The key benchmark indices cut losses in mid-morning trade. The BSE 30-share Sensex was down 184.54 points or 1.15% up close to 80 points from the day's low. Weak Asian stocks weighed on investor sentiment. Index heavyweight Reliance Industries slumped more than 2% after one of the judges withdrew from the Supreme Court hearing on gas dispute, citing potential conflict of interest. Realty stocks reversed early losses. But, IT and banking stocks fell. Oil exploration stocks were mixed and PSU OMCS fell after jump in crude oil prices. The market breadth turned positive.
Market was volatile. Weak Asian stocks pulled the key benchmark indices lower in early trade. It cuts losses in mid-morning trade.
The government will today unveil inflation data for the year through 24 October 2009 at about 12:00 IST. The headline inflation rose 1.51% in the year through 17 October 2009, accelerating from previous week's annual rise of 1.21%.
Planning Commission Deputy Chairman Montek Singh Ahluwalia today said the government would push for reforms in the financial sector but said such a move would not jeopardise India's growth prospects. He also said food price inflation was a concern but it should moderate by the end of this year. Ahluwalia said the country would miss a target of 9% annual growth between 2007/08 and 2011/12 as the global slump and the weakest monsoon in four decades hit output. The planning commission plans to reset the target.
The economy is expected to expand by 6.3% in the year to March 2010, the Planning Commission said in a report on Wednesday. The plan panel expects wholesale price inflation to go beyond 4-5% by end of March 2010.
Earlier, Finance Minister Pranab Mukherjee said on Tuesday, 3 October 2009 that the government has to continue with its fiscal stimulus and is confident of attaining it medium-term fiscal targets. He said non-farm credit growth remained an area of concern and said banks have been told to enhance credit growth.
Comments by the Finance Minister on Tuesday that there are no immediate plans to place curbs on capital inflows, send equities surging on Wednesday, 4 November 2009. His comments have put to rest speculation of government clamping capital controls after a deluge of foreign portfolio inflows this year. Brazil, another emerging economy, had last month slapped a 2% tax on foreign investments into equities and fixed income instruments.
The Reserve Bank of India at its monetary policy review, on 27 October 2009, left its key rates unchanged, but raised the wholesale price-based inflation projection for end-March 2010 sharply to 6.5% with an upward bias, from 5 % earlier.
Meanwhile, the finance ministry has reportedly firmed up details of its budget announcement that listed companies will have to achieve at least 25% public holding in a phased manner, opening up the possibility of a plethora of equity offerings from such firms. Beginning 1 April 2010, those companies falling short of the set target would have to divest at least 5% stake within a year and a similar amount in the following year till they reach the threshold prescribed, reports suggest.
The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to a 13-month peak of 56.78 in October 2009 after having dropped to a three-month low of 54.37 in September 2009. The index has been above 50, which separates expansion from contraction, for six months. Before that, it shrank for six months, hitting a trough of 40.3 in February 2009.
The business expectations sub-index recorded its fastest expansion since March 2008, at 79.47 in October 2009, compared with 74.82 in September 2009. Better market conditions, promotional strategies and good reputations were the main reasons for the increased confidence, the survey said
Rising crude oil costs have raised India's subsidy burden but the government has not taken any decision to revise state-set fuel prices, Oil Secretary R.S. Pandey said on Wednesday
Asian stocks fell on Thursday weighed by Wall Street's weak finish overnight and as the US Federal Reserve's policy statement provided few fresh cues. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan fell by between 0.5% to 1.66%. But China's Shanghai Composite rose 0.39%.
The Federal Open Market Committee left its target interest rate unchanged and maintained its language suggesting ultra-low rates would be maintained for an extended period. The result was widely expected. Earlier, some investors were worried the Fed's language would be more hawkish.
Trading in US index futures indicated Dow could fall 42 points at the opening bell on Thursday, 5 November 2009.
In US on Wednesday, the Dow Jones Industrial Average lost most of its intraday gains in the last half hour of trade and closed up just 0.2%. Stocks had opened higher earlier in the day as investors cheered some encouraging readings on the economy.
The Fed specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline. The Fed said household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.
The Dow rose 30.23 points, or 0.3%, to 9,802.14. The S&P 500 index rose 1.09 points, or 0.1%, to 1,046.50. The Nasdaq Composite Index fell 1.80 points, or 0.1%, to 2,055.52.
In economic data from the US, the ISM reported its gauge of the services sector dropped to 50.6 in October from 50.9 in September. The ADP reported that fewer jobs were lost in October than in previous months. ADP only estimates private sector jobs, not government jobs
The government releases its official October employment report on Friday, 6 November 2009. The US unemployment rate is forecast at 9.9% in October 2009, slightly higher than 9.8% in September 2009, while non-farm payrolls are forecast to fall 175,000 from a drop of 263,000. But given the strong manufacturing data for the month which was released recently, the unemployment number could be better than expected
The European Central Bank (ECB) meets on Thursday, 5 November 2009. No rate change is expected and few expect it to offer clues on when it might change tack. The Bank of England (BOE) meets the same day and the market is waiting to see if it tops up its quantitative easing programme after the economy unexpectedly contracted between July-September 2009 period.
Governments and central banks around the world have injected trillions of dollars in the past year or so to pull the world out of a most severe recession since the 1930s Great Depression.
Meanwhile, policymakers from the Group of 20 club of rich and developing nations will gather in St Andrews, Scotland, on 6-7 November 2009 to follow up on agreements made at a leaders' summit in Pittsburgh in September 2009. The Chancellor, Alistair Darling, will host the meeting, with ministers acting on agenda items set for them at the Pittsburgh summit - economic recovery and finding funds to tackle climate change.
