A bout of initial volatility was witnessed as key benchmark indices alternately swung between gains and losses. The barometer index, the S&P BSE Sensex, was up 21.84 points or 0.11%, up close to 50 points from the day's low and off about 20 points from the day's high. The market breadth, indicating the overall health of the market, was strong.
Index heavyweights, Reliance Industries and ITC, both, edged lower in early trade. Capital goods pivotals extended recent gains. Car maker Maruti Suzuki India rose on reports that the company will raise vehicle prices by up to Rs 10000 in the first week of October.
The market may remain volatile today, 26 September 2013, as traders roll over positions in the futures & options (F&O) segment from the near month September 2013 series to October 2013 series. The September 2013 F&O contracts expire today, 26 September 2013.
At 9:30 IST, the S&P BSE Sensex was up 21.84 points or 0.11% to 19,878.08. The index rose 40.93 points at the day's high of 19,897.17 in early trade. The index declined 29.25 points at the day's low of 19,826.99 in early trade.
The CNX Nifty was up 6.90 points or 0.12% to 5,880.75. The index hit a high of 5,886.10 in intraday trade. The index hit a low of 5,866 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 584 shares rose and 284 shares dropped. A total of 38 shares were unchanged.
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Among the 30-share Sensex pack, 15 stocks rose and rest of them fell. Tata Steel (up 1.22%), Sun Pharmaceutical Industries (up 1.1%) and HDFC (up 1.14%), edged higher.
Index heavyweight and cigarette maker ITC dropped 0.38%.
Another index heavyweight Reliance Industries declined 0.91%.
Capital goods pivotals extended recent gains. Bhel rose 3.22%.
L&T gained 0.29%.
Car maker Maruti Suzuki India rose 2.03% on reports that the company will raise vehicle prices by up to Rs 10000 in the first week of October to offset higher input costs, caused mainly by a sharp fall in the local currency's value. A weak rupee adds to inflation by swelling the cost of imported parts for companies such as Maruti as well as for their auto-parts suppliers. Fuel retailers have also increased the prices of diesel, the fuel used by trucks to transport vehicles.
Bond prices rose after the Reserve Bank of India on Wednesday, 25 September 2013, said it is closely and continuously monitoring liquidity conditions in the banking system and will take actions as appropriate, including open market operations, to ensure that adequate liquidity is available to support the flow of credit to productive sectors of the economy. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.7244%, lower than its close of 8.7862% on Wednesday, 25 September 2013. Bond prices and bond yields are inversely related.
The RBI said that liquidity conditions in the banking system have been tightening due to uncertainties around the government borrowing programme for the second half of 2013-14 as well as the prospective effects of banks' half-yearly account closure, the seasonal pick-up in credit demand, festival-related demand for currency and sluggish deposit growth. The RBI last week began a calibrated unwinding of the exceptional measures undertaken since July so as to restore normalcy to financial flows. Currently, the RBI is injecting about Rs 1.5 lakh crore into the system on a daily basis through the liquidity adjustment facility (LAF), the export credit refinance facility (ECR) and the marginal standing facility (MSF) taken together.
In the foreign exchange market, the rupee edged higher against the dollar after the RBI eased norms for providing swaps to banks that are borrowing funds overseas. The partially convertible rupee was hovering at 62.26, compared with its close of 62.44/45 on Wednesday, 25 September 2013.
The Reserve Bank of India late on Wednesday relaxed the minimum maturity tenure for banks' foreign currency borrowings' to one year from three years, in order to use the central bank's swap facility which was set up to support the ailing rupee.
Asian stocks were mixed on Thursday. Key benchmark indices in China, Hong Kong and Taiwan were off 0.44% to 1.47%. Key benchmark indices in Indonesia, Japan, and South Korea rose 0.15% to 0.61%.
US stocks dropped on Wednesday, with the S&P 500 index recording its longest decline since December, as a possible government shutdown overrode better-than-forecast economic reports. The Senate voted 100-0 on Wednesday to pass a stopgap spending measure, with Democrats planning to get rid of language from the House version that would remove funding of the 2010 Affordable Care Act. Without an accord to hasten Senate consideration of the bill, a vote on its passage could come as late as Sunday, giving the House one day to move before spending authority lapses. Separately, Treasury Secretary Jacob Lew told legislators that he'll run out of options to avoid hitting or surpassing the debt limit by Oct. 17 or sooner.
A report from the Commerce Department showed that new-home sales rose last month after an unexpected drop in July. Another data showed that orders for US durable goods unexpectedly bounced back last month on the back of demand for autos.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.
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