Key benchmark indices hovered in negative zone in afternoon trade. The barometer index, the S&P BSE Sensex, was down 51.71 points or 0.25%, off 114 points from the day's high and up 59 points from the day's low. Investor sentiment was hit adversely after Markit Economics said business conditions in the Indian private sector economy continued to deteriorate in December 2013. Weakness in Asian stocks also hit sentiment on the domestic bourses adversely. In the foreign exchange market, the rupee edged lower against the dollar as the US Federal Reserve prepared to start cutting bond purchases amid data that signaled the recovery of the world's biggest economy is picking up speed.
Tata Power Company and Reliance Infrastructure (RInfra), both, edged lower after media reports suggested that the state government in Maharashtra is planning to cut power tariffs. Telecom stocks were mostly lower after the Delhi High Court today, 6 January 2014, upheld the TDSAT order of an audit of private telecom companies and allowed the Comptroller and Auditor General to audit the accounts of the companies. Shares of oil and gas companies were mixed after oil secretary Vivek Rae was quoted by the media as saying today, 6 January 2014, that the government will offer at least 56 oil and gas blocks in its next round of auction of exploration blocks that will be launched next week.
The market breadth, indicating the overall health of the market, was positive.
Key benchmark indices reversed direction after a positive start. Key benchmark indices cut losses after hitting fresh intraday low in morning trade. Key benchmark indices hovered in negative zone in mid-morning trade after Markit Economics said business conditions in the Indian private sector economy continued to deteriorate in December 2013. Key benchmark indices lauguished in red in afternoon trade.
Foreign institutional investors (FIIs) sold shares worth a net Rs 18.06 crore on Friday, 3 January 2014, as per provisional data from the stock exchanges.
At 13:15 IST, the S&P BSE Sensex was down 51.71 points or 0.25% to 20,799.62. The index fell 110.70 points at the day's low of 20,740.63 in morning trade. The index rose 62.46 points at the day's high of 20,913.79 in opening trade, its highest level since 2 January 2014.
The CNX Nifty was down 20.95 points or 0.34% to 6,190.20. The index hit a low of 6,176.15 in intraday trade. The index hit a high of 6,224.70 in intraday trade, its highest level since 2 January 2014.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,334 shares gained and 968 shares fell. A total of 154 shares were unchanged.
Among the 30 Sensex shares, 17 declined and 13 rose. ICICI Bank (down 1.59%), Infosys (down 1.16%), State Bank of India (down 1.15%), Hero MotoCorp (down 1.12%), Coal India (down 0.86%), Dr Reddy's Laboratories (down 0.83%), M&M (down 0.8%) and Bajaj Auto (down 0.58%), edged lower from the Sensex pack.
Tata Motors (up 1.87%), Sun Pharmaceutical Industries (up 1.59%), Jindal Steel & Power (up 1.27%), Wipro (up 0.68%), Maruti Suzuki India (up 0.52%), NTPC (up 0.49%) and ITC (up 0.33%), edged higher from the Sensex pack.
Tata Power Company and Reliance Infrastructure (RInfra), both, edged lower after media reports suggested that the state government in Maharashtra is planning to cut power tariffs. Shares of Tata Power were off 1.67% at Rs 82.65. The stock has declined 9.52% in four trading sessions from a recent high of Rs 91.35 on 31 December 2013.
Shares of RInfra were off 0.8% at Rs 409.50. The stock was volatile. The scrip hit high of Rs 415.20 and low of Rs 406.75 so far during the day.
According to media reports, Narayan Rane, the State Industries Minister, said a decision would be announced in eight days and the group of ministers set up by the government under Rane recommended that electricity tariff be cut by around 15%. The cut would be only for farmers, domestic consumers and small businesses consuming less than a set amount of electricity, the report said.
A cut in power tariff in Maharashtra would come after the ruling Aam Aadmi Party's push in Delhi to cut power tariff in the state.
Telecom stocks were mostly lower after the Delhi High Court today, 6 January 2014, upheld the TDSAT order of an audit of private telecom companies and allowed the Comptroller and Auditor General to audit the accounts of the companies.
Tata Teleservices (Maharashtra) (down 2.97%), Idea Cellular (down 1.2%) and Reliance Communications (down 0.53%), edged lower.
Bharti Airtel (up 0.17%) and MTNL (up 0.52%), edged higher.
The telecom companies, who are being investigated in connection with the 2G spectrum scam or the arbitrary allocation of spectrum to private companies at throwaway prices, had argued that the government's auditor cannot examine private entities. The court today rejected that contention. The CAG had in 2010 sought the revenue details of the companies to examine whether they under-reported their revenues. The auditor said since the companies are in a revenue sharing arrangement with the government, they can be subjected to a state audit as well.
After the high court refused to stop the audit, the companies moved Supreme Court, which referred their case back to the high court.
Shares of oil and gas companies were mixed after oil secretary Vivek Rae was quoted by the media as saying today, 6 January 2014, that the government will offer at least 56 oil and gas blocks in its next round of auction of exploration blocks that will be launched next week.
ONGC (up 2.72%), and Cairn India (up 0.08%), edged higher. Reliance Industries (down 1.04%) and Oil India (down 0.12%), edged lower.
The oil ministry, which has already moved a cabinet note for the next exploration licensing round, plans to invite bids for the blocks in February. The oil ministry has recommended revenue sharing between the companies and the government in place of the current production sharing mechanism, Rae told the media.
