Sensex, Nifty hit 1-1/2-week low

A bout of volatility was witnessed as key benchmark indices trimmed losses soon after hitting fresh intraday low in morning trade. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit 1-1/2-week low. The Sensex was down 32.78 points or 0.16%, off close to 70 points from the day's high and up about 20 points from the day's low. The market breadth, indicating the overall health of the market, was weak. Indian stocks fell as the Reserve Bank of India (RBI) on Monday, 28 October 2013, sounded concern about inflation, which it said would remain outside its comfort zone this fiscal year, amid expectations that controlling prices would remain the prime focus when the central bank reviews monetary policy today, 29 October 2013. The central bank is widely expected to raise its main lending rate viz. the repo rate by 25 basis points after a monetary policy review today, 29 October 2013.

Capital goods pivotals edged lower. Car major Maruti Suzuki India extended initial gain triggered by the company's strong Q2 results. Infosys dropped on reports the US federal government is set to slap Infosys with the largest immigration fine ever. Lanco Industries spurted on turnaround in Q2 result.

The market slipped into the red after opening higher. A bout of volatility was witnessed as key benchmark indices trimmed losses soon after hitting fresh intraday low in morning trade. The S&P BSE Sensex and the 50-unit CNX Nifty, both, hit 1-1/2-week low.

The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month October 2013 series to November 2013 series. The near month October 2013 derivatives contract expire on Thursday, 31 October 2013.

Foreign institutional investors (FIIs) bought shares worth a net Rs 636.78 crore on Monday, 28 October 2013, as per provisional data from the stock exchanges.

At 10:20 IST, the S&P BSE Sensex was down 32.78 points or 0.16% to 20,537.50. The index fell 53.46 points at the day's low of 20,516.82 in morning trade, its lowest level since 18 October 2013. The index rose 36.40 points at the day's high of 20,606.68 in early trade.

The CNX Nifty was down 18.10 points or 0.3% to 6,083. The index hit a low of 6,082.45 in intraday trade, its lowest level since 18 October 2013. The index hit a high of 6,111.65 in intraday trade.

The market breadth, indicating the overall health of the market, was weak. On BSE, 960 shares declined and 638 shares rose. A total of 82 shares were unchanged.

Among the 30-share Sensex pack, 16 stocks fell and rest of them rose. SBI (down 1.37%), HDFC Bank (down 0.94%) and ICICI Bank (down 0.6%), edged lower.

Car major Maruti Suzuki India jumped 5.5%, with the stock extending initial gain triggered by the company's strong Q2 result. The company after trading hours on Monday, 28 October 2013, said its net profit jumped 194.7% to Rs 670.20 crore on 26.5% growth in net sales to Rs 10211.80 crore in Q2 September 2013 over Q2 September 2012. The company said that base effect aided strong growth in bottomline in Q2 September 2013 -- the company's performance in Q2 September 2012 was adversely impacted by labour problems at its Manesar plant. Higher localization and cost reduction initiatives by the company also contributed significantly to bottomline growth in Q2 September 2013, Maruti said. The overall impact of foreign exchange was positive during the quarter, Maruti said.

Maruti said that the company's new diesel engine facility at Gurgaon and the third assembly facility at Manesar went on stream during Q2 September 2013. With this, the company's total capacity for vehicle assembly has risen to 1.5 million vehicles per annum.

Capital goods pivotals edged lower. Bhel (down 2.46%) and L&T (down 1.79%), declined.

Infosys dropped 0.07% on reports the US federal government is set to slap Infosys with the largest immigration fine ever, claiming the Indian outsourcing giant illegally placed workers on visitor, rather than work, visas at big corporate clients across the US.

Lanco Industries spurted 13.93% on turnaround in Q2 result. The company reported a net profit of Rs 9.76 crore in Q2 September 2013 compared with a net loss of Rs 11.95 crore in Q2 September 2012. Net sales rose 20.8% to Rs 264.05 crore in Q2 September 2013 over Q2 September 2012. The result was announced after market hours on Monday, 28 October 2013.

In the foreign exchange market, the rupee edged lower against the dollar on caution ahead of the Reserve Bank of India's (RBI) monetary policy review today, 29 October 2013. The partially convertible rupee was hovering at 61.685, compared with its close of 61.52/53 on Monday, 28 October 2013.

Bond prices rose amid initial volatility ahead of the Reserve Bank of India's (RBI) monetary policy review today, 29 October 2013. The yield on the federal benchmark paper 7.16% GS 2023 was hovering at 8.646%, a tad lower than its close of 8.6557% on Monday, 28 October 2013. Bond yield and bond prices are inversely related.

The Reserve Bank of India (RBI) announces Second Quarter Review of Monetary Policy 2013-14 today, 29 October 2013. Market men expect RBI to hike its main lending rate viz. the repo rate by 25 basis points to rein in inflation. The wholesale price (WPI) and consumer price inflation, both, accelerated in September 2013. WPI inflation accelerated to 6.46% in September 2013, from 6.1% in August 2013. The annual rate of inflation based on the combined consumer price index (CPI) for urban and rural India rose 9.84% in September 2013, from 9.52% in August 2013.

The Reserve Bank of India (RBI) after trading hours on Monday, 28 October 2013, said that the monetary policy faces an unenviable task of anchoring inflation expectations, amid tepid growth and weak business confidence. It is, therefore, important to craft policy responses so that growth concerns are addressed in an environment of stable prices, the central bank said a report titled -- Macroeconomic and Monetary Developments, Second Quarter Review 2013-14. The document serves as a backdrop to the Second Quarter Review of Monetary of Policy 2013-14 to be announced on Tuesday, 29 October 2013. With the normalisation of exceptional liquidity measures under way, incremental calibration of monetary policy will be shaped by changes in the growth-inflation balance, keeping overall macroeconomic stability in consideration, the RBI said. For supporting growth, complementary action aimed at productivity enhancement, structural reforms and quick project implementation will be needed, the central bank said in a statement.

The RBI said the WPI inflation is ruling above the RBI's comfort level and may remain range-bound around the current level during H2 of 2013-14. Moreover, the persistence of high CPI inflation remains a concern, the RBI said. The good monsoon should have a salutary effect on food inflation, but second-round effects from already high food and fuel inflation could impart upside pressures on prices of other commodities and services, the RBI said. External sector risks have reduced as CAD is likely to moderate since Q2 of 2013-14. The trade balance has responded to the policy measures taken -- exports have picked up and gold imports have declined.

Broad money growth is largely in line with the RBI's indicative trajectory and credit growth has accelerated with greater recourse to bank finance by corporates. While financial markets have rallied, near-term uncertainties on account of 'tapering' continue to be a concern, the RBI said.

Asian stocks edged lower on Tuesday, 29 October 2013, before the Federal Reserve begins its two-day policy meeting today. Key benchmark indices in China, Taiwan, Hong Kong, Singapore, Japan, Indonesia and South Korea shed 0.01% to 1.07%.

The People's Bank of China conducted 13 billion yuan ($2.13 billion) of seven-day reverse-repurchase agreements today, 29 October 2013. That compares with the 102.5 billion yuan drained from the banking system in the last two weeks as existing contracts matured and the monetary authority suspended sales of new agreements as corporate tax payments fell due.

Trading in US index futures indicated that the Dow could fall 9 points at the opening bell on Tuesday, 29 October 2013. US stocks were little changed on Monday as investors found few catalysts to push equities higher. Economic data showed pending home sales slumped 5.6% in September, a rate that was far steeper than expected and the biggest drop in more than three years.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting today, 29 October and tomorrow, 30 October 2013. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.

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