9%. Key benchmark indices in Singapore, Indonesia and Japan fell by 0.14% to 1.18%.

Trading in US index futures indicated that the Dow could fall 13 points at the opening bell on Monday, 26 August 2013. US stocks rose on Friday, 23 August 2013 as investors watched Federal Reserve officials for signals on stimulus cuts after data showed home sales plunged. Data from the Commerce Department showed purchases of new US homes plunged in July by the most in more than three years and previous months were revised down, a sign that growth in the industry may be taking a pause as mortgage rates rise.

On Monday, durable-goods data from the US were on tap, expected to show a decline in July.

Federal Reserve officials rebuffed international calls to take the threat of fallout in emerging markets into account when tapering US monetary stimulus. The risk that the Fed's trimming of bond buying will hurt economies from India to Turkey by sparking an exodus of cash and higher borrowing costs was a dominant theme at the annual meeting of central bankers and economists in Jackson Hole, Wyoming, that ended 24 August 2013.

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.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 17-18 September 2013 to decide on interest rates in the United States.

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