Key benchmark indices extended initial losses in morning trade. The barometer index, the S&P BSE Sensex, was down 169.91 points or 0.81%, up 43.92 points from the day's high and off 327.50 points from the day's high. The market breadth, indicating the overall health of the market, turned negative from positive in morning trade. The market sentiment was hit adversely after the Federal Open Market Committee (FOMC) after a two-day monetary policy meeting on Wednesday, 18 December 2013, announced plans to cut its monthly bond purchases to $75 billion from $85 billion, taking its first step toward unwinding the unprecedented stimulus put in place to help the US economy recover from the worst recession since the 1930s. The decision of the US central bank triggered fears of slowdown in inflow from foreign institutional investors in India. Fed's bond-buying program had become a source of funds for investment in Indian as well as other emerging markets in recent years. In the foreign exchange market, the rupee edged lower against the dollar.
Index heavyweight Reliance Industries reversed initial gain in volatile trade. Capital goods stocks edged lower. IT stocks rose as the rupee edged lower against the dollar, with HCL Technologies hitting record high and Infosys and Tech Mahindra hitting 52-week high. Power Grid Corporation of India (PGCIL) dropped as the shares allotted in the company's follow-on public offer (FPO) were admitted for trading on the bourses today, 19 December 2013.
Volatility ruled the roost in early trade as the key benchmark indices reversed direction after a firm opening. The Sensex fell below the psychological 21,000 level soon after breaching that level at the onset of the trading session. Key benchmark indices extended initial losses in morning trade.
At 10:16 IST, the S&P BSE Sensex was down 169.91 points or 0.81% to 20,689.95. The index lost 213.83 points at the day's low of 20,646.03 in morning trade. The index jumped 157.59 points at the day's high of 21,017.45 in early trade, its highest level since 12 December 2013.
The CNX Nifty was down 53.55 points or 0.86% to 6,163.60. The index hit a low of 6,150.70 in intraday trade. The index hit a high of 6,263.75 in intraday trade, its highest level since 12 December 2013.
The market breadth, indicating the overall health of the market, turned negative from positive in morning trade. On BSE, 788 shares declined and 775 shares rose. A total of 123 shares were unchanged.
The total turnover on BSE amounted to Rs 841 crore by 10:15 IST, compared with Rs 282 crore by 09:25 IST.
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Among the 30-share Sensex pack, 24 stocks declined and rest of them gained.
Index heavyweight Reliance Industries reversed initial gain in volatile trade. The stock was off 1.22% at Rs 848.20. The stock hit a high of Rs 864.70 and low of Rs 845.10 so far during the day.
Capital goods stocks edged lower. ABB (down 0.1%), Bhel (down 2.11%), L&T (down 2.46%), Siemens (down 1.23%) and Thermax (down 3.07%) declined.
IT stocks edged higher as the rupee dropped against the dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Infosys rose 0.38% to Rs 3,471. The stock hit 52-week high of Rs 3,485 in intraday trade.
Tata Consultancy Services (TCS) rose 1.05%. The company on Wednesday, 18 December 2013, announced that MyState, an ASX-listed diversified financial Group in Australia, has implemented TCS BaNCS for core banking. The implementation realises further benefits of the merger between MyState and The Rock, a major provider of financial and insurance services to the Central Queensland region. MyState, with an integrated, scalable core banking platform, can now further support its growth opportunities through improved products and services, and simpler, faster business processes and operations, TCS said.
Wipro gained 0.11% to Rs 522.95.
HCL Technologies rose 1.29% to Rs 1,213 after striking a record high of Rs 1,216.05 in intraday trade.
Tech Mahindra gained 2.65% to Rs 1,773.10. The stock hit 52-week high of Rs 1,773.60 in intraday trade.
Power Grid Corporation of India (PGCIL) fell 2.3% to 97.80 on high volume of 3.77 crore as the shares allotted in the company's follow-on public offer (FPO) were admitted for trading on the bourses today, 19 December 2013. The stock was volatile. The scrip hit a high of Rs 99.05 and low of Rs 96.15 so far during the day.
