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Last Updated : Sep 05 2013 | 11:55 PM IST

Key benchmark indices held firm in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently below the psychological 19,000 mark, after regaining that mark in early trade. The Sensex was up 381.54 points or 2.05%, up close to 90 points from the day's low and off about 170 points from the day's high. The market breadth, indicating the overall health of the market, was strong. Indian stocks surged and the rupee rose today, 5 September 2013, after the new central bank Governor Raghuram Rajan announced plans late on Wednesday to bolster the financial industry and stabilize the rupee.

Realty stocks rose on renewed buying. Auto stocks also participated in the rally.

Firmness in Asian stocks supported the domestic bourses. The market sentiment was also boosted after the Lok Sabha on Wednesday, 4 September 2013, passed the Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011, an important economic legislation that will pave the way for foreign investment in the sector.

The market surged in early trade after Mr. Raghuram Rajan after taking charge as the 23rd governor of the Reserve Bank of India (RBI) on Wednesday, 4 September 2013, announced fresh steps to stabilize the currency and sought to reassure investors. The market trimmed gains in morning trade. Firmness prevailed on the bourses in mid-morning trade.

In the foreign exchange market, the rupee strengthened against the dollar after the new head of the central bank on Wednesday, 4 September 2013, announced fresh steps to stabilize the currency and sought to reassure investors. The partially convertible rupee was hovering at 66.21, stronger than its close of 67.065/075 on Wednesday, 4 September 2013. Banks can swap dollars raised from foreign-currency deposits by overseas Indians for rupees with the central bank an annual interest of 3.5%, Reserve Bank of India Governor Raghuram Rajan said late on Wednesday. The RBI also doubled what banks can raise through overseas bonds and allowed them to hedge those dollars at a special rate with the RBI.

The market sentiment was boosted by data showing that foreign funds were net buyers of Indian stocks on Wednesday, 4 September 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 172.53 crore on Wednesday, 4 September 2013, as per provisional data from the stock exchanges.

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At 11:20 IST, the S&P BSE Sensex was up 381.54 points or 2.05% to 18,949.09. The index spurted 549.97 points at the day's high of 19,117.52 in early trade, its highest level since 16 August 2013. The index rose 290.05 points at the day's low of 18,857.60 in opening trade.

The CNX Nifty was up 127.35 points or 2.34% to 5,575.45. The index hit a high of 5,625.75 in intraday trade, its highest level since 16 August 2013. The index hit a low of 5,553.75 in intraday trade.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,178 shares rose and 591 shares fell. A total of 113 shares were unchanged.

Among the 30-share Sensex pack, 24 stocks rose and rest of them fell. HDFC (up 5.56%), ICICI Bank (up 7.32%) and HDFC Bank (up 5.64%), gained.

Realty stocks rose on renewed buying. DLF (up 5.93%), Sobha Developers (up 4.75%), D B Realty (up 1.17%) and Unitech (up 2.74%), gained.

Auto stocks also participated in the rally. Tata Motors rose 2.59%. The company's total sales (including exports) of Tata commercial and passenger vehicles fell 30.93% to 49,611 units in August 2013 over August 2012. Total domestic sales fell 33.71% to 44,717 units in August 2013 over in August 2012. The company's sales from exports jumped 11.91% to 4,894 units in August 2013 over August 2012.

Ashok Leyland rose 2.37%. The company's total sales declined 24% to 7,139 units in August 2013 over August 2012. Ashok Leyland's sales of commercial vehicles excluding small commercial vehicle (SCV) Dost fell 25% to 4,939 units in August 2013 over August 2012. Sales of SCV Dost declined 22% to 2,200 units in August 2013 over August 2012.

Maruti Suzuki India gained 1.35%. The company's total sales spurted 61.2% to 87,323 units in August 2013 over August 2012. Domestic sales rose 51.6% to 76,018 units in August 2013 over August 2012. Exports spurted 180.9% to 11,306 units in August 2013 over August 2012.

Mahindra & Mahindra (M&M) fell 0.82%. The company's total auto sales declined 17% to 37,897 units in August 2013 over August 2012. M&M's sales of Passenger Vehicles segment (which includes the UVs and Verito) declined 28% to 15,821 units in August 2013 over August 2012. The company's domestic sales declined 18% to 35,159 units in August 2013 over August 2012. The sale of four-wheeler commercial segment which includes passenger and load vehicles fell 4% to 13,718 units while that of three-wheelers declined 14% to 5,149 units in August 2013 over August 2012. Exports declined 9% to 2,738 units in August 2013 over August 2012.