Closer home, the supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary equity market. As per reports, Indian firms have garnered about $9 billion (Rs 32,400 crore at the current exchange rates) through sale of shares and convertible bonds to institutional buyers since April 2009. Indian companies are taking advantage of a surge in liquidity to recapitalize and fund capital expenditure after being starved of cash last year.
At 11:20 IST, the BSE 30-share Sensex was down 184.54 points or 1.15% to 15,727.59. The Sensex fell 267.55 points at the day's low of 15644.58 in early trade The Sensex rose 14 points at the day's high of 15,926.13 in early trade.
The S&P CNX Nifty was down 49.45 points or 1.05% to 4661.35
The market breadth, indicating the overall health of the market turned positive. On BSE, 1179 shares advanced as compared with 859 that declined. A total of 60 shares remained unchanged.
From the 30 share Sensex pack, 22 stocks fell and 8 rose.
The BSE Mid-Cap index rose 0.97% and the BSE Small-cap index rose 1.08%.
Energy giant Reliance Industries fell 2.06% to Rs 1881 as the hearing in its gas dispute with Reliance Natural Resources is expected to resume during the day. Justice B. Sudershan Reddy replaces R.V. Raveendran on the three-member bench headed by Chief Justice K.G. Balakrishnan. Raveendran stepped down yesterday saying his daughter works at a law firm that advises Mukesh Ambani's Reliance Industries
In the previous hearing on 27 October 2009, the Supreme Court had observed that gas is a national resource owned by the Government and, therefore, subject to Government policy. The Court also asked why the brothers cannot settle the matter through arbitration or mutual consensus. The two brothers are fighting a legal battle in the apex court over division of natural gas produced by RIL from KG-D6. The Supreme Court began hearing arguments on the dispute from 20 October 2009.
The government on 27 October 2009 allocated additional 50 million cubic metres a day (mmscmd) of gas from Reliance Industries-operated east coast block D6. Power plants and refineries will get the bulk of Reliance Industries' gas from the Krishna-Godavari basin beyond the previously allotted 40 million metric standard cubic metres per day (mmscmd).
The empowered group of ministers (eGoM) also made some allotments for Reliance's petrochemical plants and refineries.
Oil exploration stocks were mixed as crude futures settled above $80 a barrel Wednesday after a surprise draw in oil inventories and as the dollar took a big step back toward lows for the year against the euro. Light, sweet crude for December 2009 delivery settled 80 cents, or 1%, higher at $80.40 a barrel on the New York Mercantile Exchang. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.
Cairn India rose 0.47% after the company signed a pact with Reliance Industries for supply of crude oil. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) fell 1.75%. India's second biggest state-run oil exploration firm by revenue Oil India fell 1.18%.
PSU OMCs fell as rise in crude oil prices will increaseunder-recoveries on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. HPCL, Indian Oil Corporation (IOC) and BPCL fell by between 0.24% to 0.88%.
Banking shares fell. Last week, the RBI did not relax mark-to-market rules for bank's debt holdings at a quarterly policy review on 27 October 2009. The market was been agog with talks over the past few days of the central bank hiking the ceiling on the portion of government securities that banks can park in held-to-maturity (HTM).
India's largest private sector bank by net profit ICICI Bank fell 1.29% even as its ADR rose 7.19% on Wednesday. The bank's net profit rose 2.6% to Rs 1040.13 crore on a 12.7% decline in total income to Rs 8480.73 crore in Q2 September 2009 over Q2 September 2008. The result was announced during trading hours on 30 October 2009.
India's second largest private sector bank by net profit HDFC Bank fell 1.46% even as its ADR rose 4.15% on Wednesday.
India's largest bank by net profit State Bank of India (SBI) fell 1.64%. The bank's consolidated net profit rose 28.29% to Rs 3,133.16 crore on 22% rise in consolidated income to Rs 33,101.65 crore in Q2 September 2009 over Q2 September 2008. The results were announced on 31 October 2009.
Another trigger for the recent pressure on banking stocks was the central banks' decision to streamline provisioning requirement on non-performing assets. The RBI asked banks to ensure by September 2010 that the total provisioning coverage against non-performing or bad loans aren't less than 70% of the outstanding amount.
IT stocks fell on profit taking after recent sharp jump. IT stocks rose recently on better than expected Q2 results.
India's largest software company by sales Tata Consultancy Services (TCS) fell 1.81%. As per recent reports the company secured a 150 million pounds software implementation contract for 15 years from Cardiff city council, UK.
India's third largest software company by sales Wipro fell 2.48% even as its ADR rose 2.36% on Wednesday. The company said on Thursday it had agreed to buy some personal care businesses of Yardley for about $45.5 million, adding to its consumer goods business. Wipro said it had signed an agreement with UK-based Lornamead group, which owns the Yardley brand, for the businesses in Asia, the Middle East, Australasia and some African markets.
India's second largest software company by sales Infosys fell 1.1% even as its ADR rose 1.56% on Wednesday.
Patni Computer Services spurted 4.23% on reports L&T Infotech, a part of engineering & construction major Larsen & Toubro, is in advanced talks to acquire a majority shareholding in the software company.
Rate sensitive realty shares reversed early fall on bargain hunting. Unitech, Omaxe, Akruti City and HDIL rose by between 0.67% to 3.07%. But, DLF and Indiabulls Real Estate fell by between 0.74% to 0.87%.
The stocks fell past few days after the RBI raised the provisioning requirements for loans to commercial real estate from 0.4% to 1% in its monetary policy review meet on 27 October 2009.
Rashtriya Chemicals and Fertilisers soared 8.51% on reports the company set to enter cement distribution through its 6,000-strong dealer network.
Everest Kanto Cylinder rose 1.56%, after one of the promoters hiked stake in the firm.
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