Sensex reverses direction after striking almost 7-week high above 20,000

Volatility ruled the roost as the key benchmark indices turned positive only to once again sink in red. The barometer index, BSE Sensex, hit almost 7-week high above the psychological 20,000 mark only to fall below that level in morning trade. The CNX Nifty also hit almost 7-week high. The S&P BSE Sensex was down down 71.23 points or 0.36%, off 129.67 points from the day's high and up 105.62 points from the day's low. The market breadth, indicating the overall health of the market, was strong.
Index heavyweight and cigarette major ITC dropped in early trade. Metal and mining stocks gained for second day in a row after data showed China's industrial output grew at the fastest pace in 17 months in August. Capital goods gained on fresh buying.
Key benchmark indices edged lower in early trade as investors resorted to profit booking after a four-day rally. Volatility ruled the roost as the key benchmark indices turned positive only to once again sink in red. The barometer index, BSE Sensex, hit almost 7-week high above the psychological 20,000 mark only to fall below that level in morning trade. The CNX Nifty also hit almost 7-week high.
Foreign institutional investors (FIIs) bought shares worth a net Rs 2563.60 crore on Tuesday, 10 September 2013, as per provisional data from the stock exchanges.
In the foreign exchange market, the rupee weakened today, 11 September 2013 due to dollar buying by state-run banks to meet demand of importers. The partially convertible rupee was hovering at 64.04, slightly weaker than its close of 63.84/85 on Tuesday, 10 September 2013. The rupee has seen a steep recovery from an all time low of 68.85 hit on 28 August 2013. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
At 10:16 IST, the S&P BSE Sensex was down 71.23 points or 0.36% to 19,925.86. The index rose 55.76 points at the day's high of 20,055.53 in morning trade, its highest level since 25 July 2013. The index lost 179.53 points at the day's low of 19,820.24 in early trade.
The CNX Nifty was down 14.45 points or 0.25% to 5,882.30. The index hit a high of 5,913.45 in intraday trade, its highest level since 26 July 2013. The index hit a low of 5,842.10 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 793 shares gained and 447 shares fell. A total of 47 shares were unchanged.
The total turnover on BSE amounted to Rs 521 crore by 10:20 IST compared to Rs 186 crore by 09:30 IST.
Among the 30-share Sensex pack, 19 stocks gained and rest of them declined.
Index heavyweight and cigarette major ITC lost 1.21% to Rs 331.35. The stock recovered after falling as much as 2.46% at the day's low of Rs 327.15.
Metal and mining stocks gained for second day in a row after data showed China's industrial output grew at the fastest pace in 17 months in August. China is the World's largest consumer of copper and aluminum. Sesa Goa (up 1.29%), Hindustan Zinc (up 1.08%), Jindal Steel & Power (up 0.9%), Tata Steel (up 1.58%), Sail (up 1.25%), Hindalco Industries (up 2.72%) and JSW Steel (up 1.85%), edged higher.
Capital goods gained on fresh buying. ABB (up 0.37%), BEML (up 1.44%), Crompton Greaves (up 0.89%), L&T (up 2.14%), Siemens (up 0.69%) and Thermax (up 1.05%) gained.
Bharat Heavy Electricals (Bhel) fell 1.12% to Rs 140.90, with the stock declining on profit booking after recent gains. Shares of Bhel had rallied 19.43% in prior four sessions to settle at Rs 142.60 on 10 September 2013, from a recent low of Rs 119.40 on 3 September 2013.
Meanwhile, Bhel said after market hours on Friday, 6 September 2013, that consequent upon the merger of Bharat Heavy Plate & Vessels (BHPV) with the company, the BHPV plant is renamed as Heavy Plates & Vessels Plant (HPVP) and designated as the 17th manufacturing unit of Bhel located at Vishakhapatnam, Andhra Pradesh.
The Reserve Bank of India (RBI) on Tuesday said that banks can raise funds overseas above 50% of their Tier I capital with a minimum maturity of three years and swap these borrowings with the central bank at a concessional rate for one to three years.
"The swaps shall be available at a concessional rate of a 100 basis points below the market rate for all fresh borrowing with a minimum tenor of one year and a maximum tenor of three years, irrespective of whether such borrowings are in excess of 50% of their unimpaired Tier I capital or not," the RBI said.
RBI said despite the swaps being for the entire tenor of the borrowing, the rate shall be reset after every one year from the date of the swap at 100 basis points lower than the prevailing market rate, at the time of reset.
The RBI added that banks are free to borrow in any foreign currency but the swaps will be available only for conversion of the US dollar equivalent into rupees and will be computed at relevant cross rates on that day.
Asian stock markets were mostly lower on Wednesday with investors treading a bit cautiously after the recent strong upmove. Key benchmark indices in Taiwan, Hong Kong, Indonesia, South Korea and Singapore fell by 0.07% to 0.7%. Key benchmark indices in China and Japan rose by 0.63% to 0.78%.
US stocks rallied on Tuesday, with the S&P 500 continuing its longest stretch of gains since mid-July, after upbeat data from China and amid heightened diplomacy on Syria.
Meanwhile, US President Barack Obama took his case for military action against Syria directly to the American people Tuesday, adding that recent diplomatic developments could help solve a standoff over the nation's alleged use of chemical weapons.
The president, in a prime-time address from the White House, continued to build his case for military action. He said not punishing the regime of Syrian President Bashar al-Assad for allegedly using chemical weapons would embolden other tyrants to use such weapons and could potentially put US troops in danger in the future.
But Mr. Obama also said the recent diplomatic efforts were reason to pause with military plans, and he said he had asked Congress to put off voting on military strikes against Syria.
The president said those diplomatic developments have "the potential to remove the threat of chemical weapons without the use of force, particularly because Russia is one of Assad's strongest allies."
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled this month, with their focus squarely on the timing of tapering of Federal Reserve's bond purchases. The FOMC holds a two-day policy meeting on 17-18 September 2013 to decide on interest rates in the United States. The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.

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