Key benchmark indices were sharply off the day's lows and hit fresh intraday high in mid-afternoon trade on market buzz that Life Insurance Corporation (LIC) -- India's biggest domestic institutional investor -- was buying shares after a steep initial slide in share prices. The S&P BSE Sensex was down 108.67 points or 0.6%, up close to 410 points from the day's low and off about 45 points from the day's high. The market breadth, indicating the overall health of the market, was weak.
Index heavyweight and cigarette major ITC edged higher in choppy trade. Another index heavyweight Reliance Industries (RIL) reversed intraday losses. L&T reversed direction after hitting a 52-week low. Some metal stocks rose.
The market dropped in early trade as Asian stocks fell on fears of a possible US military strike in Syria. The market extended initial losses and hit fresh intraday low in morning trade. The market trimmed losses after hitting fresh intraday low in mid-morning trade. The S&P BSE Sensex trimmed losses after hitting its lowest level in almost a year. The 50-unit CNX Nifty also cut losses after hitting its lowest level in nearly 11 months. The market continued to hover in negative terrain in early afternoon trade. Key benchmark indices were sharply off the day's lows on market buzz that Life Insurance Corporation (LIC) -- India's biggest domestic institutional investor -- was buying shares after a steep initial slide in share prices. The market continued to trade well off the day's low in mid-afternoon trade.
In the foreign exchange market, a sharp decline took the rupee to record low below 68 against the dollar. The partially convertible rupee was hovering at 68.10 against the dollar, sharply lower than its close of 66.24/25 on Tuesday, 27 August 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.
The rupee has fallen sharply this month due to concerns that India will find it tough to close its wide current-account gap when developed countries end their easy-money policies.
Investor sentiment has been hit adversely on concerns about government finances after the Lok Sabha on Monday, 26 August 2013, passed the Food Security Bill. The massive outlay of funds required for rolling out the programme is bound to raise the government's fiscal deficit.
The market sentiment was also affected adversely by data showing that foreign funds remained net sellers of Indian stocks on Tuesday, 27 August 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 1373.99 crore on Tuesday, 27 August 2013, as per provisional data from the stock exchanges.
The market is expected to remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month August 2013 series to September 2013 series. The near month August 2013 derivatives contract expire tomorrow, 29 August 2013.
At 14:20 IST, the S&P BSE Sensex was down 108.67 points or 0.6% to 17,859.41. The index tumbled 519.37 points at the day's low of 17,448.71 in mid-morning trade, its lowest level since 6 September 2012. The index declined 65.57 points at the day's high of 17,902.51 in mid-afternoon trade.
The CNX Nifty was down 40.25 points or 0.76% to 5,247.20. The index hit a low of 5,118.85 in intraday trade, its lowest level since 5 October 2012. The index hit a high of 5,256.95 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,406 shares fell and 800 shares rose. A total of 116 shares were unchanged.
Among the 30-share Sensex pack, 15 stocks rose and rest of them rose. ONGC (down 7.83%), HDFC (down 7.01%), and GAIL (India) (down 4.11%), edged lower from the Sensex pack.
Some metal stocks rose. Jindal Steel & Power gained 2.2%. A meeting of the board of directors of Jindal Steel & Power will be held on Friday, 30 August, 2013, to consider a proposal for buy-back of equity shares of the company. The company announced this after market hours on Tuesday, 27 August 2013.
Tata Steel (up 0.46%) and Hindalco Industries (up 0.76%), edged higher.
L&T rose 0.41% to Rs 708. The stock reversed direction after hitting a 52-week low of Rs 678.10 in intraday trade today, 28 August 2013.
Tata Power Company jumped 4.16%.
ITC rose 0.57% to Rs 298.90. The stock was volatile. The scrip hit high of Rs 304.50 and low of Rs 285.40 so far during the day. The board of ITC at its meeting held today, 28 August 2013, approved the demerger of the non-engineering business comprising safety matches business and agri (forestry) business of Wimco (a subsidiary of the company) into the company and the related scheme of arrangement (scheme) between Wimco and the company. The scheme, which is subject to approvals as necessary, will take effect from 1 April 2013. Upon the scheme becoming effective, the shareholders of Wimco will be entitled to 2 (two) ordinary shares of Rs 1 each of ITC for every 77 (seventy seven) equity shares of Rs 1 each of Wimco held by them on record date. ITC made the announcement during trading hours today, 28 August 2013.
Reliance Industries gained 0.2%, with the stock reversing intraday losses.
Strides Arcolab jumped 5.28% to Rs 874 after the Foreign Investment Promotion Board (FIPB) on Tuesday, 27 August 2013, gave its nod for US-based Mylan Inc's proposal to acquire Agila Specialties -- a subsidiary of Strides Arcolab. Since the Mylan's investment proposal is of over Rs 1200 crore, it will go to the Cabinet Committee on Economic Affairs for final approval. Earlier, FIPB had taken up the proposal in its 5 July meeting, but kept decision in "abeyance" pending finalisation of policy on FDI in brownfield pharma projects involving transfer of control.
On 28 February this year, Strides Arcolab and the US-based Mylan Inc signed a massive $1.6 billion plus agreement by which the US drug major will acquire Agila Specialties, the injectable medicine business of Strides.
Global rating agency Standard & Poor's (S&P) today, 28 August 2013, said that growth risks to domestically driven countries like India, Indonesia, China and Philippines are lower than more open and trade dependant economies like Singapore and Hong Kong. However, rising external financing risks can have negative repercussions on domestic growth for countries like India which have a high current account deficit, S&P said. These rising external financing risks can have negative repercussions on domestic growth through tighter financing constraints and lower confidence, which is what we witnessed recently in India and Indonesia, S&P said in a report.
European stock markets edged lower on Wednesday, 28 August 2013, as investors dumped risky assets ahead of a possible US-led military strike in Syria. Key benchmark indices in UK and Germany were off 0.36% to 0.52%. In France, the CAC 40 Index was up 0.06%.
Fears of a US-led military strike in Syria have heightened in recent days after allegations that forces loyal to the government of Bashar al-Assad used chemical weapons against rebels. US Secretary of State John Kerry on Monday, 26 August 2013, said that there could be no doubt about the Syrian government's use of chemical weapons, calling the action "inexcusable." White House spokesman Jay Carney on Tuesday, 27 August 2013, said that US President Barack Obama is still consulting with allies and members of Congress on Syria and that there "must be a response."
Asian stocks dropped for a second day in a row on Wednesday, 28 August 2013, on concern the US will take military action against Syria. Key benchmark indices in China, Singapore, Hong Kong, South Korea and Japan fell by 0.07% to 1.6%. Key benchmark indices in Indonesia and Taiwan rose by 0.06% to 0.99%.
Trading in US index futures indicated that the Dow could gain 28 points at the opening bell on Wednesday, 28 August 2013. US stocks fell hard on Tuesday, with the Dow Jones Industrial Average ending at a two-month low, as unease over possible US action against Syria shook global markets.
US Treasury Secretary Jacob Lew said early this week that the US government will hit the debt ceiling by mid-October and will be unable to borrow money to pay its bills.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled next 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.
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