Key benchmark indices languished in the red in early afternoon trade after Prime Minister Dr. Manmohan Singh expressed concern about the failure in controlling persistent inflation. The barometer index, the S&P BSE Sensex, Sensex was down 88.91 points or 0.43%, up about 40 points from the day's low and off close to 60 points from the day's high. The market breadth, indicating the overall health of the market, was negative. Weakness in Asian shares dampened sentiment on the domestic bourses. The rupee edged lower against the dollar.
Bank stocks dropped after Prime Minister Dr. Manmohan Singh expressed concern about the failure in controlling persistent inflation. Pharma stocks were mixed.
A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak opening. The Sensex and the 50-unit CNX Nifty, both, hit two-week low at the onset of the trading session. Volatility continued as key benchmark indices hovered in negative zone in morning trade. The Sensex languished in the negative terrain in mid-morning trade after Prime Minister Manmohan Singh said that he will not to seek third term in office and that he will "pass on baton" after Lok Sabha elections. The Sensex languished in the negative terrain in early afternoon trade after Dr. Singh expressed concern about the failure in controlling persistent inflation.
Foreign institutional investors (FIIs) bought shares worth a net Rs 674.05 crore on Thursday, 2 January 2014, as per provisional data from the stock exchanges.
Asian stocks dropped on Friday, 3 January 2014, after US equities retreated from record highs and a gauge of China's non-manufacturing industries declined. The latest data added to signs of a slowdown in the world's second-largest economy.
At 12:20 IST, the S&P BSE Sensex was down 88.91 points or 0.43% to 20,799.42. The index dropped 130.30 points at the day's low 20,758.03 in morning trade, its lowest level since 20 December 2013. The index fell 31.80 points at the day's high of 20,856.53 in early trade.
The CNX Nifty was down 29 points or 0.47% to 6,192.15. The index hit a low of 6,178.85 in intraday trade, its lowest level since 20 December 2013. The index hit a high of 6,209.05 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,245 shares fell and 887 shares rose. A total of 136 shares were unchanged.
Among the 30-share Sensex pack, 22 stocks fell and rest of them rose. M&M (down 2.57%), Tata Motors (down 2.37%) and Tata Power Company (down 4.92%) declined.
Bank stocks edged lower after Prime Minister Dr. Manmohan Singh expressed concern about the failure in controlling persistent inflation.
State Bank of India declined 1.18%. The state-run bank after market hours on Thursday, 2 January 2014, said that the Executive Committee of the Central Board of the bank at its meeting held on Thursday, 2 January 2014, has accorded its approval for the issuance and allotment of 1.12 crore equity shares at an issue price of Rs 1782.74 per share to the Government of India (GoI) on preferential basis. The committee also approved the allotment of Basel III compliant Tier 2 bonds of Rs 2000 crore, issued for 120 months (10 year bullet), at an annually payable coupon of 9.69%, by way of private placement.
AXIS Bank (down 1.15%) and ICICI Bank (down 1.59%) declined. HDFC Bank rose 0.56%.
Indian Bank fell 1.79%. UCO Bank (up 0.66%) and Vijaya Bank (up 1.08%) gained. The Union Cabinet on Thursday gave its approval for conversion of Perpetual Non-Cumulative Preference Shares (PNCPS) held by Government of India (GoI) in Indian Bank, UCO Bank and Vijaya Bank amounting to Rs 400 crore, Rs 1823 crore and Rs 1200 crore respectively into equity shares of these banks in favour of GoI, subject to approval of shareholders and also Securities and Exchange Board of India (SEBI) and other authorities.
Conversion of PNCPS subscribed by GoI in Indian Bank, UCO Bank and Vijaya Bank into equity shares in the first instance and subsequently in other Public Sector Banks where GOI has invested in PNCPS, PCPS and IDPIs, would enhance the Tier-1 capital of the PSBs thereby making available more funds at their disposal to meet the credit requirement of the productive sectors of economy, a government statement said. It will also provide impetus to the economy by including the under-banked rural and semi-urban areas, it said.
