Key benchmark indices were range bound in negative terrain in afternoon trade. Concerns about the upcoming US fiscal cliff weighted on investor sentiment. United States is the world's biggest economy. The barometer index, BSE Sensex, was down 85.18 points or 0.44%, up 55 points from the day's low and off 130 points from the day's high. The market breadth was negative. Index heavyweight Reliance Industries (RIL) hovered in negative zone. Another index heavyweight and cigarette maker ITC was negative. Pharma stocks were in demand on defensive buying in a weak market. IT shares fell on profit booking after recent firmness.
The Sensex reached its highest level in more than one week at the onset of the trading session. The market soon lost ground. Intraday volatility continued as key benchmark indices alternately swung between gains and losses in morning trade. Key benchmark indices extended losses to hit fresh intraday low in mid-morning trade. The market hovered in negative zone in early afternoon trade. Key benchmark indices were range bound in negative terrain in afternoon trade.
Foreign institutional investors (FIIs) bought shares worth a net Rs 1244.96 crore on Wednesday, 19 December 2012, as per provisional data from the stock exchanges.
At 13:15 IST, the BSE Sensex was down 85.18 points or 0.44% to 19,390.82. The index lost 140.28 points at the day's low of 19,335.72 in mid-morning trade, its lowest level since 18 December 2012. The index rose 44.51 points at the day's high of 19,520.51 in early trade, its highest level since 11 December 2012.
The S&P CNX Nifty was down 34.05 points or 0.57% to 5,895.55. The index hit a low of 5,881.45 in intraday trade, its lowest level since 18 December 2012. The index hit a high of 5,937.60 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,524 shares declined and 1,128 shares gained. A total of 114 shares were unchanged.
From the 30-share Sensex pack, 23 stocks declined while the rest of them gained. Sterlite Industries (India) (down 1.59%), Mahindra & Mahindra (down 1.54%), Bhel (down 1.37%), Bajaj Auto (down 1.28%), Tata Steel (down 1.13%), Sun Pharmaceutical Industries (down 1.12%), L&T (down 0.95%), Wipro (down 0.93%) and Hero MotoCorp (down 0.76%), edged higher.
Hindustan Unilever (up 0.97%), Maruti Suzuki India (up 0.69%), Jindal Steel & Power (up 0.33%), Bharti Airtel (up 0.13%) and HDFC (up 0.02%), edged higher from the Sensex pack.
Index heavyweight Reliance Industries (RIL) fell 0.61% to Rs 834.25. The stock hit a high of Rs 841 and a low of Rs 830 so far during the day. Russia's Spirit DPS early this week said that Indian telecom operator Infotel, a subsidiary of Reliance Group, has licensed its software TeamSpirit Voice and Video Engine. "Reliance intends to invest $10 billion in its LTE network and has turned to Spirit's software products for voice and video calls over LTE instead of waiting for phone makers who are slow in offering handsets transmitting voice and video in 4G networks. The lack of mobile devices supporting VoLTE (Voice-over-LTE) drives a growing number of carriers to implement a software-only product, which is more flexible, scalable and offers a quicker time to market. By using Spirit engines, Reliance will be able to offer its subscribers high-quality services as an alternative to Skype over cellular networks and attract new high-value subscribers that used services from other operators and commercial OTT service providers", Spirit DPS said in a statement.
RIL has bought back 4.62 crore shares for about of Rs 3358.09 crore till 11 December 2012 under its ongoing share buyback program. RIL has set maximum buyback price of Rs 870 per share. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013.
Index heavyweight and cigarette maker ITC shed 0.69% to Rs 288.10. The stock hit a high of Rs 290.35 and low of Rs 286.05 so far during the day. The Ministry of Health and Family Welfare in October 2012 notified new pictorial health warnings to be depicted on tobacco product packs which will come into effect from 1 April 2013. The Ministry of Health and Family Welfare said in a statement on 22 October 2012 that three sets of warnings each have been notified for smoking as well as smokeless forms of tobacco product packages. The well-designed health warnings and messages are part of a range of measures to communicate health risks due to tobacco use. Pictorial health warnings communicate health risks in a visible way, provoke a greater emotional response and increase the motivation of tobacco users to quit and to decrease their tobacco consumption, the ministry's statement said. Graphic warning labels have a greater impact than text-only labels and can be recognized by low-literacy audiences and children, the statement added.
