Key benchmark indices hovered in negative zone in mid-morning trade after Markit Economics said business conditions in the Indian private sector economy continued to deteriorate in December 2013. The barometer index, the S&P BSE Sensex, was down 54.26 points or 0.26%, off 116.72 points from the day's high and up 56.44 points from the day's low. The market breadth, indicating the overall health of the market, was strong. In the foreign exchange market, the rupee edged lower against the dollar as the US Federal Reserve prepared to start cutting bond purchases amid data that signaled the recovery of the world's biggest economy is picking up speed.
L&T rose in volatile trade after the company said it has won new orders worth Rs 2962 crore across various business segments. Tata Power Company and Reliance Infrastructure, both, extended their recent losses triggered by the Delhi government ordering CAG audit of their finances last week. Shares of steel major JSW Steel surged after the company after trading hours on Friday, 3 January 2014, said it has completed the acquisition of HeidelbergCement India's cement grinding facility at Raigad, Maharashtra. Among media shares, Zee Entertainment scaled 52-week high.
Key benchmark indices reversed direction after a positive start. Key benchmark indices cut losses after hitting fresh intraday low in morning trade. Key benchmark indices hovered in negative zone in mid-morning trade after Markit Economics said business conditions in the Indian private sector economy continued to deteriorate in December 2013.
Foreign institutional investors (FIIs) sold shares worth a net Rs 18.06 crore on Friday, 3 January 2014, as per provisional data from the stock exchanges.
At 11:16 IST, the S&P BSE Sensex was down 54.26 points or 0.26% to 20,797.07. The index fell 110.70 points at the day's low of 20,740.63 in morning trade. The index rose 62.46 points at the day's high of 20,913.79 in opening trade, its highest level since 2 January 2014.
The CNX Nifty was down 17.15 points or 0.28% to 6,194. The index hit a low of 6,176.15 in intraday trade. The index hit a high of 6,224.70 in intraday trade, its highest level since 2 January 2014.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,251 shares gained and 751 shares fell. A total of 117 shares were unchanged.
The total turnover on BSE amounted to Rs 891 crore by 11:20 IST compared to Rs 598 crore by 10:25 IST.
Among the 30-share Sensex pack, 18 stocks declined and rest of them gained.
L&T rose 0.52% to Rs 1,017.50 in volatile trade. The stock hit a high of Rs 1,025.90 and low of Rs 1,001 so far during the day. The company during market hours today, 6 January 2013, said it has won new orders worth Rs 2962 crore across various business segments.
Tata Power Company and Reliance Infrastructure, both, extended their recent losses triggered by the Delhi government ordering CAG audit of their finances last week. Tata Power Company dropped 1.84%. Reliance Infrastructure lost 1.08%. Rejecting the contention of private power distributors, the Delhi government on 1 January 2014 ordered a CAG audit of their finances. Delhi Chief Minister Arvind Kejriwal last week announced that the power tariffs in Delhi will be slashed by 50% for up to 400 units. The Delhi government will provide the subsidy and the money will be directly paid to the distribution companies. The cut in electricity tariffs, part of the AAP manifesto for the 4 December state assembly election, will entail a cost of Rs 61 crore over next three months.
Lanco Infratech rose 2.63% after the company said it has received favorable order from the Appellate Tribunal for Electricity in the matter of tariff determination for a power project unit in Chhattisgarh. The announcement was made after market hours on Friday, 3 January 2014.
Lanco Infratech said that the Appellate Tribunal for Electricity (APTEL) has passed its order in the matter of tariff determination for the second unit of Lanco Amarkantak Power Project in Korba district, Chhattisgarh.
As per the APTEL order, Amarkantak unit 2 shall be paid regulated tariff based on the actual capital cost of the project. This would result in sustainable and profitable operation of the project at full capacity, Lanco Infratech said in a statement.
Shares of steel major JSW Steel surged after the company after trading hours on Friday, 3 January 2014, said it has completed the acquisition of HeidelbergCement India's cement grinding facility at Raigad, Maharashtra. The stock was up 4.28% at Rs 1,036.50. The stock hit 52-week high of Rs 1,041.30 in intraday trade.
Zee Entertainment gained 4.55% to Rs 293.95 after hitting a 52-week high of Rs 294.60 in intraday trade.
Lakshmi Vilas Bank lost 0.47% to Rs 74.85 after the bank said that its board of directors have approved to issue and allot equity shares of the bank for an amount aggregating up to Rs 650 crore on rights basis. The announcement was made after market hours on Friday, 3 January 2014.
Lakshmi Vilas Bank's board of directors at a meeting held on Friday, 3 January 2014, approved to issue and allot equity shares of the bank for an amount aggregating up to Rs 650 crore to the equity shareholders of the bank on a rights basis at such price as may be determined by the Board or a Committee thereof.
If one assumes that the bank issues 8.64 crore fresh equity shares, it will result in a massive equity dilution of 88.6% based on the closing price of Rs 75.20 on Friday, 3 January 2014.
