Key benchmark indices extended losses and hit fresh intraday low in mid-morning trade after Federal Reserve Bank of St. Louis President James Bullard said on Friday, 20 September 2013, that the Fed could make a small stimulus reduction at its next meeting in October 2013. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The market sentiment was also hit by the Reserve Bank of India's hawkish tone at its latest montetary policy review on Friday, 20 September 2013. The barometer index, the S&P BSE Sensex fell below the psychological 20,000 level. The Sensex, was down 278.03 points or 1.37%, off about 340 points from the day's high and up close to 60 points from the day's low. The market breadth, indicating the overall health of the market, turned negative from positive.
Capital goods pivotals edged lower. Interest rate sensitive auto stocks extended Friday's losses triggered by the Reserve Bank of India's surprise decision to raise its key policy rate viz. the repo rate by 25 basis points (bps) to 7.5% from 7.25% after a monetary policy review on Friday, 20 September 2013, and as the central bank retained hawkish tone at the latest monetary policy review. Two-wheeler stocks rose on expectations of pick up in sales during the upcoming festive season and on hopes good rains this year will boost rural sales.
A bout of initial volatility was witnessed as key benchmark indices trimmed losses after a weak start. The 50-unit CNX Nifty fell below the psychological 6,000 mark. Volatility continued as key benchmark indices weakened once again and hit fresh intraday low after trimming initial losses. The market extended losses and hit fresh intraday low in mid-morning trade. The Sensex fell below the psychological 20,000 level.
The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month September 2013 series to October 2013 series. The September 2013 F&O contracts expire on Thursday, 26 September 2013.
In the foreign exchange market, the rupee dropped against the dollar. The partially convertible rupee was hovering at 62.48, weaker than its close of 62.23/24 on Friday, 20 September 2013. 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 11:20 IST, the S&P BSE Sensex was down 278.03 points or 1.37% to 19,985.68. The index declined 337.33 points at the day's low of 19,926.38 in mid-morning trade, its lowest level since 18 September 2013. The index fell 63.90 points at the day's high of 20,199.81 in early trade.
The CNX Nifty was down 91.05 points or 1.51% to 5,921.05. The index hit a low of 5,907.35 in intraday trade, its lowest level since 18 September 2013. The index hit a high of 5,989.40 in intraday trade.
The market breadth, indicating the overall health of the market, turned negative from positive in mid-morning trade. On BSE, 1,048 shares fell and 774 shares rose. A total of 119 shares were unchanged.
Among the 30-share Sensex pack, 21 stocks fell and rest of them rose. State Bank of India (down 4.07%), Bharti Airtel (down 3.63%) and ICICI Bank (down 3.79%), declined.
Asian Paints rose 0.66% to Rs 490.75. A block deal of 4.5 lakh shares was executed in the counter on BSE at Rs 491 per share at 10:47 IST.
Interest rate sensitive auto stocks extended Friday's losses triggered by the Reserve Bank of India's surprise decision to raise its key policy rate viz. the repo rate by 25 basis points (bps) to 7.5% from 7.25% after a monetary policy review on Friday, 20 September 2013, and as the central bank retained hawkish tone at the latest monetary policy review. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
M&M (down 1.48%), Maruti Suzuki India (down 2.46%), and Tata Motors (down 0.52%), declined.
Two-wheeler stocks rose on expectations of pick up in sales during the upcoming festive season and on hopes good rains this year will boost rural sales. The festive season starts with the Durga Puja in October. The festival is followed by Dussehra and Diwali. Hero MotoCorp rose 1.25%. Bajaj Auto gained 0.05%. TVS Motor Company advanced 2.4%.
Capital goods pivotals edged lower. L&T fell 1.64%. Bhel declined 1.11%.
Cosmo Films advanced 1.7% after the company successfully commissioned its new state-of-art manufacturing facility at Shendra, SEZ, Aurangabad, Maharashtra. The announcement was made after market hours on Friday, 20 September 2013.
Cosmo Films said on Friday, 20 September 2013, that the company has successfully commissioned its new state-of-art manufacturing facility at Shendra, SEZ, Aurangabad, Maharashtra. The new plant had commissioned and started the commercial production on 1 September 2013, the company said. With the commissioning of this new facility, the approximate installed capacity of the company now stands at 130,000 tonnes per annum (TPA) for BOPP, 40,000 TPA for thermal films and 8,000 TPA for metalized films. This new plant would mainly be dedicated to exports, the company said.
Cosmo Films said that the successful commissioning of this new facility will contribute to phenomenal growth in revenues of the company in FY 2014. With the establishment of this new facility coupled with its initiatives in Research & Development, the company said it expects to continue its growth trajectory.
Most Asian stocks fell on Monday, 23 September 2013, on concerns about US monetary policy after Federal Reserve Bank of St. Louis President James Bullard said on Friday, 20 September 2013, that the Fed could make a small stimulus reduction at its next meeting in October 2013. Key benchmark indices in South Korea, Indonesia, Hong Kong and Singapore were off 0.06% to 1.1%. Key benchmark indices in China and Taiwan rose 0.92% to 1.01%. Japanese markets were closed for a holiday.
A Chinese manufacturing index rose to a six-month high in September, signaling that a rebound in the world's second-largest economy is gaining steam. The preliminary reading of 51.2 for a Purchasing Managers' Index released today by HSBC Holdings Plc and Markit Economics. The gauge was at 50.1 in August.
Trading in US index futures indicated that the Dow could gain 37 points at the opening bell on Monday, 23 September 2013. US stocks fell on Friday, 20 September 2013, after Federal Reserve Bank of St. Louis President James Bullard said that the Fed could make a small stimulus reduction at its next meeting in October. Bullard said tapering is more likely if the labor market continues to improve. The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013.
On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus. Kansas City Fed President Esther George on Friday, 20 September 2013, said markets were ready for reduced stimulus to begin, and the central bank's failure to follow through on expectations hurt its credibility on Wall Street.
In Europe, Chancellor Angela Merkel's conservative party won Germany's election, but finished just short of an absolute majority. Merkel's Christian Democrats (CDU) bloc took about 42% of the vote. But she might yet have to seek a grand coalition with the Social Democrats (SPD) who won about 26% of the vote. Mrs Merkel's preferred liberal partners have not made it into parliament. The results showed that the liberal Free Democrats (FDP) won only 4.8%, leaving it with no national representation in parliament for the first time in Germany's post-war history. Mrs Merkel has made clear she would be prepared to work with the Social Democrats (SPD) in a grand coalition, as she did in 2005-09.
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