PGCIL had priced the FPO at Rs 90 per share, the top end of the Rs 85-90 per share price band, following strong investor response for the issue. Retail investors and employees were allotted the shares at Rs 85.50 per share, which is a discount of Rs 4.50 per share on the issue price.
The FPO was subscribed 6.74 times. The portion reserved for institutional investors i.e. Qualified Institutional Buyers (QIBs) was subscribed 9.09 times. Category wise subscription data showed that foreign institutional investors (FIIs) put in bids for a total of 186.93 crore shares, compared with 39.20 crore shares reserved for the QIB category as a whole. The portion reserved for retail individual investors was subscribed 2.17 times. The portion reserved for non-institutional investors was subscribed 9.7 times.
The PGCIL FPO was a combination of fresh issue of 60.18 crore shares by the company and disinvestment by the Government of India (GoI) of 18.51 crore equity shares held by the President of India, acting through the Ministry of Power. After the successful divestment, GoI's holding in PGCIL has dropped to 57.89% from earlier 69.42%.
PGCIL, a navaratna public sector undertaking under the ministry of power, is the country's central transmission utility (CTU). The company owns and operates more than 90% of India's inter-state and interregional electric power transmission systems (ISTS). As principal electric power-transmission company of the country, it owns and operates 102109 circuit kilometers of electrical transmission lines and 172 electrical substations with a total transformation capacity of 172378 MVA as end of 30 September 2013.
In the foreign exchange market, the rupee edged lower against the dollar after the Federal Open Market Committee (FOMC) after a two-day monetary policy meeting on Wednesday, 18 December 2013, announced plans to cut its monthly bond purchases to $75 billion from $85 billion, taking its first step toward unwinding the unprecedented stimulus put in place to help the US economy recover from the worst recession since the 1930s. The partially convertible rupee was hovering at 62.405, compared with its close of 62.09/10 on Wednesday, 18 December 2013.
Asian markets edged higher on Thursday, 19 December 2013, after the US Federal Reserve expressed enough confidence in the US labor market to taper asset purchases while still promising to hold interest rates close to zero in the world's biggest economy. Key benchmark indices in Taiwan, Hong Kong, Singapore, Japan, Indonesia and South Korea rose by 0.01% to 1.63%. China's Shanghai Composite fell 0.09%.
The Bank of Japan's (BoJ) two-day monetary policy meeting begins today, 19 December 2013. The Japanese central bank currently buys more than 7 trillion yen ($67.6 billion) of Japanese Government Bonds (JGBs) every month in its bid to stoke inflation.
US markets soared with the Dow Jones Industrial Average and the S&P 500 closing at all-time highs on Wednesday as markets interpreted the Federal Reserve's decision to begin the tapering of bond purchases in January as confidence in the underlying strength of the economy and welcomed its commitment to low rates for a considerable time.
The Federal Reserve on Wednesday took the first step to exiting from its controversial bond-buying program, showing greater confidence that the US economy will grow faster and hiring will pick up over the next year. Starting in January, the Fed will reduce the pace of asset purchases to $75 billion from $85 billion a month. And if the economy improves at the pace the Fed expects, outgoing Chairman Ben Bernanke said in a press conference that he could foresee the bond-purchase program coming to an end by late next year. "We are hopeful the economy will continue to show progress," Bernanke said, and return to a "more normal" path of growth. The central could taper at each meeting if the economy continues to improve. He didn't rule out pausing if the economy stumbles or tapering more quickly if growth surprises to the upside.
The Fed split the reduction in asset purchases evenly between Treasurys and mortgage-backed securities. It will now purchase $40 billion per month of Treasurys, down from $45 billion, and $35 billion of mortgage-related securities, down from $40 billion.
In an effort to keep market rates stable, the Fed stressed that it will be in no hurry to raise short-term interest rates. The central bank added new language that it plans to maintain the target Fed funds rates "well past the time that the unemployment rate declines below 6.5%".
The US Senate on Wednesday, 18 December 2013, cleared and sent to President Barack Obama a $1.01 trillion budget deal, lowering the US deficit over 10 years and easing $63 billion in automatic spending cuts. The plan keeps in place about half of the reductions known as sequestration for next year, and about three-quarters of the planned cuts for 2015.
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