Sensex in red; US govt shuts down for first time since 1996

Moneycontrol Bureau
Live Market Commentary

10:00 am Market opinion: Ridham Desai, Managing Director, Morgan Stanley feels that the ferocity of the market moves has been surprising.  In an interview to CNBC-TV18, he said that the market is overvalued and global macros are benign. He, however, feels that it is time to buy ahead of elections.

9:50 am Buzzer: Shares of Apollo Tyres fell more than 8 percent in early trade Tuesday after the shareholders of Cooper Tire approved merger with the Indian tyre manufacturer.

Cooper Tire & Rubber Company on Monday announced that its stockholders voted to approve its pending merger with a wholly-owned subsidiary of Apollo Tyres with more than 74 percent of Cooper’s outstanding common shares voted in favour of the transaction.

"Approximately 78 percent of Cooper’s outstanding common shares were voted, with more than 48 million shares voted in favour of the merger, representing approximately 96 percent of Cooper’s voted shares," Cooper Tire said in its release.

9:45 am Market check: The Sensex is at 19350.32, down 40 points, while the Nifty is at 5727.45, down 12 points.

9:40 am US govt shuts down: US government shuts down for first time since 1996. White House has notified federal agencies to implement shutdown plans. It has also ordered government agencies to begin shutting down.

"We urge Congress to act quickly to pass a continuing resolution to provide a short-term bridge that ensures sufficient time to pass a budget for the remainder of the fiscal year, and to restore the operation of critical public services and programs that will be impacted by a lapse in appropriations," said Sylvia Burwell, director of the White House Office of Management and Budget, in a statement, reports Reuters.

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After tepid sessions, the market is in green terrain today. The Sensex is at 19452.05, up 73  points while Nifty is  up 17 points at 5751.92.

The Indian rupee opened with a marginal gain of 11 paise at 62.49 per dollar versus 62.60 yesterday.

Tirthankar Patnaik, Religare said, "We expect overall CAD for the fiscal at a much lower USD 55 billion or 3.2 percent of GDP, thanks to a narrowing trade deficit. Concerns on the capital account have also faded after the RBI's recent steps. However, with lower growth and the Fed's 'taper' still remaining key risks for India, we maintain our 58-62/USD band for the rupee for now."

Meanwhile, current account deficit (CAD) widens to USD 21.8 billion in the first quarter of the fiscal. Imports surge at a 4.7 percent pace during the quarter, while exports decline by 1.5 percent.

Oil marketing companies are under selling pressure on price cut. After seven successive petrol price hikes, oil marketing companies cut petrol prices by Rs 3 but hike diesel prices by 50/paise a litre. BPCL loses 3 percent, HPCL is down 2 percent and IOC falls 2.3 percent on the BSE.

US markets finished sharply lower as the budget impasse in Washington threatens the first government shutdown in nearly 17 years, but major indices still capped a rocky month and quarter with robust gains.

The Dow Jones lost nearly 130 points to close lower for the seventh session in the last 8 days. The yield on the 10-year treasury remains almost unchanged at 2.6%. The CBOE volatility index jumped to near 17 levels. For the month, the Dow rallied 2.16 percent, the S&P 500 jumped 2.97 percent, and the Nasdaq soared 5.06 percent.

Equity markets in Asian enjoyed a modest rebound on Tuesday but investors remained on tenterhooks on the back of a likley US government shutdown. Japan's Nikkei and South Korea's Kospi were both rallying while Australia's S&P ASX 200 traded flat.