The key benchmark indices edged lower on profit taking ahead of the weekend after Thursday (13 August 2009)'s sharp rally. The BSE 30-share Sensex shed 106.86 points or 0.69% off close to 120 points from the day's high and up close to 45 points from the day's low. Oil & gas stocks bucked the weak trend. IT, banking, auto, realty and FMCG stocks fell. The market breadth, indicating the overall health of the market, was positive.
Intraday volatility was high. The key benchmark indices slipped in early trade on profit taking after Thursday's (13 August 2009)'s sharp gains. Weak Chinese stocks and poor monsoon triggered profit taking. The market extended losses in morning trade before recovering from lower level. The recovery gathered steam later as the Sensex moved into the green from red in early afternoon trade.
The market once again slipped into the red in early afternoon trade and extended losses for the day. The Sensex once again moved into the green as European stocks rose. However, it soon slipped into the red once again. The market extended losses in late trade.
The Sensex had jumped 498.33 points or 3.32% at 15,518.49 on Thursday boosted by government's proposal to reform direct taxes and on improved economic data in key European economies.
India's economic growth is expected to be between 6% to 6.5 % in the 2009/10 fiscal year, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan today said.
A rapid expansion in the government's borrowing impedes the Reserve Bank of India's (RBI) monetary policy transmission, its Governor Duvvuri Subbarao said on Friday. He was speaking at a Reserve Bank event in Hyderabad. The agriculture situation in India is disturbing but it is too early to take action on inflation, the RBI governor said. There was no policy decision yet on increasing the size of government borrowing, he said.
Investors are worried about poor rains. Monsoon was 56% below normal in week to 12 August 2009 and was 72% below normal in the soyabean growing central region in past one week, India Meteorological Department (IMD) said on Thursday. Monsoon rains were 29% below normal during the period from 1 June 2009 to 12 August 2009. India relies on rain for 60% of its irrigation and on agriculture for 17% of its economy. The weather office chief Ajit Tyagi on Thursday told a television channel that the situation was grim and low rainfall would hurt winter-sown crops as well.
Prime Minister Manmohan Singh on Thursday constituted a Group of Ministers (GoM) which will suggest measures to control the damage caused by the failure of summer crop. The GoM, headed by finance minister Pranab Mukherjee, has agriculture minister Sharad Pawar, railway minister Mamata Banerjee, petroleum minister Murli Deora and power minister Sushil Kumar Shinde as its members.
Meanwhile, India on Thursday signed a landmark free trade agreement (FTA) with 10-member regional grouping The Association of Southeast Asian Nations (Asean) that will eliminate tariffs on around 4,000 products such as consumer electronics, pharmaceuticals, machinery, metals and readymade garments. The pact is a strategic victory for India, which has been trying to intensify its relationship with the region as a counterweight to the regional blocs in North America and Europe. Formal negotiations on liberalising services and investment, however, are yet to begin and the challenge before India is to expedite the process, reports suggest.
European shares rose on Friday amid growing confidence of a global economic rebound, and helped by overnight gains in the United States. The key benchmark indices in France, Germany and UK were up by between 0.42% to 0.54%.
But, Chinese stocks fell extending a recent steep correction triggered by concerns this year's rally has overvalued the prospects for earnings growth. The Shanghai Composite index was down 2.98%.
Most other Asian markets were in green as higher metal prices and anticipation of more takeovers fueled speculation a five-month rally will continue. The key benchmark indices in Hong Kong, Singapore, Japan, South Korea, Taiwan rose by between 0.15% to 1.71%.
The BSE 30-share Sensex shed 106.86 points or 0.69% at 15,411.63. The Sensex rose 16.98 points at the day's high of 15,535.47 in early trade. At the day's low of 15,367.61, the Sensex fell 150.87 points in afternoon trade.
The S&P CNX Nifty was down 24.95 points or 0.54% to 4,580.05. Nifty August 2009 futures were at 4561, at a discount of 19.05 points as compared to the spot closing of 4580.05. Turnover in NSE's futures & options (F&O) segment was Rs 63,891.72 crore, lower than Rs 65,552.20 crore on Thursday, 13 August 2009.
BSE clocked a turnover of Rs 5623 crore, lower than Rs 6105.39 crore on Thursday, 13 August 2009.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1412 shares advanced as compared with 1243 that declined. 70 shares remained unchanged. Breadth weakened compared to strong breadth earlier in the day.
From the 30 share Sensex pack, 25 stocks fell and rest rose.
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