Sensex, Nifty hit three-week low

Key benchmark indices edged lower in volatile trade, with market sentiment hit adversely by hawkish comments from the Reserve Bank of India governor Dr. Raghuram Rajan on Thursday, 26 September 2013, that inflation continues to remain high. Weakness in European stocks also weighed on sentiment. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, dropped to three-week closing low. The Sensex shed 166.58 points or 0.84%, up close to 55 points from the day's low and off about 255 points from the day's high. The market breadth, indicating the overall health of the market, turned negative from positive in late trade.

The Sensex has gained 1,107.55 points or 5.94% in September 2013 so far (till 27 September 2013). The Sensex has risen 300.56 points or 1.54% in calendar 2013 so far (till 27 September 2013). From a 52-week high of 20,739.69 on 19 September 2013, the Sensex has declined 1,012.42 points or 4.88%. From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 2,278.56 points or 13.05%.

Coming back to today's trade, capital goods pivotals dropped. Metal and mining stocks also declined. Banking and realty stocks declined after Reserve Bank of India (RBI) governor Dr. Raghuram Rajan said on Thursday, 26 September 2013, that the RBI is still worried about high inflation, even when taking out volatile food prices. Index heavyweight Reliance Industries (RIL) edged higher in choppy trade. UB group stocks rallied.

In the foreign exchange market, the rupee reversed intraday gains against the dollar. The partially convertible rupee was hovering at 62.42, weaker than with its close of 62.07/08 on Thursday, 26 September 2013. The rupee had strengthened past 62 against the dollar earlier during the day.

The S&P BSE Sensex lost 166.58 points or 0.84% to settle at 19,727.27, its lowest closing level since 6 September 2013. The index declined 219.47 points at the day's low of 19,674.38 in late trade. The index rose 87.72 points at the day's high of 19,981.57 in early trade.

The CNX Nifty shed 49.05 points or 0.83% to 5,833.20, its lowest closing level since 6 September 2013. The index hit a low of 5,819.30 and a high of 5,909.20 in intraday trade.

The BSE Mid-Cap index fell 0.1% and outperformed the Sensex. The BSE Small-Cap index rose 0.31% and outperformed the Sensex.

The total turnover on BSE amounted to Rs 1793 crore, higher than Rs 1602.55 crore on Thursday, 26 September 2013.

The market breadth, indicating the overall health of the market, turned negative from positive in late trade. On BSE, 1,213 shares fell and 1,157 shares rose. A total of 130 shares were unchanged.

Among the 30-share Sensex pack, 25 stocks fell and rest of them rose.

Metal stocks declined. JSW Steel (down 1.67%), Tata Steel (down 3.89%), Hindustan Zinc (down 1.13%), Sail (down 3.06%), Sesa Sterlite (down 2.17%), NMDC (down 1.88%) and Hindalco Industries (down 2.73%), edged lower.

But, Jindal Steel & Power rose 0.25%.

Hindustan Unilever (HUL) dropped 1.35% to Rs 620.40. A block deal of 3.81 lakh shares was executed in the counter on BSE at Rs 628.20 at 9:41 IST.

Capital goods pivotals dropped. Bhel declined 4.29% on profit booking after gaining 15.78% in prior three trading sessions.

L&T declined 1.53%.

Index heavyweight Reliance Industries gained 0.2% to Rs 840.20. The stock was volatile. The scrip hit high of Rs 853.90 and low of Rs 838.

Two-wheeler stocks were mixed. Bajaj auto fell 0.06%. Hero MotoCorp gained 1.5%.

M&M fell 1.41% in choppy trade. The company today, 27 September 2013, said it would be raising the prices of its passenger as well as its commercial vehicles by up to 2% with effect from 1 October 2013. The company said that the increase would be in the range of Rs 6000 to Rs 20000 depending on the vehicle model. The increase is primarily due to higher input costs, devaluation of the rupee and increase in some raw material costs.

Realty stocks declined after Reserve Bank of India (RBI) governor Dr. Raghuram Rajan said on Thursday, 26 September 2013, that the RBI is still worried about high inflation, even when taking out volatile food prices. Purchases of both residential and commercial property are largely driven by finance. DLF (down 2.88%), D B Realty (down 0.18%), HDIL (down 2.9%), and Unitech (down 1.81%), dropped

Shares of realty firm Omaxe dropped following weak response to the Offer for Sale (OFS) of the company's shares by promoters which was aimed at meeting the minimum public shareholding rule. The stock lost 3.88% to Rs 136.35. The OFS got bids for just 42.3 lakh shares, compared with 1.52 crore shares on offer, data from the stock exchanges showed. The OFS was subscribed 27.74% at an indicative price of Rs 135.67 per share, compared with floor price of Rs 135.

