A bout of volatility was witnessed as key benchmark indices edged lower once again after recouping almost entire intraday losses in mid-morning trade. The barometer index, the S&P BSE Sensex, was down 20.33 points or 0.1%, up close to 45 points from the day's low and off close to 20 points from the day's high. The market breadth, indicating the overall health of the market, was positive. In the foreign exchange market, the rupee reversed initial losses against the dollar. Government bond prices dropped as crude oil futures rose.
Index heavyweight and cigarette maker ITC dropped. Tata Power Company extended initial gains. Metal stocks extended recent gains triggered by data showing that manufacturing activity in China continued to grow last month. Jyothy Laboratories rose after the company said it has allotted 1.5 crore equity shares, aggregating Rs 262.72 crore, to Sahyadri Agencies on preferential allotment basis.
The market edged lower in early trade on weak Asian stocks. Key benchmark indices hovered in negative terrain in morning trade. A bout of volatility was witnessed as key benchmark indices edged lower once again after recouping almost entire intraday losses in mid-morning trade.
At 11:22 IST, the S&P BSE Sensex was down 20.33 points or 0.1% to 20,834.59. The index lost 65.48 points at the day's low of 20,789.44 in early trade, its lowest level since 2 December 2013. The index declined 0.35 points at the day's high of 20,854.57 in mid-morning trade.
The CNX Nifty was down 6.05 points or 0.1% to 6,195.80. The index hit a low of 6,180.05 in intraday trade, its lowest level since 2 December 2013. The index hit a high of 6,201.95 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,112 shares rose and 864 shares dropped. A total of 157 shares were unchanged.
Among the 30-share Sensex pack, 18 stocks fell and rest rose. ICICI Bank (down 1.67%), L&T (down 1.7%) and Hindustan Unilever (down 0.76%) declined.
Tata Power Company was up 2.25% at Rs 81.85. The scrip hit high of Rs 82.30 and low of Rs 79.90 so far during the day.
Index heavyweight and cigarette maker ITC was off 0.69% at Rs 317. The scrip hit high of Rs 319.65 and low of Rs 316.80 so far during the day.
Metal stocks extended recent gains triggered by data showing that manufacturing activity in China continued to grow last month. China is the world's largest consumer of copper and aluminum. Jindal Steel & Power (up 1.22%), JSW Steel (up 0.54%), NMDC (up 0.18%), Sail (up 0.65%), Sesa Sterlite (up 2.04%), Hindustan Copper (up 2.79%), Tata Steel (up 0.73%), Hindustan Zinc (up 0.6%) and National Aluminum Company (up 0.4%), gained.
China last month released a broad outline for structural reform of the economy.
Jyothy Laboratories rose 2.2% after the company said it has allotted 1.5 crore equity shares, aggregating Rs 262.72 crore, to Sahyadri Agencies on preferential allotment basis. The announcement was made after market hours on Tuesday, 3 December 2013. Jyothy Laboratories said that the preferential allotment committee of the board of directors of the company at its meeting held on Tuesday, 3 December 2013, has allotted 1.5 crore equity shares of the company to Sahyadri Agencies on preferential basis at Rs 175.15 per share against receipt of entire amount payable by Sahyadri Agencies in cash aggregating to Rs 262.72 crore.
In the foreign exchange market, the rupee reversed initial losses against the dollar. The partially convertible rupee was hovering at 62.31, compared with its close of 62.36/37 on Tuesday, 3 December 2013.
Government bond prices dropped as crude oil futures rose. The yield on 10-year benchmark federal paper, 7.16% GS 2023, was hovering at 9.0866%, higher than its close of 9.069% on Tuesday, 3 December 2013. Bond yield and bond prices are inversely related.
The Organization of Petroleum Exporting Countries (OPEC) holds a meeting in Vienna on today, 4 December 2013, to decide production quota. The OPEC is expected to assess the impact of rising US oil production and the potential return of Iranian oil barrels to the market. OPEC countries will have to accommodate any additional oil supply into the market without changes to the cartel's overall production ceiling of 30-million-barrels-a-day, Venezuela Oil Minister Rafael Ramirez said on 28 November 2013.
