Key benchmark indices weakened and hit fresh intraday low in morning trade as weakness in rupee against the dollar hurt sentiment. The barometer index, the S&P BSE Sensex was down 156.78 points or 0.83%, off about 275 points from the day's high and up close to 45 points from the day's low. The market breadth, indicating the overall health of the market, was positive. Index heavyweight Reliance Industries extended initial losses.
Metal stocks extended Monday's gains. Hero MotoCorp dropped as the stock turned ex-dividend today, 3 September 2013, for a dividend of Rs 60 per share for the year ended 31 March 2013.
A bout of volatility was witnessed as key benchmark indices slipped into the red after opening higher. It weakened and hit fresh intraday low in morning trade.
The partially convertible rupee was trading at 66.84 lower than Monday's close of 66. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
At 10:20 IST, the S&P BSE Sensex was down 156.78 points or 0.83% to 18,729.35. The index fell 201.66 points at the day's low of 18,684.47 in morning trade. The index rose 121.18 points at the day's high of 19,007.31 in opening trade, its highest level since 16 August 2013.
The CNX Nifty was down 61.20 points or 1.1% to 5,489.55. The index hit a high of 5,532.85 in intraday trade. The index hit a low of 5,482.30 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 579 shares rose and 537 shares fell. A total of 81 shares were unchanged.
Among the 30-share Sensex pack, 16 stocks fell and rest of them rose. HDFC (down 3.44%), Reliance Industries (down 2.02%) and Hindustan Unilever (down 1.37%), edged lower from the Sensex pack.
Metal stocks extended Monday's gains. Hindalco Industries (up 0.28%), Jindal Steel & Power (up 0.44%), NMDC (up 0.33%), Sesa Goa (up 1.21%), JSW Steel (up 0.03%), and Tata Steel (up 1.2%) edged higher.
Steel Authority of India (Sail) rose 2.01% after the company said its steel sales rose 16% to 10.86 lakh tonnes in August 2013 over August 2012. Sail said in a statement that the rise in sales was mainly on account of increase in flat product sales, which went up by 26% during the period under review. While long products saw a growth of 3%, retail sales at 53,800 tonnes in August were up by 62% on a month-to-month basis. Concerted efforts to harness the rising dollar materialised in a significant growth in exports to a level of 31,000 tonnes, a corresponding period last year (CPLY) growth of 36%, the company said in a statement.
Hero MotoCorp dropped 3.3% as the stock turned ex-dividend today, 3 September 2013, for a dividend of Rs 60 per share for the year ended 31 March 2013.
Tech Mahindra rose 1.97% after the central bank allowed the company to raise the purchasing limit of shares by foreign institutional investors in the company by up to 35% of the paid up capital. Tech Mahindra has passed resolutions at the board of directors' level and a special resolution by the shareholders, agreeing to enhancing the limit for the purchase of its equity shares and convertible debentures by Foreign Institutional Investors (FIIs), through primary market and stock exchanges up to 35% of the paid up capital of the company under Portfolio Investment Scheme, the Reserve Bank of India (RBI) said in a notification. As of 30 June 2013, FIIs held 26.80% stake in the company.
The combined index of eight core industries rose 3.1% in July 2013 over July 2012. The eight core industries have a combined weight of 37.90% in the Index of Industrial Production (IIP).
The Rajya Sabha on Monday approved a $20 billion scheme to distribute subsidised wheat and rice to 80 crore people, backing an anti-malnutrition drive that investors fear will mean missing the fiscal deficit target. The Food Security Bill is seen as a vote winner by the ruling Congress party as it prepares for elections due by May next year. But investors reacted negatively to the plan when the lower house approved it last weak, on worries the government will struggle to contain the cost of subsidies. The scheme has now been passed by both houses. Before becoming law it must be signed by the president, a formality.
Asian stocks climbed on Tuesday on evidence of a pickup in global manufacturing. Key benchmark indices in China, Hong Kong, South Korea, Japan, Indonesia, and Taiwan rose by 0.46% to 2.58%. Singapore's Straits Times fell 0.14%.
China's official purchasing managers' index (PMI) for the non-manufacturing sector dipped slightly to 53.9 in August from July's 54.1, the National Bureau of Statistics (NBS) said on Tuesday. A reading above 50 indicates activity in the sector is accelerating, while one below 50 indicates it is slowing. The services sector index followed the bureau's manufacturing PMI on Sunday, which showed China's factory activity expanded at the fastest pace in more than a year in August with a jump in new orders.
Trading in US index futures indicated that the Dow could gain 123 points at the opening bell on Tuesday, 3 September 2013. US stock markets remained closed on Monday, 2 September 2013, for the Labor Day holiday.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled this month, with their focus squarely on the timing of tapering of Federal Reserve's bond purchases. The FOMC holds a two-day policy meeting on 17-18 September 2013 to decide on interest rates in the United States. 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.
President Barack Obama on Saturday said he has decided military action is appropriate, but he would still seek congressional authorization on the use of US military force against Syria. Congressional leaders have agreed to debate and vote on the possible action when lawmakers return from recess on September 9. And, while lawmakers aren't due back in Washington until next week, the Senate Foreign Relations Committee said it would hold hearings on Syria today and tomorrow.
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