High volatility was witnessed as key benchmark indices languished in negative zone in morning trade. The market breadth, indicating the overall health of the market, was weak. The market sentiment was hit adversely by Reserve Bank of India (RBI) governor Raghuram Rajan's comments on Thursday, 23 January 2014, that inflation is a destructive disease which is forcing the central bank to keep interest rates high. Weakness in Asian stocks and overnight losses for US stocks also hit sentiment on the domestic bourses adversely. The barometer index, the S&P BSE Sensex, was down 80.32 points or 0.38%, off close to 40 points from the day's high and up about 65 points from the day's low.
Realty stocks declined. Some pharma stocks edged higher. Dr Reddy's Laboratories scaled record high. But, Ranbaxy Laboratories slumped on high volumes after the company announcement that the US Food and Drug Administration notified the company that it is prohibited from manufacturing and distributing active pharmaceutical ingredients (APIs) from its facility in Toansa, India, for FDA-regulated drug products. Among IT stocks, Wipro hit 52-week high.
A bout of volatility was witnessed as key benchmark indices trimmed losses after a weak start triggered by weak Asian stocks. The Sensex languished in negative zone in morning trade.
At 10:20 IST, the S&P BSE Sensex was down 80.32 points or 0.38% to 21,293.34. The index dropped 143.63 points at the day's low of 21,230.03 in early trade, its lowest level since 22 January 2014. The index declined 40 points at the day's high of 21,333.66 in early trade.
The CNX Nifty was down 26.45 points or 0.42% to 6,319.20. The index hit a low of 6,294.70 in intraday trade, its lowest level since 22 January 2014. The index hit a high of 6,331.45 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,071 shares fell and 594 shares rose. A total of 71 shares were unchanged.
Among the 30-share Sensex pack, 18 stocks fell and rest rose. Bhel (down 2.08%), Tata Motors (down 1.78%) and Tata Steel (down 1.7%) edged lower from the Sensex pack.
Realty stocks declined. DLF (down 1.7%), HDIL (down 1.69%), Sobha Developers (down 0.97%) and Unitech (down 1.47%) declined.
Wipro rose 0.85% to Rs 583.30 after hitting 52-week high of Rs 584 in intraday trade.
Some pharma stocks edged higher. Cipla (up 0.33%) and Sun Pharmaceutical Industries (up 0.36%) gained.
Dr Reddy's Laboratories rose 0.32% to Rs 2,675.65 after hitting record high of Rs 2,690 in intraday trade.
Ranbaxy Laboratories slumped on high volumes after the company announcement that the US Food and Drug Administration notified the company that it is prohibited from manufacturing and distributing active pharmaceutical ingredients (APIs) from its facility in Toansa, India, for FDA-regulated drug products. The stock was off 16.34%. On BSE, so far 13.46 lakh shares changed hands on the counter, compared with average daily volume of 4.4 lakh shares in the past one quarter. The Toansa facility is now subject to certain terms of a consent decree of permanent injunction entered against Ranbaxy in January 2012, Ranbaxy said in a statement.
Subsequent to the Form 483 issued in early January 2014, Ranbaxy voluntarily and proactively suspended shipments of API from this facility to the US market when it received the inspection findings. Ranbaxy said that the management is disappointed with the recent FDA action and would like to apologize to all its stakeholders in for the inconvenience caused by the suspension of shipment. Arun Sawhney, CEO and Managing Director of Ranbaxy said: "This development is clearly unacceptable and an appropriate management action will be taken upon completion of the internal investigation".
Ranbaxy further said that the company is committed to highest standard of patient safety and quality, and shall constantly endeavour to strengthen its systems and processes. Ranbaxy will cooperate with the FDA and shall comply with the Consent Decree in both the letter and spirit, it said.
In the foreign exchange market, the rupee edged lower against the dollar on global risk off sentiment. The partially convertible rupee was hovering at 62.24, compared with its close of 61.9275/9375 on Thursday, 23 January 2014.
Bond prices dropped after Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday, 23 January 2014, called inflation a "destructive disease" that was forcing the central bank to keep interest rates high, according to reports. "Industrialists complain about high interest rates but we don't have a choice but to keep interest at a high rate because inflation is high at 8%", Rajan said. The strong warning against inflation comes ahead of the central bank's policy review early next week. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.6834%, higher than its close of 8.6653% on Thursday, 23 January 2014. Bond yield and bond prices move in opposite direction.
The Reserve Bank of India's Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months.
Asian stocks edged lower on Friday, 24 January 2014, amid concern earnings growth will miss estimates on signs of weakness in China's economy. Key benchmark indices in Japan, South Korea, Singapore, Indonesia, Taiwan and Hong Kong were down 0.02% to 1.72%. China's Shanghai Composite rose 0.85%.
A preliminary reading of HSBC's January China manufacturing Purchase Manufacturing Index fell to 49.6, below the 50 boundary between expansion and contraction, and down from 50.5 in the final result for December. It was the first contraction for the sector in six months, according to the HSBC data which was released on Thursday, 23 January 2014.
China's central bank on 21 January 2014 announced that it is injecting more liquidity into the system ahead of the Lunar New Year holiday.
Trading in US index futures indicated that the Dow could drop 27 points at the opening bell on Friday, 24 January 2014. US stocks closed sharply lower on Thursday as weak economic data from China prompted investors to sell resource stocks and emerging-markets assets and seek safety in bonds, gold, and high-dividend paying sectors.
Among economic data, an early gauge of US manufacturing dipped in January from the prior month, but some of the slowdown was due to cold weather, Markit reported Thursday. The US flash purchasing managers index slipped to 53.7 in January, down from December's level of 55, which was an 11-month high. This is the slowest improvement in conditions since October. US initial jobless claims rose slightly to 326,000 last week. The leading economic index rose 0.1% in December, marking its sixth gain in a row, the nonprofit Conference Board said Thursday. In the housing sector, sales of existing homes rose 1% in December to a 4.98 million annual rate, while the median sale price climbed 9.9% to $198,000.
The Federal Open Market Committee (FOMC) holds a two-day monetary policy meeting on 28 and 29 January 2014. By a 9-to-1 vote, the Fed on 18 December 2013 decided to trim its asset-purchase program by $10 billion to $75 billion per month starting in January 2014.
Powered by Capital Market - Live News