The downturn in services activity eased slightly in November although a dearth of new orders prompted firms to rein in hiring plans, a business survey showed on Wednesday. The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, nudged up to 47.2 last month from 47.1 in October. While the services PMI reading was a little better than the previous month, it has now spent five straight months below the 50 mark that divides contraction from growth, prompting firms to freeze hiring plans. The employment sub-index fell to 49.9 in November from 50.1.
New business in November fell at a slightly slower pace than in October, but it was the fifth month running that demand has declined. For inflation, the survey showed a mixed picture, with firms ramping up their prices faster despite some moderation in rising input costs.
Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "Service sector activity remains subdued, but would at least appear to be stabilizing. The inflation picture is a bit mixed, with prices charged rising at a faster pace while input price inflation eased somewhat. Looking ahead, economic activity is expected to remain soft in coming months as high inflation, tighter financial conditions, and structural constraints continue to weigh on growth".
The Reserve Bank of India (RBI) announces next Mid-Quarter Review of Monetary Policy for 2013-14 on 18 December 2013. The Third Quarter Review of Monetary Policy for 2013-14 is scheduled 28 January 2014.
On the political front, Delhi goes to polls today, 4 December 2013. Polls for assembly election in Chattisgarh, Rajasthan, Madhya Pradesh and Mizoram are already over. Counting of votes for assembly elections in Delhi, Madhya Pradesh, Chhattisgarh and Rajasthan takes place on 8 December 2013. Counting of votes for assembly elections in Mizoram takes place on 9 December 2013.
The outcome of the assembly elections could provide clues as to which party comes to power in the national elections that are due by May 2014. Many investors are hoping the state elections will show strong support for the Bharatiya Janata Party whose prime ministerial candidate Narendra Modi is considered a pro-business leader.
The winter session of parliament begins tomorrow, 5 December 2013. The session will end on 20 December 2013. It will have 12 sittings in which government is likely to introduce a bill to create a separate Telangana.
Asian stocks fell on Wednesday, 4 December 2013, with investors awaiting influential US job data later this week that may provide further evidence as to when the Federal Reserve will reduce stimulus to the US economy. Key benchmark indices in Indonesia, Hong Kong, Japan, Singapore and South Korea were down 0.32% to 2.04%. Key benchmark indices in China and Taiwan rose 0.39% to 1.46%. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year.
Chinese President Xi Jinping said the environment for economic and social development next year isn't optimistic.
Trading in US index futures indicated that the Dow could gain 13 points at the opening bell on Wednesday, 4 December 2013. US stocks declined for a third day on Tuesday, 3 December 2013, as investors assessed reports on car and retail sales before US jobs data later this week that may offer clues on when the Federal Reserve will reduce stimulus.
Investors are keeping a close watch on economic data in the United States as the Federal Reserve monitors the pace of recovery to gauge when it will begin to reduce monetary stimulus for the US economy, which has been aimed at encouraging growth. The US government will release the influential US non-farm payrolls data for November 2013 on Friday, 6 December 2013. The Fed has said improvement in the labor market is a key factor in its policy assessment.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 December 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated.
In Europe, the European Central Bank (ECB) holds its monthly monetary policy meeting tomorrow, 5 December 2013. The ECB unexpectedly cut the benchmark interest rate by a quarter-percentage point last month to a record-low 0.25% after inflation slowed in October to the least in four years.
UK's central bank -- Bank of England -- is also expected to keep its key policy rate steady at 0.5% after a monetary policy review tomorrow, 5 December 2013.
Brazil's economy contracted in the third quarter for the first time since early 2009, falling short of expectations yet again as plunging investment underscored eroding confidence in what was recently one of the world's most promising emerging markets. The economy shrank 0.5% between July and September from the prior three months, government statistics agency IBGE said on Tuesday.
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