Key benchmark indices continued their upward march and hit fresh intraday high in mid-afternoon trade as concerns of an immediate US military action against Syria eased after US President Barack Obama on Wednesday, 28 August 2013, said that he hasn't yet decided whether to launch an attack on Syria. Investors also took solace from a recovery in the battered rupee triggered by the Reserve Bank of India's (RBI) decision on Wednesday, 28 August 2013, to immediately start a facility to meet the daily dollar requirement of the country's three state-run refiners. The S&P BSE Sensex was up 340.81 points or 1.89%, up close to 265 points from the day's low and off about 30 points from the day's high. The market breadth, indicating the overall health of the market, was positive.
Metal and mining stocks extended intraday gains. Capital goods pivotals recovered after recent steep losses. L&T rose after a consortium of the company and Pipavav Defence and Offshore Engineering Company bagged an order worth over $170 million from ONGC. Index heavyweights ITC and Reliance Industries (RIL) extended intraday gains.
The market edged higher in early trade as the rupee recovered after the Reserve Bank of India's move to provide dollars directly to oil companies. The Sensex regained the psychological 18,000 mark at the start of the day's trade. The market retained positive terrain in morning trade. The market extended intraday gains to hit fresh intraday high in mid-morning trade. The market strengthened further and hit fresh intraday high in early afternoon trade. Key benchmark indices extended gains to hit fresh intraday high in afternoon trade after European markets opened on a positive note. The market continued its upward march and hit fresh intraday high in mid-afternoon trade.
The battered rupee recovered after the Reserve Bank of India (RBI) on Wednesday, 28 August 2013, said it has started a facility to meet the daily dollar requirement of the country's three state-run refiners, with the latest RBI measure aimed at reducing currency market volatility. The partially convertible rupee was hovering at 67.88 against the dollar, sharply higher than its record close of 68.80/81 on Wednesday, 28 August 2013.
The Reserve Bank of India (RBI) on Wednesday, 28 August 2013, said that on the basis of assessment of current market conditions, RBI has decided to open a forex swap window to meet the entire daily dollar requirements of three public sector oil marketing companies (IOCL, HPCL and BPCL). Under the swap facility, the RBI will undertake sell/buy USD-INR forex swaps for fixed tenor with the oil marketing companies through a designated bank. The swap facility gets operationalized with immediate effect and will remain in place until further notice, the RBI said late on Wednesday, 28 August 2013, after the rupee fell by 3.7% on that day, its steepest one-day decline in years, as investors pull back from emerging markets in response to a likely US-led military intervention in Syria.
Indian stocks are likely to remain volatile during the last one hour or so of trade as traders roll over positions in the futures & options (F&O) segment from the near month August 2013 series to September 2013 series. The near month August 2013 derivatives contract expire today, 29 August 2013.
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At 14:20 IST, the S&P BSE Sensex was up 340.81 points or 1.89% to 18,336.96. The index surged 367.36 points at the day's high of 18,363.51 in mid-afternoon trade, its highest level since 27 August 2013. The index rose 75.07 points at the day's low of 18,071.22 in opening trade.
The CNX Nifty was up 107.75 points or 2.04% to 5,392.75. The index hit a high of 5,398.05 in intraday trade, its highest level since 27 August 2013. The index hit a low of 5,303 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,177 shares rose and 961 shares fell. A total of 133 shares were unchanged.
Among the 30-share Sensex pack, 25 stocks rose and rest of them fell. HDFC (up 5.35%), Hindalco Industries (up 4.31%), and Bharti Airtel (up 3.11%), edged higher from the Sensex pack.
Metal and mining stocks extended intraday gains. JSW Steel (up 6.83%), Hindalco Industries (up 4.6%), Jindal Steel & Power (up 2.16%), Tata Steel (up 0.72%), Hindustan Zinc (up 3.98%), NMDC (up 3.06%), and Bhushan Steel (up 0.21%), edged higher.
Sesa Goa surged 10.23%. The stock replaced Sterlite Industries in the 30-share benchmark S&P BSE Sensex early this week. Sesa Goa replaced Sterlite Industries (India) in the Sensex on 27 August 2013 following the scheme of amalgamation between the two Vedanta group firms, whereby Sterlite Industries (India) merged with Sesa Goa. Trading in Sterlite stopped from 27 August 2013.
Capital goods pivotals recovered after recent fall. Bhel rose 1.01%.
Shares of Pipavav Defence and Offshore Engineering Company remained locked at 5% lower circuit at Rs 55.10 on BSE after the company during trading hours said a consortium of the company and L&T has bagged an order worth over $170 million from ONGC. Pipavav Defence also said that the order book of the company has now crossed Rs 12000 crore.
Shares of L&T were up 3.09% to Rs 726.50.