In the foreign exchange market, the rupee edged lower against the dollar as the US Federal Reserve prepared to start cutting bond purchases amid data that signaled the recovery of the world's biggest economy is picking up speed. The partially convertible rupee was hovering at 62.305, weaker than its close of 62.16/17 on Friday, 3 January 2014.
Bond prices rose after strong bidding at bond auction held on Friday, 3 January 2014. The yield on 10-year federal paper, 8.83% GS 2023, was hovering at 8.8166%, lower than its close of 8.8343% on Friday, 3 January 2014. Bond yield and bond prices are inversely related.
Markit Economics today, 6 January 2014, said that business conditions in the Indian private sector economy continued to deteriorate in December 2013. At 48.1, the seasonally adjusted HSBC India Composite Output Index posted below the crucial 50 threshold for the sixth consecutive month. The index dropped from November's 48.5, indicating a slightly faster rate of contraction. While manufacturing production expanded, services output fell in December 2013, Markit Economics said.
Adjusted for seasonal factors, the HSBC Services Business Activity Index fell from 47.2 in November to 46.7 in the latest month, indicating a solid and accelerated rate of contraction. This was the sixth consecutive monthly drop in output levels, which is the longest period of continuous reduction since the 2008/2009 global financial crisis, Markit Economics said. Underpinning the latest fall in services output was a solid decrease in incoming new work. New business contracted at the quickest pace since September, with panelists reporting an increasingly fragile economy and competitive pressures, Markit Economics said. There were a few mentions that the upcoming elections had also contributed to the latest drop in new orders. Across the private sector as a whole, new business decreased at a faster, but moderate pace.
Four of the six broad areas of the service economy registered lower output volumes, while new business contracted in five categories. As with the trend for output, the sharpest decline in new orders was noted at Hotels & Restaurants. The Post & Telecommunication sub-sector remained resilient, with growth of both business activity and new orders recorded.
Outstanding business at both service providers and manufacturers increased in December, leading to a further accumulation of unfinished work in the Indian private sector. Although modest, the overall rate of increase was above the long-run survey average.
December data indicated that private sector employment rose. The latest increase in payroll numbers was broad-based with both manufacturers and service providers posting job creation.
Average purchase costs at services companies rose further in December, amid reports of higher prices paid for fuel, food, transportation and electricity. But, the rate of cost inflation was only moderate and the weakest since July, Markit Economics said. Input price inflation in the private sector as a whole eased to a six-month low. Additional cost burdens were passed on, as prices charged by private sector firms were raised for the fifty-fifth consecutive month in December. The latest increase in tariffs was, however, marginal and below its average.
Indian service providers remained upbeat about the prospects for business activity in 2014, Markit Economics said. Furthermore, the degree of confidence was the strongest in five months. Positive sentiment was linked by companies to forecasts of better economic conditions and hopes of higher demand. Some firms also mentioned that output is anticipated to grow after the elections.
Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: "The service sector continues to face head winds, with weakening new business dragging down activity. On a positive note, inflation pressures are easing and optimism about the coming year is rising".
The next major trigger for the stock market is Q3 December 2013 corporate earnings. Investors and analysts will closely watch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year and/or the next year. The Q3 earnings season begins later this week when IT major Infosys and private sector bank IndusInd Bank unveil their earnings on Friday, 10 January 2014.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
Asian stocks declined on Monday, 6 January 2014, as a gauge of China's services industries dropped, signaling growth may slow in the world second-biggest economy. Key benchmark indices in Taiwan, Hong Kong, Singapore, China, Japan and Indonesia fell by 0.23% to 2.35%. South Korea's Seoul Composite rose 0.37%.
A private index of China's services industry released today, 6 January 2014, by HSBC and Markit Economics fell to 50.9 last month from 52.5 in November. A number above 50 indicates expansion. China's official nonmanufacturing PMI fell to 54.6 in December from 56.0 in November, according to a statement on Friday, 3 January 2014, from the China Federation of Logistics and Purchasing.
China is due to publish December trade data on Wednesday, 8 January 2014, and December inflation figures on Thursday, 9 January 2014.
Trading in US index futures indicated that the Dow could drop 3 points at the opening bell on Monday, 6 January 2014. US stocks ended a choppy trading session mostly lower on Friday, 3 January 2014, after Federal Reserve Chairman Ben Bernanke defended the extraordinary measures undertaken by the central bank to boost the economic recovery. Bernanke, in a speech in Philadelphia four weeks before his term expires, said the economy "has made considerable progress." He cited payroll employment rising by 7.5 million since 2010 and growth in 16 of the 17 quarters after the recession ended as evidence the Fed's policies have succeeded. "The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for US economic growth in coming quarters," Bernanke said.
The US central bank will make its first Treasuries purchase under the smaller program on 6 January 2014, buying as much as $1.5 billion of securities due from February 2036 to November 2043. The Federal Reserve said after a two-day monetary policy review on 18 December 2013 that it will cut its monthly bond purchases to $75 billion from $85 billion starting in January 2014 amid an improved outlook for the job market in the world's largest economy. The US central bank is poised to continue winding down its stimulus measures gradually this year.
The central bank will release minutes of its December Federal Open Market Committee policy meeting on Wednesday, 8 January 2014.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014.
The US government will unveil the influential non-farm payroll report for December 2013 on Friday, 10 January 2014.
The US Senate on Monday evening was slated to vote, and likely approve, the nomination of Janet Yellen as the Fed's new chief. She would succeed Fed Chairman Ben Bernanke on Feb. 1 if confirmed.
In Europe, the European Central Bank holds a monetary policy meeting on Thursday, 9 January 2014. UK's central bank -- Bank of England -- also undertakes monthly monetary policy review on the same day.
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