IT shares fell on profit booking after recent firmness. Tech Mahindra (down 1.85%), Hexaware Technologies (down 1.62%), Mahindra Satyam (down 1.13%), Wipro (down 0.93%), Infosys (down 0.56%), HCL Technologies (down 0.4%) and Oracle Financial Services Software (down 0.38%), edged lower. However, TCS (up 0.58%) and MphasiS (up 0.26%), edged higher.
The BSE IT index rose 1.83% in the preceding two sessions to 5,623.19 on 19 December 2012 from 5,522.03 on 17 December 2012.
Pharma stocks were in demand on defensive buying in a weak market. Aurobindo Pharma (up 3.98%), Strides Arcolab (up 2.63%), Glenmark Pharmaceuticals (up 2.28%), Divis Laboratories (up 1.27%), Biocon (up 0.96%), Ranbaxy Laboratories (up 0.69%), Wockhardt (up 0.48%), GlaxoSmithKline Pharmaceuticals (up 0.42%), Lupin (up 0.19%) and Cadila Pharmaceuticals (up 0.04%), edged higher.
Pharma major Cipla rose 1.48% to Rs 426 after scaling a record high of Rs 429.35 in intraday trade today, 20 December 2012.
Sun Pharmaceutical Industries fell 0.85% to Rs 755.10, with the stock reversing direction after hitting a record high of Rs 775.90 in intraday trade today, 20 December 2012. Sun Pharmaceutical Industries early this week sid its wholly-owned subsidiary, Caraco Pharmaceutical Laboratories, has entered into a definitive agreement with Takeda Pharmaceuticals USA, Inc, a wholly-owned subsidiary of Takeda Pharmaceutical Company, to buy the URL Pharma, Inc. generic business. Upon completion of the purchase, the non-Colcrys (colchicine, USP) generic assets of URL Pharma will be owned and managed by Caraco. The deal is subject to satisfaction of customary closing conditions, including applicable regulatory approvals.
Stock market regulator Securities & Exchange Board of India (Sebi) on Wednesday, 19 December 2012, raised the base minimum capital (BMC) for stock brokers holding registration as "stock-broker" in the cash segment. Sebi has also introduced BMC for members holding registration as "trading member" in any derivative segment. Only proprietary trading without Algorithmic trading (Algo) will require BMC of Rs 10 lakh, Sebi said in a circular. BMC is the deposit given by the member of the exchange against which no exposure for trades is allowed. All Trading Members/Brokers with Algo will be required to maintain BMC of Rs 50 lakh.
The stock exchanges will be permitted to prescribe suitable deposit requirements, over and above the Sebi prescribed norms, based on their perception and evaluation of risks involved, Sebi said. Minimum 50% of the deposit will be in the form of cash and cash equivalents. The existing guidelines on collateral composition shall continue to remain applicable, Sebi said. The new BMC norms will be applicable by 31 March 2013, Sebi said.
Indian companies will start unveiling Q3 December 2012 results from mid-January 2013. Investors and analysts will closely watch the management commentary that would accompany the result which could cause revision in their future earnings forecast of the company for the current year and or next year. Bajaj Auto unveils Q3 results on 16 January 2013. HDFC Bank unveils Q3 results on 18 January 2013.
Finance Minister P. Chidambaram early this week said that the insurance bill won't come up in the current session. The minister didn't say anything about the pension bill. The insurance bill will aim to raise the limit for foreign direct investment in the sector to 49% from 26%, while the pension bill will seek to allow foreign investments of up to 49% in local pension-fund managers. Today is the last of the winter session of the parliament.