Sun Pharmaceutical Industries rose 1.45% to Rs 589.75 after hitting record high of Rs 597.30 in intraday trade.

Glenmark Pharmaceuticals dropped 0.07%. The company today, 27 September 2013, said it has received a small research fee payment from Forest Laboratories Inc. on a collaboration for the development of novel mPGES-1 inhibitors to treat chronic inflammatory conditions to support the next phase of work. Glenmark is expecting an additional payment to support the advancement of the programme, the company said in a statement. Forest has an exclusive option to obtain license rights to the program upon the completion of pre-clinical trials. Under the terms of the agreement signed in FY 2013, Forest had made $6 million as upfront payment to Glenmark and also made an additional $3 million to support the next phase of work for the development of novel mPGES-1 inhibitors to treat chronic inflammatory conditions, including pain.

Shares of biscuits major Britannia Industries rose 2.58% to Rs 775.25 after hitting a record high of Rs 783.75 in intraday today, 27 September 2013.

Bank stocks declined after Reserve Bank of India (RBI) governor Raghuram Rajan said on Thursday, 26 September 2013, that the RBI is still worried about high inflation, even when taking out volatile food prices. Among private bank stocks, HDFC Bank (down 1.78%), Yes Bank (down 3.5%) and ICICI Bank (down 2.31%), declined.

Kotak Mahindra Bank lost 2.96% to Rs 682.30. A block deal of 2.99 lakh shares was executed in the counter on BSE at Rs 703.85 at 9:41 IST.

State Bank of India (SBI) fell 2%. SBI announced after market hours that it has repurchased of a principal amount of $147 million of $1 billion 3.25% bonds due 2018 (the 2018 Bonds). The 2018 Bonds were issued by SBI on 18 April 2013 and are listed on the Singapore Exchange Securities Trading. The repurchase of the Bond took place between 26 August 2013 and 26 September 2013. The bank is in the process of cancelling the repurchased 2018 Bonds and the aggregate outstanding principal amount of the 2018 Bonds following such cancellation will be $853 million, SBI said in a statement.

SBI on 18 September 2013 said it has raised the base rate by 10 basis points (bps) to 9.8% per annum (pa) from 9.7% and the benchmark prime lending rate by 10 bps to 14.55% from 14.45% with effect from 19 September 2013. The bank also raised interest rates for retail term deposits.

Among other PSU bank stocks, Canara Bank, Bank of India, Union Bank of India, and Bank of Baroda declined 0.24% to 1.66%. Punjab National Bank rose 0.24%.

Index heavyweight and cigarette maker ITC dropped 0.1% to Rs 348.90. The stock hit high of Rs 351 and low of Rs 345.

IT stocks were mixed after positive economic data in the US, the biggest outsourcing market for the Indian IT firms. HCL Technologies (up 1.71%) and TCS (up 0.31%), gained.

Infosys declined 0.23%.

Wipro fell in volatile trade. The stock was down 0.77%. The stock became part of the 50-unit CNX Nifty index effective today, 27 September 2013. The IT major replaced Reliance Infrastructure in Nifty.

Shares BPCL and Videocon Industries, both, jumped after a drilling campaign off Brazil's northeastern coast showed that an area controlled by Petrobras and the Indian companies likely holds more than a billion barrels of oil. BPCL jumped 6.07%. Videocon Industries spurted 6.33%.

Videocon Industries announced during trading hours today, 27 September 2013, that Brazil's state-run oil company Petrobras and IBV Brasil, a 50-50 joint venture between BPCL and Videocon Industries, have determined that "SEAL-11" exploration block contains very large amounts of high-quality light crude oil and natural gas. The SEAL-11 block and adjacent areas, 100 kilometers off the coast of the Brazilian state of Sergipe, may hold more than 3 billion barrels of oil in place, according to reports. If confirmed, that would make the block -- owned 60% by Petrobras and 40% owned by IBV -- one of the biggest global discoveries of the year.

UB group stocks rallied. United Spirits (up 6.51%), United Breweries (up 6.17%), gained.

Kingfisher Airlines rose by maximum permissible 5% upper circuit at Rs 6.52 on BSE, with the stock extending recent sharp surge. The company's Chairman Vijay Mallya said on Tuesday, 24 September 2013, that the company is in talks with a foreign investor for a potential stake sale. Kingfisher Airlines has been grounded since October 2012 for want of cash. Its flying licence was suspended in December 2012.

Tyre stocks edged higher. JK Tyre & Industries (up 0.22%), MRF (up 5.16%) and CEAT (up 4.34%), gained.

Shipbuilding stocks rallied for the second day in a row. ABG Shipyard (up 13.71%) and Bharati Shipyard (up 11.09%), edged higher.

