Weakness continued on the bourses in early afternoon trade. The barometer index, the S&P BSE Sensex, was down 258.07 points or 1.25%, up 22.21 points from the day's low and off 202.20 points from the day's high. The market breadth, indicating the overall health of the market, was weak. Investor sentiment was hit adversely after minutes from the Federal Reserve's last meeting signaled US stimulus may be reduced in coming months. 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. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. In the foreign exchange market, the rupee edged lower against the dollar due to broad dollar gains after minutes from the US Federal Reserve's October policy meeting showed the US central bank considering an imminent slowing of its bond-buying program.
Index heavyweight and cigarette major ITC hovered in red. FMCG major Hindustan Unilever reversed intraday losses in choppy trade. Some other FMCG stocks declined. IT major and index heavyweight Infosys declined. Uttam Galva Steels jumped on high volume. Wyeth extended Wednesday's 20% rally triggered by the company and Pfizer announcing that the board of directors of the two companies will separately consider merger proposal.
Key benchmark indices edged lower in early trade as Asian stocks fell after minutes from the Federal Reserve's last meeting signaled US stimulus may be reduced in coming months and as a preliminary gauge showed that China's manufacturing activity decelerated this month. The market extended initial losses in morning trade. The Sensex and the 50-unit CNX Nifty, both, hit one-week low. Weakness continued on the bourses in early afternoon trade.
At 12:18 IST, the S&P BSE Sensex was down 258.07 points or 1.25% to 20,377.06. The index lost 280.28 points at the day's low of 20,354.85 in early afternoon trade, its lowest level since 14 November 2013. The index fell 55.87 points at the day's high of 20,579.26 in opening trade.
The CNX Nifty was down 77.50 points or 1.27% to 6,045.40. The index hit a low of 6,037.55 in intraday trade, its lowest level since 14 November 2013. The index hit a high of 6,097.35 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,321 shares declined and 797 shares gained. A total of 146 shares were unchanged.
The total turnover on BSE amounted to Rs 804 crore by 12:20 IST, compared to Rs 601 crore by 11:20 IST.
Among the 30-share Sensex pack, 24 stocks declined and rest of them gained.
HDFC (down 2.24%), L&T (down 1.91%) and Sesa Sterlite (down 1.66%) edged lower from the Sensex pack.
Index heavyweight and cigarette major ITC fell 1.87% to Rs 314.95. The stock hit high of Rs 320.25 and low of Rs 313.80 so far during the day.
FMCG major Hindustan Unilever rose 0.05% to Rs 582. The stock was volatile. The scrip hit high of Rs 583 and low of Rs 574 so far during the day.
Some other FMCG stocks declined. Britannia Industries (down 0.21%), Marico (down 0.1%), Nestle India (down 0.87%) declined.
IT major Infosys lost 1.79% to Rs 3,341.60. The stock had hit a 52-week high of Rs 3,447.90 in intraday trade on Tuesday, 19 November 2013.
Wyeth surged 4.66% to Rs 813, with the stock extending Wednesday's 20% rally. Shares of Pfizer fell 1.05% at Rs 1,401. Wyeth and Pfizer before market hours on Wednesday, 20 November 2013 said that the board of directors of the two companies will meet on 23 November 2013 to consider merger proposal. While, globally Pfizer and Wyeth are single entities, they operate as separate entities in India.
Uttam Galva Steels jumped 5.97% to Rs 72.75 on volume of 24.77 lakh shares, higher than average volume of 64,543 shares in the past one quarter.
Bombay Dyeing & Manufacturing Company jumped 3.1% after the company announced that the Bombay High Court on Wednesday, 20 November, 2013, passed an order upholding the petition filed by the company permitting it to handover 66,651 square meter (sq. m) land to MCGM and MHADA at a single location in its Spring Mills plot now known as Island City Centre at Wadala. As a part of its development plans, the company was required to handover 52,331.55 sq. m at Wadala and 12,823.39 at Lower Parel to the two agencies. It had prayed, in a petition that it be allowed to submit the land at one location in Wadala instead of separately at its mill lands in Lower Parel and Wadala under the Integrated Development Scheme for Textile Mills as provided under Section 58 of DCR.
Commenting on the decision, a company spokesperson stated, "We welcome the decision by the Honourable court. I am pleased that we can now move forward with our development plans by handing over the requisite land to MHADA and MCGM. This paves the way for planned world class developments for the city of Mumbai and our customers."