The Reserve Bank of India (RBI) undertakes Third Quarter Review of Monetary Policy 2012-13 on 29 January 2013. RBI kept its key policy rate viz. the repo rate unchanged at 8% after mid-quarter monetary policy review on 18 December 2012. The central bank said that in view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards. Liquidity conditions will be managed with a view to supporting growth as stated in the Second Quarter Review (SQR) of Monetary Policy 2012-13 on 30 October 2012, thereby preparing the ground for further shifting the policy stance to support growth, RBI said. Overall, recent inflation patterns and projections provide a basis for reinforcing October guidance about policy easing in the fourth quarter, RBI said. However, risks to inflation remain and accordingly, even as the policy emphasis shifts towards growth, the policy stance will remain sensitive to these risks, RBI said.
The Lok Sabha on Tuesday, 18 December 2012, approved the much-awaited Companies Bill, 2011, making it mandatory for profit-making companies to spend on activities related to corporate social responsibility (CSR). If a company does not do so, it will have to explain the reasons for it. The Bill, aimed at improving corporate governance, also contains provisions to strengthen regulations for companies and auditing firms.
The changes in the bill include provisions that make it mandatory for firms -- those that have reported profits of Rs 5 crore or more in last three years -- to spend at least two per cent of their average net profit on CSR activities. Companies failing to meet the obligation and not disclosing reasons for it in their books of account would face action, including penalty.
Gujarat chief minister Narendra Modi looks set to lead the Bharatiya Janata Party to a comfortable victory in assembly elections in the state. The Bharatiya Janata Party is leading 118 seats and the Congress is leading in 60 seats as the trends of assembly elections in Gujarat pour in. The Gujarat Assembly has a total of 182 seats. In Himachal Pradesh (HP), the Congress is leading in 36 seats and BJP is leading in 26 seats. The HP Assembly has a total of 68 seats.
The next general elections in India must be held before May 2014.
Asian stocks were mostly lower on Thursday, 20 December 2012, as doubt over the progress of US budget talks set in. Key benchmark indices in Japan, Indonesia and Taiwan were down by 0.91% to 1.19%. Key benchmark indices in Hong Kong, China and Singapore rose 0.02% and 0.40%. South Korea's Kospi rose 0.32% as investors returned from a one-day break for an election which ushered in the country's first female president, Park Geun-hye.
The Bank of Japan announced Thursday it would add about 10 trillion yen ($119 billion) to its asset-purchase program, citing "a high degree of uncertainty concerning Japan's economy." The monetary policy committee also voted to keep its interest-rate target at 0 to 0.1%, as widely expected. The Bank of Japan said it would wait until its next meeting to discuss "the medium-to long-term price stability that the bank aims to achieve in the conduct of monetary policy." The central bank also sounded a downbeat note on the economy, saying Japan would stick to "somewhat weak movement for the time being," with the core consumer price index likely to remain flat.
In Australia, fiscal policy was under the spotlight after Treasurer Wayne Swan said that the Australian government is unlikely to reach its target of a budget surplus in the fiscal year ending June 30, 2013.
Trading in US index futures indicated that the Dow could fall 27 points at the opening bell on Thursday, 20 December 2012. US stocks edged lower on Wednesday, 19 December 2012, due to less optimism that politicians will reach a compromise agreement to stop billions of dollars of tax hikes and spending cuts taking place at the start of the year. US President Barack Obama told a news conference on Wednesday that Republicans find it "very hard" to say yes to him, while a spokesman for House Speaker John Boehner, the top Republican negotiator in the talks, called the White House "irrational."
The US fiscal cliff refers to the year-end deadline for the expiration of hundreds of billions of dollars worth of tax cuts and the triggering of $109 billion in across-the-board spending cuts, if the US Congress fails to act. The US Congress created the hazardous deadline of 31 December 2012 in August 2011 when it agreed to a deficit deal as a way out of a deadlock over raising the US debt ceiling. The Congressional Budget Office has estimated the US economy would drop into a recession in the first half of the new year if a deal is not reached.
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