A bout of volatility was witnessed as key benchmark indices trimmed losses in afternoon trade. The barometer index, the S&P BSE Sensex, was down 161.40 points or 0.81%, up close to 105 points from the day's low and off about 135 points from the day's high. The market breadth, indicating the overall health of the market, was negative. Investor sentiment was hit adversely as European and Asian stocks fell and as trading in US index futures pointed to a weak opening of US stocks later in the global day as lawmakers in Washington remain deadlocked over extending the nation's debt limit to avoid default. In the foreign exchange market, the rupee dropped against the dollar.
Hindalco Industries extended intraday gain. Steel shares shrugged off hike in freight rate by the Railways. Coal India declined on reports that the government will offload its 5% stake in the company by way of follow-on public offer (FPO) in December. Reliance Infrastructure (RInfra) cut intraday losses after the company said that its unit Reliance Cement will commission its first 5 million tonnes per annum (MTPA) cement project in Madhya Pradesh this month. Realty stocks fell on profit booking after recent gains.
Key benchmark indices edged lower in early trade on weak Asian stocks. Weakness continued on the bourses in morning trade. Key benchmark indices cut losses after hitting fresh intraday low in mid-morning trade. Weakness continued on the bourses in early trade afternoon trade. The Sensex trimmed losses in afternoon trade.
In the foreign exchange market, the rupee dropped against the dollar. The partially convertible rupee was hovering at 61.87, weaker than its close of 61.43/44 on Friday, 4 October 2013. The Reserve Bank of India (RBI) will look at easing restrictions on the forex futures market once the rupee stabilises, Deputy Governor H.R. Khan said on Monday, 7 October 2013. The RBI is also in talks with stock market regulator Securities and Exchange Board of India (Sebi) on making the dollar-rupee over-the-counter and futures market trades on a delivery basis, Khan said on the sidelines of an event. The central bank will look at the "whole gamut of futures market" once stability improves in the forex market, Khan added.
Foreign institutional investors (FIIs) bought shares worth a net Rs 541.36 crore on Friday, 4 October 2013, as per provisional data from the stock exchanges.
At 13:20 IST, the S&P BSE Sensex was down 161.40 points or 0.81% to 19,754.55. The index lost 268.07 points at the day's low of 19,647.88 in mid-morning trade, its lowest level since 3 October 2013. The index fell 27.54 points at the day's high of 19,888.41 in early trade.
The CNX Nifty was down 45.05 points or 0.76% to 5,862.25. The index hit a low of 5,825.85 in intraday trade, its lowest level since 3 October 2013. The index hit a high of 5,895.25 in intraday trade
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,072 shares declined and 1,030 shares gained. A total of 150 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks declined and rest of them gained. ICICI bank (down 2.71%), HDFC (down 1.79%) and HDFC Bank (down 2.85%) edged lower from the Sensex pack.
Coal India was off 3.15% to Rs 300.25 on reports that the company's 5% follow-on public offer (FPO) is likely to hit the market by the second week of December. The government, which currently holds a 90% stake in Coal India, intends to sell more than 31.5 crore shares through an offer for sale or OFS through the stock exchanges. Shares will be allotted to Coal India employees at a 5% discount to the lowest cut-off price. A maximum of 10% of the offer will be kept for employees, reports said.
Steel shares shrugged off hike in freight rate by the Railways. Tata Steel (up 2.62%), Jindal Steel & Power (up 1.46%), and Sail (up 1.72%), gained.
The Railways has announced an increase in freight rates by 1.7% on all commodities effective from the midnight of 9 October 2013. Railway is the preferred mode of transport for bulk commodities. The revision came in the form of fuel adjustment component (FAC) which was announced in the Railway Budget 2013-14 to adjust the fluctuating prices of fuel.
JSW Steel rose 1.03%. JSW Steel on Saturday, 5 October 2013, said it has executed a business transfer agreement with Heidelberg Cement India for acquisition of its cement grinding facility at Raigad, Maharashtra, as a going concern on slump sale basis.
Heidelberg Cement India fell 0.28%, with the stock trimming intraday losses.
Among other metal stocks, Sesa Sterlite rose 1.12%.
Hindalco Industries gained 3.35%, with the stock extending intraday gain.
