A bout of initial volatility was witnessed as key benchmark indices regained positive terrain after slipping into the red after opening higher. Bargain hunting emerged after a carnage on the bourses on Tuesday, 3 September 2013. The barometer index, the S&P BSE Sensex, was up 161.66 points or 0.89%, up close to 205 points from the day's low. The market breadth, indicating the overall health of the market, was strong. IT stocks gained on positive economic data in the US and on weak rupee.
At 9:30 IST, the S&P BSE Sensex was up 161.66 points or 0.89% to 18,396.32. The index rose 163.95 points at the day's high of 18,398.61 in early trade. The index fell 46.23 points at the day's low of 18,188.43 in early trade.
The CNX Nifty was up 42.75 points or 0.8% to 5,384.20. The index hit a high of 5,385.05 in intraday trade. The index hit a low of 5,318.90 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 433 shares rose and 228 shares fell. A total of 28 shares were unchanged.
Among the 30-share Sensex pack, 22 stocks rose and rest of them fell. Hero MotoCorp (up 2.72%), Bhel (up 2.3%) and Tata Motors (up 2.61%), gained.
IT stocks gained on positive economic data in the US and on weak rupee. US is the biggest outsourcing market for the Indian IT firms. TCS (up 0.77%), Infosys (up 1.34%) and Wipro (up 1.29%), gained.
Weak rupee also aided gains in IT stocks. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
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In the foreign exchange market, the rupee weakened further and fell below 68 against the dollar in early deals. The partially convertible rupee was trading at 68.12, sharply lower than Tuesday's close of 67.63/64. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.
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US stocks rose on Tuesday as better-than-forecast economic data overshadowed concern over possible military action against Syria. The Institute for Supply Management's manufacturing index increased to 55.7 in August, the strongest since June 2011, from 55.4 a month earlier. Readings above 50 indicate growth. Another report showed construction spending in the US increased in July to the highest level in four years, propelled by gains in residential real estate.
US House of Representatives Speaker John Boehner backed President Barack Obama's call for action against Syria, while Republican and Democratic leaders of the Senate's foreign relations panel agreed on a proposal backing a military strike. Obama urged Congress to take a prompt vote authorizing military action against Syria. He announced on August 31 that he'd seek support from Congress, after previously saying he had authority to order a military mission.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled this 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.
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