In the foreign exchange market, the rupee edged lower against the dollar as the US Federal Reserve prepared to start cutting bond purchases amid data that signaled the recovery of the world's biggest economy is picking up speed. The partially convertible rupee was hovering at 62.3075, weaker than its close of 62.16/17 on Friday, 3 January 2014.
Bond prices rose after strong bidding at bond auction held on Friday, 3 January 2014. The yield on 10-year federal paper, 8.83% GS 2023, was hovering at 8.8132%, lower than its close of 8.8343% on Friday, 3 January 2014. Bond yield and bond prices are inversely related.
Markit Economics today, 6 January 2014, said that business conditions in the Indian private sector economy continued to deteriorate in December 2013. At 48.1, the seasonally adjusted HSBC India Composite Output Index posted below the crucial 50 threshold for the sixth consecutive month. The index dropped from November's 48.5, indicating a slightly faster rate of contraction. While manufacturing production expanded, services output fell in December 2013, Markit Economics said.
Adjusted for seasonal factors, the HSBC Services Business Activity Index fell from 47.2 in November to 46.7 in the latest month, indicating a solid and accelerated rate of contraction. This was the sixth consecutive monthly drop in output levels, which is the longest period of continuous reduction since the 2008/2009 global financial crisis, Markit Economics said. Underpinning the latest fall in services output was a solid decrease in incoming new work. New business contracted at the quickest pace since September, with panelists reporting an increasingly fragile economy and competitive pressures, Markit Economics said. There were a few mentions that the upcoming elections had also contributed to the latest drop in new orders. Across the private sector as a whole, new business decreased at a faster, but moderate pace.
Four of the six broad areas of the service economy registered lower output volumes, while new business contracted in five categories. As with the trend for output, the sharpest decline in new orders was noted at Hotels & Restaurants. The Post & Telecommunication sub-sector remained resilient, with growth of both business activity and new orders recorded.
Outstanding business at both service providers and manufacturers increased in December, leading to a further accumulation of unfinished work in the Indian private sector. Although modest, the overall rate of increase was above the long-run survey average.
December data indicated that private sector employment rose. The latest increase in payroll numbers was broad-based with both manufacturers and service providers posting job creation.
Average purchase costs at services companies rose further in December, amid reports of higher prices paid for fuel, food, transportation and electricity. But, the rate of cost inflation was only moderate and the weakest since July, Markit Economics said. Input price inflation in the private sector as a whole eased to a six-month low. Additional cost burdens were passed on, as prices charged by private sector firms were raised for the fifty-fifth consecutive month in December. The latest increase in tariffs was, however, marginal and below its average.
Indian service providers remained upbeat about the prospects for business activity in 2014, Markit Economics said. Furthermore, the degree of confidence was the strongest in five months. Positive sentiment was linked by companies to forecasts of better economic conditions and hopes of higher demand. Some firms also mentioned that output is anticipated to grow after the elections.
Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "The service sector continues to face head winds, with weakening new business dragging down activity. On a positive note, inflation pressures are easing and optimism about the coming year is rising".
The next major trigger for the stock market is Q3 December 2013 corporate earnings. Investors and analysts will closely watch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year and/or the next year. The Q3 earnings season begins later this week when IT major Infosys and private sector bank IndusInd Bank unveil their earnings on Friday, 10 January 2014.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
Asian stocks declined on Monday, 6 January 2014, as a gauge of China's services industries dropped, signaling growth may slow in the world second-biggest economy. Key benchmark indices in Taiwan, Hong Kong, Singapore, China, Japan and Indonesia fell by 0.01% to 2.21%. South Korea's Seoul Composite rose 0.53%.
A private index of China's services industry released today, 6 January 2014, by HSBC and Markit Economics fell to 50.9 last month from 52.5 in November. A number above 50 indicates expansion. China's official nonmanufacturing PMI fell to 54.6 in December from 56.0 in November, according to a statement on Friday, 3 January 2014, from the China Federation of Logistics and Purchasing.
Trading in US index futures indicated that the Dow could drop 9 points at the opening bell on Monday, 6 January 2014. US stocks ended a choppy trading session mostly lower on Friday, 3 January 2014, after Federal Reserve Chairman Ben Bernanke defended the extraordinary measures undertaken by the central bank to boost the economic recovery. Bernanke, in a speech in Philadelphia four weeks before his term expires, said the economy "has made considerable progress." He cited payroll employment rising by 7.5 million since 2010 and growth in 16 of the 17 quarters after the recession ended as evidence the Fed's policies have succeeded. "The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for US economic growth in coming quarters," Bernanke said.
The US central bank will make its first Treasuries purchase under the smaller program on 6 January 2014, buying as much as $1.5 billion of securities due from February 2036 to November 2043. The Federal Reserve said after a two-day monetary policy review on 18 December 2013 that it will cut its monthly bond purchases to $75 billion from $85 billion starting in January 2014 amid an improved outlook for the job market in the world's largest economy. The US central bank is poised to continue winding down its stimulus measures gradually this year.
The central bank will release minutes of its December Federal Open Market Committee policy meeting on Wednesday, 8 January 2014.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014.
The US government will unveil the influential non-farm payroll report for December 2013 on Friday, 10 January 2014.
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