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Banking, realty stocks lead rally

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Capital Market
Last Updated : Sep 19 2013 | 11:55 PM IST

Firmness continued on the bourses in morning trade, with investor sentiment boosted by the US Federal Reserve's decision after a monetary policy review on Wednesday, 18 September 2013, to maintain stimulus to the US economy through monthly bond purchases. Fed's bond-buying program has kept global markets flush with liquidity in recent years. The S&P BSE Sensex was up 571.61 points or 2.86%, up close to 185 points from the day's low and off about 35 points from the day's high. The market breadth, indicating the overall health of the market, was strong. All the thirteen sectoral indices on BSE were in the green.

Bank stocks galloped. Telecom stocks gained across the board. Realty stocks also vaulted.

The market surged in early trade after the US Federal Reserve after a monetary policy review on Wednesday, 18 September 2013, unexpectedly refrained from reducing pace of monthly bond buying, saying it needs to see more evidence of improvement in the US economy. The S&P BSE Sensex regained the psychological 20,000 mark. The 50-unit CNX Nifty moved past the psychological 6,000 level. The Sensex hit its highest level in more than 32 months. The Nifty hit its highest level in more than 8 weeks. Firmness continued on the bourses in morning trade.

The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Wednesday, 18 September 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 580.13 crore on Wednesday, 18 September 2013, as per provisional data from the stock exchanges.

In the foreign exchange market, the rupee surged past 62 against the dollar as the Fed refrained from withdrawing monetary stimulus to the US economy. The partially convertible rupee was hovering at 61.91, sharply higher than its close of 63.38/39 on Wednesday, 18 September 2013.

Bond prices jumped as the Fed refrained from withdrawing monetary stimulus to the US economy. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.1807%, lower than its close of 8.3715% on Wednesday, 18 September 2013. Bond yield and bond prices are inversely related.

At 10:20 IST, the S&P BSE Sensex was up 571.61 points or 2.86% to 20,533.77. The index surged 605.45 points at the day's high of 20,567.61 in early trade, its highest level since 4 January 2011. The index gained 385.14 points at the day's low of 20,347.30 in opening trade.

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The CNX Nifty was up 185.55 points or 3.15% to 6,085. The index hit a high of 6,092.70 in intraday trade, its highest level since 23 July 2013. The index hit a low of 6,040.15 in intraday trade.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,096 shares rose and 510 shares fell. A total of 90 shares were unchanged.

Among the 30-share Sensex pack, 29 stocks rose and only one fell. Maruti Suzuki India (up 5.38%), M&M (up 4.62%), Tata Steel (up 4.1%), edged higher.

Telecom stocks gained across the board. Bharti Airtel (up 5.57%), Idea Cellular (up 2.58%), MTNL (up 1.85%) Tata Teleservices (Maharashtra) (up 2.73%) and Reliance Communications (up 4.89%) gained.

Realty stocks jumped. HDIL (up 5.17%), Unitech (up 4.96%), D B Realty (up 3.02%) and DLF (up 7.82%), jumped.

Bank stocks galloped. State Bank of India jumped 6.53%. The state-run bank after market hours on Wednesday, 18 September 2013, said it has raised the base rate by 10 basis points (bps) to 9.8% per annum (pa) from 9.7% and the benchmark prime lending rate by 10 bps to 14.55% from 14.45% with effect from 19 September 2013. The bank has also raised interest rates for retail term deposits.

Among other PSU bank stocks, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank gained 5.54% to 7.5%.

Among private sector banks, ICICI Bank (up 8.64%), HDFC Bank (up 4.41%), and Axis Bank (up 7.96%), jumped.

Private sector bank Yes Bank jumped 16.49%, with the stock extending recent gains. The bank on Tuesday, 17 September 2013, said it has successfully closed equivalent to $255 million by way of dual currency, multi-tenor syndicated loan facility which will be utilized for general corporate purposes and trade finance. The facility has a maturity of 1 and 2 years with majority commitments coming in the 2 year tenure bucket. The loan has been widely distributed with commitments from 11 banks representing 8 countries across US, Europe, Middle East and Australia, Yes Bank said.

The recent RBI guidelines on offering swap facility to banks for the foreign currency borrowings at 100 basis points below the market rate will further make the landed rupee cost of these funds extremely competitive vis-vis rupee funds of equivalent maturity, Yes Bank said.

Investors' focus will now shift to the outcome of the Reserve Bank of India's mid-quarter policy review tomorrow, 20 September 2013. At its mid-quarter monetary policy review tomorrow, 20 September 2013, the Reserve Bank of India will have to decide whether to give in to industry demands and lower interest rates in order to boost slowing economic growth, or leave interest rates unchanged for the third straight policy review as it guards against risks of a fresh rise in inflationary pressures. The RBI will release Mid-Quarter Review of Monetary Policy 2013-14 at 11:00 IST tomorrow, 20 September 2013. This will be followed by Governor Raghuram Rajan addressing the media in the afternoon on that day.

Asian stocks jumped on Thursday, 19 September 2013, after the Federal Reserve unexpectedly refrained from reducing US economic stimulus on Wednesday, 18 September 2013. Key benchmark indices in Hong Kong, Indonesia, Japan and Singapore rose by 1.58% to 4.38%. The stock markets in Mainland China, Taiwan and South Korea were closed for a holiday.

Japan's exports rose the most since 2010 in August, boosting Prime Minister Shinzo Abe's growth drive. Japanese exports rose 14.7% on year in August, the Ministry of Finance said Thursday.

Trading in US index futures indicated that the Dow could gain 13 points at the opening bell on Thursday, 19 September 2013. US stocks climbed to record highs on Wednesday and the benchmark 10-year Treasury yield fell sharply after the Federal Reserve abstained from reducing its bond buys. The Federal Open Market Committee after two-day policy meet on Wednesday said it wants more evidence of an economic recovery before paring its $85 billion-a-month bond buying program. Fed Chairman Ben S. Bernanke said there is no fixed schedule for tapering and it could still start this year should data confirm the central bank's basic outlook.

In fresh quarterly projections, the Fed cut its forecast for 2013 economic growth to a 2% to 2.3% range from a June estimate of 2.3% to 2.6%. The downgrade for next year was even sharper. It cited strains in the economy from tight fiscal policy and higher mortgage rates as it explained why it decided to maintain asset purchases at the current pace. The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market, it said in a statement. Nevertheless, the Fed said the economy was still making progress despite tax hikes and budget cuts in Washington. Taking into account the extent of federal fiscal retrenchment, the committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy, it said.

Meanwhile, the US Commerce Department reported that housing starts rose 0.9% to a smaller-than-expected 891,000 annual pace in August.

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First Published: Sep 19 2013 | 10:19 AM IST

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