Key benchmark indices trimmed gains to hit fresh intraday low in morning trade as index heavyweight and cigarette maker ITC declined. The S&P BSE Sensex was up 142.80 points or 0.78%, off close to 180 points from the day's high and up about 10 points from the day's low. The market breadth, indicating the overall health of the market, was strong. Capital goods pivotals rose on bargain hunting after recent losses. Realty stocks also advanced. Bank stocks rallied after the RBI on Tuesday relaxed some rules that will help banks deal with the notional or marked-to-market (MTM) loss in their government bond portfolios due to a recent sharp fall in bond prices.
The market surged amid initial volatility after the Reserve Bank of India (RBI) on Tuesday, 20 August 2013, announced measures to increase the availability of cash in the banking system. It trimmed gains to hit fresh intraday low in morning trade.
At 10:20 IST, the S&P BSE Sensex was up 142.80 points or 0.78% to 18,388.84. The index surged 321.66 points at the day's high of 18,567.70 in early trade, its highest level since 19 August 2013. The index rose 132.69 points at the day's low of 18,378.73 in morning trade.
The CNX Nifty was up 51.25 points or 0.95% to 5,452.70. The index hit a high of 5,504.10 in intraday trade, its highest level since 16 August 2013. The index hit a low of 5,447.25 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 851 shares rose and 250 shares fell. A total of 176 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks rose and rest of them fell. HDFC Bank (up 5.16%), State Bank of India (up 4.99%) and ICICI Bank (up 3.21%), edged higher.
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Capital goods pivotals rose on bargain hunting after recent losses. L&T rose 3.38% to Rs 758. The stock had hit a 52-week low of Rs 710.10 in intraday trade on Monday, 19 August 2013. The company announced during market hours on Tuesday, 20 August 2013, that it has won an order valued around Rs 1500 crore from Petroleum Development Oman LLC (PDO). The engineering, procurement and construction (EPC) order is for the Yibal 3rd stage depletion compression (Y3DC) project at the Yibal-Natih gas reservoir in Oman. The project is scheduled to be completed in 39 months.
Bhel gained 5.08% to Rs 107.50. The stock had hit a 52-week low of Rs 100.35 in intraday trade on Tuesday, 20 August 2013.
Realty stocks advanced. DLF (up 1.56%), HDIL (up 2.18%), D B Realty (up 4.11%), and Unitech (up 1.7%) edged higher.
Index heavyweight and cigarette maker ITC declined 0.22%.
Everonn Education rose 2.54% after the company said that its board approved a debt restructuring plan through a scheme of arrangement with the creditors. The announcement was made before trading hours today, 21 August 2013.
Genesys International Corporation (up 9.5%), Speciality Restaurants (up 7.23%), Visagar Polytex (up 6.5%) and Gravita India (up 6.3%), were the biggest gainers from the BSE Small-Cap index.
The RBI on Tuesday, 20 August 2013, said it would repurchase government bonds to increase the availability of cash in the banking system, a step that appears to be a partial reversal of the slew of measures it took since mid-July to tighten liquidity. In a late evening news release, the RBI said it would buy back Rs 8000-crore of government bonds on Friday, 23 August 2013. Further repurchase will depend on evolving market conditions, it said. It is important to ensure that the liquidity tightening doesn't harden long-term bond yields and impact the flow of credit to productive sectors of the economy, the central bank said, referring to its buyback plan.
The RBI on Tuesday also relaxed some rules that will help banks deal with the notional or marked-to-market (MTM) loss in their government bond portfolios due to a recent sharp fall in bond prices. They now don't have to record their current marked-to-market losses immediately as the RBI has allowed them to spread the losses equally over the remaining period of this fiscal year.
Bond prices surged after the RBI on Tuesday, 20 August 2013, announced measures to increase the availability of cash in the banking system. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.3024%, sharply lower than its close of 8.9028% on Tuesday, 19 August 2013. Bond yield and bond prices are inversely related.
The rupee weakened against the dollar amid initial volatility. The rupee was hovering at 63.31, weaker than its close of 63.25/26 on Tuesday, 19 August 2013.
Most Asian stocks fell on Wednesday, 21 August 2013, before the release of minutes of the Federal Reserve's July meeting. Key benchmark indices in Singapore, Hong Kong, Japan, and South Korea were down by 0.35% to 1.12%. Key benchmark indices in China and Indonesia rose by 0.08% to 0.95%. Taiwan's Taiwan Weighted was flat.
Trading in US index futures indicated that the Dow could fall 21 points at the opening bell on Wednesday, 21 August 2013. US stocks on Tuesday, 20 August 2013, mostly climbed, with the S&P 500 halting its longest losing streak this year, as retailers including Best Buy Co. beat estimates and as Wall Street looked to clues about future US monetary policy. The Federal Open Market Committee (FOMC) later in the global day today, 21 August 2013, will issue minutes of its recent policy meeting held on 30 and 31 July 2013. The minutes of FOMC meet may help provide clues about the future of Fed's bond-buying program.
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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