L&T fell 1.35%. The company said during market hours that it has secured two engineering, procurement and construction (EPC) projects aggregating about Rs 1100 crore in the hydrocarbon segment in UAE and Qatar. These orders reinforce L&T strategic objective of enhancing its global footprints, and reflect its capability to execute hydrocarbon projects in competitive international environment, L&T said in a statement.
Reliance Infrastructure (RInfra) fell 1.34% to Rs 387.55, off the day's low of Rs 382.60. The company during market hours today, 7 October 2013, announced that Reliance Cement will commission its first 5 million tonnes per annum (MTPA) cement project in Madhya Pradesh this month i.e. in October 2013. The company has implemented the project within a record time of just 22 months, more than 5 months ahead of the targeted schedule.
The project has been implemented at a capital outlay of about Rs 3000 crore, setting a new benchmark in terms of capex efficiency, nearly 25% lower than comparable recent transaction values.
Mr. Anil D. Ambani, Chairman, Reliance Infrastructure, said: "We are delighted to add the cement business to our portfolio of high growth infrastructure businesses, serving the long term needs of our country. Reliance Cement will add the manufacturing mix to our existing range of annuity infrastructure businesses across power, roads and metro rail systems."
Reliance Infrastructure (RInfra) said that all processes for manufacturing, sales and distribution, customer service and administration have been designed to be fully automated for ensuring high product and service quality.
The project is conceptualized with waste heat recovery system right from the beginning, generating over 10 megawatts (MW) of power from the heat that would otherwise be lost as waste. Further, the cement plant is designed and built at par with the international standards to be one of the most energy efficient plants in the country, and with the highest environmental standards.
Reliance Cement has already been launched in the Maharashtra market last year, with supplies from the company's Butibori plant having capacity of about 0.5 million MTPA, and has already established itself as a favored brand in a short period of time, RInfra said in a statement. The company now plans to expand its presence in the central, eastern and northern markets of India from the new manufacturing unit in Madhya Pradesh.
Earlier during the day, RInfra announced that a meeting of the board of directors of the company will be held on Wednesday, 9 October 2013, to consider raising long term resources through borrowings in the domestic/international market for the purpose of refinancing of rupee debt, capital expenditure etc. RInfra also announced that Brickwork Ratings India has assigned AA rating for the proposed Non-convertible Debenture issue of Rs 300 crore of the company. Meanwhile, CRISIL has revised credit rating on the company's long term debts to A+.
Realty stocks fell on profit booking after recent gains. DLF (down 1.76%), D B Realty (down 2.98%), HDIL (down 2.52%), and Unitech (down 2.11%) declined.
At its board meeting on Saturday, 5 October 2013, market regulator Securities & Exchange Board of India (Sebi) approved the draft Sebi (Foreign Portfolio Investors) Regulations, 2013. The Sebi (Foreign Portfolio Investors) Regulations, 2013 have been framed keeping in view the provisions of Sebi (Foreign Institutional Investors) Regulations, 1995, qualified foreign investors (QFIs) framework and the recommendations of the "Committee on Rationalization of Investment Routes and Monitoring of Foreign Portfolio Investments".
Sebi said that existing FIIs, sub accounts and qualified foreign investors (QFIs) shall be merged into a new investor class termed as Foreign Portfolio Investors (FPIs). Sebi approved designated depository participants (DDPs) shall register FPIs on behalf of Sebi subject to compliance with KYC requirements. The Sebi board also took note of the fact that instructions regarding risk-based KYC for FPIs have already been issued by Sebi on 12 September 2013.
Sebi said that FPIs shall be required to seek registration in any one of the categories viz. Category I Foreign Portfolio Investor -- which shall include Government and Government related foreign investors etc; Category II Foreign Portfolio Investor -0 which shall include appropriately regulated broad based funds, appropriately regulated entities, broad based funds whose investment manager is appropriately regulated, university funds, university related endowments, pension funds etc; and Category III Foreign Portfolio Investor -- which shall include all others not eligible under Category I and II foreign portfolio investors.
Sebi said that all existing FIIs and sub accounts may continue to buy, sell or otherwise deal in securities under the FPI regime. Further, all existing Qualified Foreign Investors (QFIs) may continue to buy, sell or otherwise deal in securities till the period of one year from the date of notification of this regulation. In the meantime, they may obtain FPI registration through DDPs. The registration granted to FPIs by the DDPs on behalf of Sebi shall be permanent unless suspended or cancelled by Sebi. FPIs shall be allowed to invest in all those securities, wherein Foreign Institutional Investors (FIIs) are allowed to invest.
