Weak market breadth

Weakness continued on the bourses in afternoon trade as European stocks opened lower. The market breadth, indicating the overall health of the market, was weak. The barometer index, the SP BSE Sensex, was down 211.79 points or 1.06%, up close to 32 points from the day’s low and off about 270 points from the day’s high. The market sentiment was hit adversely by the government’s failure to raise fuel prices. The government’s decision on Tuesday not to raise fuel prices sparked concerns about the government’s fiscal deficit. PSU OMCs, which control more than 90% of the fuel-retail market in India, sell diesel and cooking fuels at government-set discounted prices. The government partially reimburses them for the discounted sales.

A bout of initial volatility was witnessed as key benchmark indices alternately swung between gains and losses. The market moved in a narrow range in morning trade. Key benchmark indices extended intraday losses and hit fresh intraday low in mid-morning trade as index heavyweights, Reliance Industries and ITC, both, extended intraday losses. Key benchmark indices trimmed losses in early afternoon trade after hitting their lowest level in more than a week. Weakness continued on the bourses in afternoon trade as European stocks opened lower.

The market may remain volatile in the immediate future as traders roll over positions in the futures options (FO) segment from the near month September 2013 series to October 2013 series. The September 2013 FO contracts expire tomorrow, 26 September 2013.

At 13:15 IST, the SP BSE Sensex was down 211.79 points or 1.06% to 19,708.42. The index declined 243.36 points at the day’s low of 19,676.85 in early afternoon trade, its lowest level since 17 September 2013. The index rose 58.28 points at the day’s high of 19,978.49 in early trade.

The CNX Nifty was down 70.95 points or 1.20% to 5,821.50. The index hit a low of 5,813.60 in intraday trade, its lowest level since 17 September 2013. The index hit a high of 5,910.55 in intraday trade.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1,287 shares fell and 772 shares rose. A total of 156 shares were unchanged.

Among the 30-share Sensex pack, 15 stocks fell and rest of them rose. MM (down 3.58%), Reliance Industries (down 3.23%), HDFC Bank (down 3.02%), ITC (down 2.27%), ICICI Bank (down 2.25%), Bajaj Auto (down 2.22%), Hindustan Unilever (down 1.87%) and Tata Steel (down 1.74%), edged lower from the Sensex pack.

Bhel (up 4.15%), Tata Motors (up 2.5%), Bharti Airtel (up 1.03%), Sun Pharmaceutical Industries (up 0.76%), Sesa Goa (up 0.74%), ONGC (up 0.71%) and Coal India (up 0.67%), edged higher from the Sensex pack.

Financial Technologies (India) (FTIL) slumped 10.28% to Rs 150.15 after the company’s auditors withdrew their audit report saying that the company’s year ended 31 March 2013 standalone and consolidated results should no longer be relied upon. Meanwhile, NSEL on Tuesday, 24 September 2013, made the sixth straight payment default, as it could pay only Rs 11.45 crore to investors out of the scheduled amount of Rs 174.72 crore.

NSEL had to shut down its operations since 1 August 2013 following the government direction in the wake of violation of certain rules. NSEL is grappling with the problem of payment settlement after the suspension. It has given eight-month plan to settle Rs 5574.31 crore to investors. NSEL is scheduled to make a payout every Tuesday for 30 weeks, ending in March 2014. FTIL is one of the two promoters of the NSEL.

NHPC (up 2.63%), Tata Motors (up 2.33%), Bharat Electronics (up 2.32%), Apollo Hospitals Enterprise (up 2.19%) and Indian Hotels Company (up 1.77%), were among the leading gainers from the BSE’s ‘A’ group.

BPCL (down 4.69%), Rural Electrification Corporation (down 4.43%), Gitanjali Gems (down 3.90%), MCX (down 3.90%) and IDFC (down 3.69%), were among the major losers in the BSE’s ‘A’ group.

HCL Technologies was off 1.11% to Rs 1,062.10. The company announced during trading hours today, 25 September 2013, that its wholly-owned subsidiary, HCL America Inc (HCLA), has won a multi-year, multi-million dollar deal with the WyCAN Consortium, a group of states including Arizona, Colorado, North Dakota and Wyoming. HCLA will enable WyCAN to significantly improve services for its Unemployment Insurance (UI) modernization program, which is one of the largest such programs in the US providing critical income to millions of unemployed Americans.

The deal will give the consortium states a configurable, intuitive Government-to-Citizen (G2C) system aimed at consolidating and replacing existing legacy systems to allow easier adaptation to changing legislation, HCL Technologies said in a statement.

Minister of Petroleum Natural Gas Dr. M. Veerappa Moily on Tuesday, 24 September 2013, ruled out any steep increase in diesel and cooking-fuel prices. The government’s decision on Tuesday, 24 September 2013, not to raise fuel prices has sparked concerns about the government’s fiscal deficit. PSU OMCs, which control more than 90% of the fuel-retail market in India, sell diesel and cooking fuels at government-set discounted prices. The government partially reimburses them for the discounted sales. Dr. Moily on Tuesday, 24 September 2013, asked the people of India to conserve petroleum products to help the government’s finances and reduce the country’s oil-import bill.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 62.66, compared with its close of 62.7525/7625 on Tuesday, 24 September 2013.

European shares edged lower on Wednesday, 25 September 2013, tracking prior-day losses in the US, where discussions about raising the debt ceiling weighed on sentiment. Key benchmark indices in UK, France and Germany were off 0.27% to 0.36%.

Asian stocks dropped on Wednesday, 25 September 2013, as concern that US lawmakers will fail to arrange a budget deal preventing a government shutdown next week weighed on sentiment. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, Taiwan and South Korea were off 0.01% to 1.71%.

Trading in US index futures indicated that Dow could slide 23 points at opening bell on Wednesday, 25 September 2013. US stocks ended mostly lower on Tuesday, 24 September 2013, as a drop in consumer confidence and worries over a Washington debt-ceiling fight outweighed a rise in home prices and easing concerns over the Middle East.

Investors are worried about the latest squabbling in Washington over a new budget for the fiscal year that starts on 1 October 2013 and, more importantly, over whether to lift the debt ceiling. Ratings firm Moody’s Investors Service on Tuesday said a failure by the US government to raise the country’s debt limit would result in a worse outcome for financial markets than a government shutdown.

The Conference Board’s index of US consumer confidence slumped in September to a four-month low and a separate report showed a gauge of manufacturing in the region covered by the Federal Reserve Bank of Richmond shrank in September. The Case-Shiller report on US home prices showed prices rose in July, but at a slower pace.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus.

US President Barack Obama on Tuesday said that the US is committed to finding diplomatic solutions for the Syria conflict and for the ongoing dispute with Iran over its nuclear program.

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Weak market breadth