M&M's domestic tractor sales rose 9% to 12,394 units in August 2013 over August 2012. Export sales dropped 27% to 840 units in August 2013 over August 2012. Total tractor sales rose 7% to 13,234 units in August 2013 over August 2012.

Two-wheeler major Hero MotoCorp rose 2.06%.

Bajaj Auto gained 1.89%. The company's total sales fell 9% to 3.12 lakh units in August 2013 over August 2012. Motorcycle sales declined 8% to 2.78 lakh units in August 2013 over August 2012. Commercial vehicles sales declined 17% to 33,605 units in August 2013 over August 2012. Exports rose 10% to 1.44 lakh units in August 2013 over August 2012.

Ranbaxy Laboratories fell 0.55%. The company said during market hours today, 5 September 2013, that the company has completed 20 successful years in Russia. The company established its operations in the Russian market in 1993 with the launch of its key brand, Cifran. Since then, Ranbaxy has grown to become a number one player with a market share of 15.4% in the represented market segment in Russia (IMS, May 2013).

In an unexpectedly detailed and wide-ranging briefing, new RBI Governor Raghuram Rajan on Wednesday outlined plans to attract more funds from overseas by subsidising hedging costs for banks and making it easier for importers and exporters to hedge currency risk. He made clear his intention to liberalise markets, including pushing for more rupee trade settlement, introducing new financial products such as overnight interest rate swaps and removing curbs on opening new branches by Indian banks. Rajan, in his remarks, outlined the plan to attract more funds from non-resident Indians (NRIs) as part of a broader push to lure inflows. Under the plan, the central bank will offer a swap window to banks for fresh dollar deposits mobilised from non-resident Indians. India has the world's second-biggest diaspora, according to the Ministry of Overseas India Affairs, and the country has turned to overseas Indians for help in past financial crises. The central bank will also offer forex swap into rupees at a concessional rate below market levels for banks who raise dollar funds through overseas borrowings.

Rajan said banks should gradually be allowed to decrease their mandatory holdings of government securities, which would free up capital for lending. He also said new bank licences should be awarded on an ongoing basis. The central bank is now in the process of awarding the first new bank licences in a decade. Rajan also proposed the issue of inflation-indexed bonds linked to the consumer price index, an indication that the central bank may soon shift its inflation benchmark from the wholesale price index. Rajan also pushed back the date of the RBI's next monetary policy review by two days to 20 September 2013. That will give the central bank more time to consider the outcome of what is expected to be a pivotal two-day meeting of the US Federal Reserve, ending on 18 September 2013

The Lok Sabha on Wednesday passed the Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011, an important economic legislation that will pave the way for foreign investment in the sector. The Bill allows 26% foreign investment in the Pension sector and gives statutory backing to the interim pension authority that had been functioning on executive authority for over a decade now. It also gives legal backing to the pensions regulator to create a social security architecture that channels savings of households into the financial sector. The PFRDA manages the New Pension System, a defined contribution scheme for the central government that many states have joined and is also now open to private individuals.

Asian stocks rose on Thursday, 5 September 2013, following gains on Wall Street overnight. Key benchmark indices in Indonesia, Hong Kong, Japan, South Korea, Singapore and Taiwan rose by 0.59% to 1.19%. China's Shanghai Composite fell 0.38%.

The Bank of Japan upgraded its assessment of the economy, saying a moderate recovery is underway, reinforcing Governor Haruhiko Kuroda's message that Japan can weather a sales-tax increase due in April. The central bank will expand the monetary base at an annual pace of 60 trillion yen ($602 billion) to 70 trillion yen, it said in Tokyo today, leaving policy unchanged.

Trading in US index futures indicated that the Dow could gain 17 points at the opening bell on Thursday, 5 September 2013. US stocks jumped on Wednesday after surging US auto sales pointed to robustness in the manufacturing sector. Federal Reserve data released overnight showed that the US economy grew at a "modest to moderate" pace in July and August, according to the central banks "beige book".

The influential US nonfarm payroll report for August 2013 is due for release tomorrow, 6 September 2013. The employment numbers will be keenly watched given the implications for the timing of the Federal Reserve's plan to begin slowing the pace of its monetary stimulus.

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.

Meanwhile, a summit of leaders from the Group of 20 major economies begins in St. Petersburg today, 5 September 2013.

On Wednesday, President Obama reiterated the need for a global response on Syria as a US Senate panel approved a resolution authorising US military intervention.

In Europe, the central banks in the UK and euro zone review their interest rate policies today.

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First Published: Sep 05 2013 | 11:17 AM IST

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