The RBI has a neutral stance on interest rates for now, but it is still worried about high inflation, even when taking out volatile food prices, RBI governor Dr. Raghuram Rajan said on Thursday, 26 September 2013. He said that inflation is not due just to higher food prices. "Unfortunately there is still some inflation when you strip out the effects of food and energy. Therefore it is not just food, it's other factors also which are driving inflation," Rajan told reporters on the sidelines of a conference. "CPI core (inflation) is about 8.2%, that is certainly high, but I think we are looking at all aspects of inflation at this point," Rajan said.

With regard to cross-border capital flows, Rajan said that especially emerging markets were often the losers as flows turned around very quickly. "We need to solve this problem (of capital flows) and we need to take a more practical view of this," Rajan said, without going into details.

The Reserve Bank of India on Wednesday, 25 September 2013, said that it is closely and continuously monitoring liquidity conditions in the banking system and will take actions as appropriate, including open market operations, to ensure that adequate liquidity is available to support the flow of credit to productive sectors of the economy. The RBI issued the statement as liquidity conditions have become tight following last week's surprise interest-rate increase by the central bank.

European stocks edged lower on Friday, 27 September 2013. Key benchmark indices in UK, France and Germany were down by 0.31% to 0.92%.

Economic confidence in the euro-area increased more than economists forecast in September, adding to signs the single-currency bloc's recovery is gaining momentum. An index of executive and consumer sentiment rose for a fifth month to 96.9 from a revised 95.3 in August, the European Commission in Brussels said today.

Italian business confidence rose to the highest in two years, a sign of optimism that the euro region's third-biggest economy will emerge from a recession by the end of 2013. The manufacturing-sentiment index climbed in September to 96.6 from a revised 93.4 in August, the Rome-based national statistics office Istat said today.

Spanish consumer price inflation eased in September to reach its slowest pace since February 2010 as the government squeezes the domestic economy under pressure from the European Union. The EU-harmonized measure for inflation increased 0.5 percent from a year ago compared with 1.6% in August as the effect of an increase in sales tax dropped out of the annual comparison, Spain's National Statistics Institute INE in Madrid said today.

Asian stocks rose on Friday, 27 September 2013, after US jobless claims unexpectedly fell and Japan's inflation accelerated to the fastest pace since 2008. Key benchmark indices in China, Hong Kong, Taiwan, Indonesia, Singapore and South Korea rose 0.20% to 0.56%. Japan's Nikkei Average fell 0.26%.

Japan's inflation accelerated to the fastest pace since 2008 in August on higher energy costs, underscoring pressure on Prime Minister Shinzo Abe to drive wage increases as he seeks to end 15 years of deflation. Consumer prices excluding fresh food increased 0.8% from a year earlier, the statistics bureau said today in Tokyo.

Trading in US index futures indicated that the Dow could fall 47 pints at the opening bell on Friday, 27 September 2013. US stocks rose on Thursday, halting the longest slump this year for the Standard & Poor's 500 Index, as an unexpected drop in jobless claims overshadowed concern that a budget impasse could hurt economic growth.

A Labor Department report showed the number of Americans filing applications for unemployment benefits unexpectedly fell last week, indicating further progress in the labor market. First-time claims for unemployment benefits in the US dropped by 5,000 to 305,000 last week. The economy expanded at faster pace in the second quarter from the previous three months, with gross domestic product rising at a 2.5% annualized rate, the Commerce Department said. A separate report added to signs that rising mortgage rates may have slowed housing market momentum. Fewer Americans signed contracts in August to buy previously owned homes, figures from the National Association of Realtors showed.

The 2014 fiscal year in the United States starts on Monday, 1 October 2013, and politicians remain at loggerheads over passing a budget, with this weekend expected to see some crucial scrambling in Washington. Investors are also closely watching debt-ceiling negotiations in Washington. House Speaker John Boehner said on Thursday that his party will push for a bill that will tie increasing the debt ceiling and continue funding the government past Oct. 1 to more cuts in federal spending. Senate Majority Leader Harry Reid, D-Nev., said his chamber plans to have a stopgap budget bill finished by Sunday.

The Senate on Wednesday moved toward advancing a bill that would keep the government open after Monday without wiping out funding from the health-care law. Also Wednesday, Treasury Secretary Jacob Lew told Congress the Treasury will only have $30 billion in cash by Oct. 17, putting the nation on the brink of default.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 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.

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said on Thursday that the US central bank will face risks as it pursues its exit strategy from recent unconventional policies. Lacker is a nonvoting member of the Fed's policy-making committee. Participating on a panel in Germany, Fed Gov. Jeremy Stein, a voting member, said the US central bank should develop a methodical approach to tapering by linking reduced asset purchases to the unemployment rate. In Houghton, Mich., Minneapolis Fed President Narayana Kocherlakota, who votes next year, said the central bank should do "whatever it takes" to bolster the labor market.

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