The conversion is proposed to be done in the Financial Year 2013-14 subject to approval of shareholders and also the Securities and Exchange Board of India (SEBI) and other authorities.
Three PSBs namely, UCO Bank, Vijaya Bank and Indian Bank have requested for conversion of PNCPSs held by GoI into equity. The Reserve Bank of India (RBI) has been consulted in the matter. RBI, in its comments on the proposals, advised that the Government may consider permitting conversion of PNCPSs into equity subject to approval of shareholders and also Securities and Exchange Board of India (SEBI) and other authorities.
Pharma stocks were mixed. Cipla (down 0.76%) and Dr Reddy's Laboratories, declined.
Lupin (up 0.26%), Sun Pharmaceutical Industries (up 0.33%) and Ranbaxy Laboratories (up 0.54%) gained.
In the foreign exchange market, the rupee edged lower against the dollar on global risk off sentiment. The partially convertible rupee was hovering at 62.52, weaker than its close of 62.26/27 on Thursday, 2 January 2014.
In a rare news conference Prime Minsiter Manmohan Singh today, 3 January 2014, took to the stump to defend his economic policies and promised recovery. He also said he would "hand the baton over to a new prime minister," after general elections this year, ruling out a third term.
Dr. Singh said that the country is set for better times ahead in terms of economic growth. The cycle of global economic growth is turning for the better, he said. "Many of the steps we have taken to address our domestic constraints are coming into play", he said. India's own growth momentum will revive, Dr. Singh said.
"As we enter the New Year we will continue to implement our policies, with vigor and commitment, aiming to revive growth, promote enterprise, generate employment, eliminate poverty and ensure the safety and security of all our people, particularly women and children. Our Government will work ceaselessly till its last day", Dr. Singh said.
Dr. Singh said that he is concerned that the government has not been as successful to the extent required in generating employment in the manufacturing sector. "This is an aspect of performance which we are working hard to correct. We need a much stronger effort in support of small and medium enterprises which can be a major source of good quality employment. Our Manufacturing Strategy gives high priority to this objective for the future", Dr. Singh said.
He also expressed concern about the failure in controlling persistent inflation. Dr. Singh said that the Food Security Act will to some extent shield the common man from rising food prices. "The worry about inflation is legitimate but we should also recognize that incomes for most people have increased faster than inflation. I have already mentioned that real wages in rural areas have increased faster than before. Per-capita consumption in both rural and urban areas has increased significantly", Dr. Singh said.
The next major trigger for the stock market is Q3 December 2013 corporate earnings. The Q3 earnings season will begin around mid-January 2014 and continue till mid-February 2014. 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 Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
Asian stocks dropped on Friday, 3 January 2014, after US equities retreated from record highs and a gauge of China's non-manufacturing industries declined. Key benchmark indices in Hong Kong, Taiwan, Singapore, Indonesia, China and South Korea were off 0.77% to 2.12%. Japanese stock markets were closed for a holiday.
China's non-manufacturing gauge fell to a four-month low in December, after data earlier this week showed two measures of factory output in the world's second-largest economy declined. China's purchasing managers' index for the non-manufacturing sector fell to 54.6, the lowest reading since August, from 56 in November.
Trading in US index futures indicated that the Dow could drop 45 points at the opening bell on Friday, 3 January 2014. Stocks on Wall Street closed sharply lower on the first trading day of 2014 on Thursday, 2 January 2014, after data pointed to a slowdown in manufacturing expansion in China and the United States.
Data indicated applications for US unemployment benefits declined last week to the lowest level in a month. Jobless claims fell by 2,000 to 339,000 in the period ended Dec. 28, Labor Department data showed. A separate report showed the Institute for Supply Management's factory index fell to 57 in December from the prior month's 57.3, which was the highest since April 2011. Readings above 50 indicate expansion.
The US 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 over the next year.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014.
In Europe, final readings on Thursday, 2 January 2014, confirmed that manufacturing in the euro zone expanded last month at the fastest pace since May 2011, while output in Germany, the currency bloc's largest economy, expanded for a sixth consecutive month.
Powered by Capital Market - Live News