The market regulator said Category I and Category II FPIs shall be allowed to issue, or otherwise deal in offshore derivative instruments (ODIs), directly or indirectly. However, the FPI needs to be satisfied that such ODIs are issued only to persons who are regulated by an appropriate foreign regulatory authority after ensuring compliance with know your client norms.
The CII ASCON survey for July-September 2013 quarter indicates a scenario of subdued growth with green shoots of recovery continuing to be elusive in the near future. The Survey reveals that the number of sectors reporting negative growth in July-September 2013 quarter of the current year has increased significantly over the corresponding period of last year. This is despite the fact that the government has introduced various economic reform measures to seize the declining growth. "This continuous deterioration in the economy since the last fiscal is reflective of downbeat sentiment within industry. With economic slowdown showing no signs of bottoming out in the near future, industry is cautious in moving ahead. This calls for a concerted effort from policy makers to stay the course on reforms. No doubt, the government has reiterated its support to industry in form of steps taken to accelerate rupee valuation, increase exports, rev up foreign investment, etc. However, the focus has to be on clearing projects and ensuring that once cleared the investments do take place." said Mr Chandrajit Banerjee, Director General, CII.
The sluggish performance of both producer as well as consumer goods indicate subdued demand conditions in the economy which going forward does not sound optimistic for revival of growth in the coming quarters as well. The Survey respondents have raised concerns over the deteriorating macroeconomic conditions owing to multiple factors, both domestic and global. On the external front, global economic uncertainties, depreciation value of rupee, rising oil prices has contributed to the weak economic environment. These concerns have further contributed to the weakening of domestic economy leading to lowering investments, decline in exports, soaring inflation, stalled investments, and subdued consumption, among others. Respondents have stressed on the need for reviving the investments in the economy to boost demand.
RBI governor Raghuram Rajan on Friday, 4 October 2013, said that there is no reason to dispute the government's estimate of 5-5.5 percent economic growth for the current fiscal year. A pick-up in exports and strong agriculture growth would help the government meet its growth estimate, said Rajan while speaking at Raipur after the Reserve Bank of India's board meeting. He also said the RBI had so far received $5.6 billion through the two swap windows the bank announced last month to attract foreign flows.
On the political front, the Election Commission on Friday, 4 October 2013, announced the schedule for assembly elections in five states. While Chhattisgarh will have a two-phase polling on 11 November and 19 November 2013, the remaining states will have a single-phase poll. Delhi and Mizoram will go to polls on 4 December 2013, Madhya Pradesh on 25 November 2013 and Rajasthan on 1 December 2013. Counting of all assembly elections in all five states will be held on 8 December 2013.
European stocks dropped on Monday, 7 October 2013, as US House Speaker John Boehner ruled out raising the US government's debt limit without setting preconditions. Key benchmark indices in France, Germany and UK were off 0.75% to 1.16%.
Asian markets edged lower on Monday, 7 October 2013, as lawmakers in Washington remain deadlocked over extending the nation's debt limit to avoid default. Key benchmark indices in Singapore, Taiwan, Hong Kong, Indonesia, Japan and South Korea fell by 0.03% to 1.22%. Mainland Chinese markets, which have been closed since Oct. 1 for the National Day holidays, resume trading tomorrow, 8 October 2013.
Trading in US index futures indicated that the Dow could fall 116 points at the opening bell on Monday, 7 October 2013. Republican House Speaker John Boehner vowed on Sunday not to raise the US debt ceiling without a "serious conversation" about what is driving the debt, while Democrats said it was irresponsible and reckless to raise the possibility of a US default. Republicans and Democrats also traded blame for a shutdown that has brought much of the government to a standstill for nearly a week. Republicans are seeking concessions in exchange for raising the nation's $16.7 trillion debt limit. If the borrowing cap is not increased, the United States could go into default.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. The lack of data may make it harder for the Federal Reserve to assess the economy's strength as policy makers mull the timing of reductions in bond buying. Government data from payrolls to retail sales will be delayed as long as the shutdown continues. 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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