Index heavyweight and cigarette maker ITC rose 2.2%, with the stock extending intraday gain. The board of ITC at its meeting held on Wednesday, 28 August 2013 approved the demerger of the non-engineering business comprising safety matches business and agri (forestry) business of Wimco (a subsidiary of the company) into the company and the related scheme of arrangement (scheme) between Wimco and the company. The scheme, which is subject to approvals as necessary, will take effect from 1 April 2013. Upon the scheme becoming effective, the shareholders of Wimco will be entitled to 2 (two) ordinary shares of Rs 1 each of ITC for every 77 (seventy seven) equity shares of Rs 1 each of Wimco held by them on record date. ITC made the announcement during trading hours on Wednesday, 28 August 2013.
Reliance Industries gained 3.14%, with the stock extending intraday gain.
Credit Analysis and Research (CARE) rose 2.84% to Rs 541 after the company said its board has given its consent to create, issue, offer, and allot, on a preferential basis, an aggregate of 4.46 lakh equity shares at Rs 560.15 per share aggregating Rs 25 crore to Ascent India Fund III managed by Ascent Capital Advisors India. The company is undertaking the issue in order to comply with the minimum capitalisation norms of $0.5 million applicable to non-fund based nonbanking finance companies as required by the Reserve Bank of India (RBI) in connection with the initial public offer of the company undertaken in December 2012. CARE said that the RBI has already extended the date of compliance with the minimum capitalization requirement by the company from 9 June 2013 to 30 September 2013.
Global rating agency Moody's Investors Service today, 29 August 2013, said that the Indian government's plan to provide cheap grains to the poor is credit negative and will exacerbate the government's weak finances. The measure is credit negative for the Indian government because it will raise government spending on food subsidies to about 1.2% of GDP per year from an estimated 0.8% currently, exacerbating the government's weak finances, Moody's said. Moody's currently has a "Baa3" sovereign rating on India, or its lowest investment-grade rating, with a stable outlook. The Lok Sabha passed the Food Security Bill early this week.
Crude oil prices dropped after US government data showed crude stockpiles gained the most in four months in the US, the world's largest oil consumer. US crude oil futures for October delivery were off $1.01 a barrel or 0.92% at $109.09 a barrel.
Oil futures had surged during the past two trading sessions as the US moved closer to military action against Syrian government targets in retaliation for their alleged use of chemical weapons on civilians. However, late Wednesday, US President Barack Obama said in an interview with PBS Newshour that he had yet to make a decision on his nation's response. At the same time, the UK indicated it would wait until a parliamentary vote, likely early next week, before joining any US effort in Syria, according to reports. At the same time, the chances that a Syria strike could spark a wider conflict appeared to rise, as officials from the Syria regime and its ally Iran suggested they might attack Israel if the US takes military action.
European stocks edged higher on Thursday, 29 August 2013, as shares of Vodafone Group PLC surged after the company confirmed media reports that it is in talks with Verizon Communications Inc. to sell its 45% stake in their joint-venture company, Verizon Wireless. Key benchmark indices in UK, France and Germany were up 0.43% to 0.73%.
Spain's recession eased in the second quarter as domestic demand stabilized and exports surged, supporting the government's forecast that the fourth-largest economy in the euro area will recover this year. Exports rose 6% after a 3.8% decline in the previous quarter, while household spending contracted 0.1% from the three months through March, when it shrank 0.5%, the Madrid-based National Statistics Institute said today. Gross domestic product fell 0.1% in the second quarter, the office said, confirming a July 30 estimate.
Asian stocks rose on Thursday, 29 August 2013, as a weaker-than-expected report on US durable-goods orders triggered speculation that the Federal Reserve may delay plans to reduce its monetary stimulus to the US economy. Speculation that geopolitical tensions arising from a possible US-led military strike against Syria may also lead the Fed hold off the reduction in stimulus aided gains in Asian stocks. Key benchmark indices in Singapore, Hong Kong, South Korea, Indonesia, Taiwan and Japan rose by 0.84% to 1.24%. China's Shanghai Composite fell 0.19%.
The Philippine economy expanded above 7% for a fourth straight quarter, defying a regional slowdown to cement its role as Southeast Asia's best performer as President Benigno Aquino boosts investment. Gross domestic product rose 7.5% in the three months through June from a year earlier, compared with a 7.7% gain in the previous quarter, the National Statistical Coordination Board said in Manila today.
Trading in US index futures indicated that the Dow could gain 46 points at the opening bell on Thursday, 29 August 2013. US stocks on Wednesday advanced for the first session this week, with oil producers leading the gains as the price of crude settled at a more-than-two-year high.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled next 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.
Brazil's central bank on Wednesday raised its key lending rate by a half percentage point, reinforcing a commitment to curb worrisome inflation despite parallel concerns over the pace of economic growth. In a widely expected move, the central bank's monetary policy committee voted unanimously to raise the Selic interest rate to 9% from the previous 8.5%, the fourth increase since April.
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