Bombay Realty, a division of Bombay Dyeing is working on an Integrated Development Scheme at Wadala. It has already delivered Springs, a luxury 40 storey residential tower and is currently developing two more world-class premium residential towers at Wadala site called Island City Centre. The Lower Parel situated Bombay Dyeing Mill land is also to be commercially developed, the company said in a statement.
In the foreign exchange market, the rupee edged lower against the dollar due to broad dollar gains after minutes from the US Federal Reserve's October policy meeting showed the US central bank considering an imminent slowing of its bond-buying program. The partially convertible rupee was hovering at 62.85, compared with its close of 62.57/58 on Wednesday, 20 November 2013.
The annual headline inflation is expected to moderate to near 5% as there was reasonable price stability in some major commodities, the finance minister said on Thursday. P. Chidambaram made the comment in a lecture at the National University of Singapore. Government data on 14 November 2013 showed that the headline inflation had accelerated to an eight-month high of 7% in October, mainly driven by higher fuel and manufactured goods prices. Chidambaram also said the fiscal deficit target of 4.8% of gross domestic product in 2013/14 would not be breached under any circumstances.
Fitch Ratings said in a report published on Wednesday, 20 November 2013, that the spillover effects of a weaker rupee have not significantly hurt India's creditworthiness, and hence would not trigger any rating action as this point. The economy has not lost much momentum, with both agriculture and exports remaining resilient and providing a cushion. Fitch therefore expects the economy to recover with real GDP forecast to rise 4.8% in FY 2014 (financial year ending March 2014) and 5.8% in FY 2015, compared with a 5% rise in FY 2013. The modest economic recovery, however, will continue to undermine India's banking sector, which is facing a combination of weakening asset quality, eroding profit and declining capital. Nonetheless, these factors are likely to have only a moderate effect on the banking sector's ability to supply credit to the economy. Inflation has risen only moderately, despite higher import prices stemming from the weaker rupee. The Reserve Bank of India (RBI) has also signalled that it has started to place a greater focus on capping CPI. The current account deficit is narrowing, following measures to curb gold imports, a weaker exchange rate, and softer domestic demand. Fitch forecasts the current account deficit to decline to 3.1% of GDP in FY 2014 (versus 4.8% in FY 2013). This fall, however, will not be enough to shield India from further pressures related to the eventual start of Fed tapering.
India's budget remains under pressure as the central government's (CG) fiscal deficit in the first six months of FY 2014 stood at 76% of the full-year target, Fitch said. The authorities have indicated that they are still committed to lowering the fiscal deficit to 4.8% of GDP (versus 4.9% in FY 2013). To achieve this, the CG is likely to clamp down heavily on expenditures in 2H FY 2014.
Asian stocks fell on Thursday, 21 November 2013, after minutes from the Federal Reserve's last meeting signaled US stimulus may be reduced in coming months and as a preliminary gauge showed that China's manufacturing activity decelerated this month. Key benchmark indices in Taiwan, Hong Kong, China, Singapore, Indonesia and South Korea fell by 0.38% to 1.28%. Japan's Nikkei 225 index rose 1.92%.
China manufacturing activity growth slipped to a two-month low as export orders swung to a decline, according to preliminary results from HSBC's monthly gauge of the sector, released Thursday. The "flash" version of the HSBC/Markit China manufacturing Purchasing Managers' Index eased to 50.4, compared to last month's 50.9 reading.
China may not be able to end its reliance on investment and exports for growth over the next three to five years despite plans for economic restructuring, an adviser to the central bank said on Thursday, 21 November 2013. Speaking at a financial seminar, Song Guoqing said that China's high savings rate is hindering the government's efforts to boost domestic consumption and reduce the role of exports and investment in driving growth. China's high savings rate is partly due to an aging population combined with a lack of a reliable social safety net, he noted.
The Bank of Japan kept its policy rates and asset-purchasing program unchanged Thursday, as widely expected. The decision, which came just three weeks after the central bank's previous policy statement, was unanimous. It also made no changes to its assessment of the economy, which it said "has been recovering moderately" as "exports have generally been picking up." It also cited gains for businesses' fixed investment and corporate profits.
Trading in US index futures indicated that the Dow could fall 15 points at the opening bell on Thursday, 21 November 2013. US stocks fell on Wednesday, 20 November 2013, after the minutes of the Federal Reserve's October meeting minutes signaled the central bank is on track to slow down its $85 billion a month bond bond-buying program that has boosted the equity market. Central bank policy makers "generally expected that the data would prove consistent with the committee's outlook for ongoing improvement in labor-market conditions and would thus warrant trimming the pace of purchases in coming months," according to minutes of the Federal Open Market Committee's Oct. 29-30 meeting.
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