Key benchmark indices trimmed initial strong gains triggered by the US Federal Reserve's decision after a monetary policy review on Wednesday, 18 September 2013, to maintain stimulus to the US economy through monthly bond purchases of $85 billion which has been a source of liquidity for most Asian and emerging markets this year. The S&P BSE Sensex was up 488.67 points or 2.45%, off about 115 points from the day's high and up close to 100 points from the day's low. The market breadth, indicating the overall health of the market, was strong. Except BSE IT index, all the other sectoral indices on BSE were in the green.
Auto stocks gained on renewed buying. Two-wheeler stocks rose on expectations of pick up in sales during the upcoming festive season and on hopes good rains this year will boost rural sales. Capital goods pivotals also rose.
The market surged in early trade after the US Federal Reserve after a monetary policy review on Wednesday, 18 September 2013, unexpectedly refrained from reducing pace of monthly bond buying, saying it needs to see more evidence of improvement in the US economy. The S&P BSE Sensex regained the psychological 20,000 mark. The 50-unit CNX Nifty moved past the psychological 6,000 level. The Sensex hit its highest level in more than 32 months. The Nifty hit its highest level in more than 8 weeks. Firmness continued on the bourses in morning trade. The Sensex traded off intraday high in mid-morning trade.
The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Wednesday, 18 September 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 580.13 crore on Wednesday, 18 September 2013, as per provisional data from the stock exchanges.
In the foreign exchange market, the rupee surged past 62 against the dollar as the Fed refrained from withdrawing monetary stimulus to the US economy. The partially convertible rupee was hovering at 61.88, sharply higher than its close of 63.38/39 on Wednesday, 18 September 2013.
Bond prices jumped as the Fed refrained from withdrawing monetary stimulus to the US economy. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.2053%, lower than its close of 8.3715% on Wednesday, 18 September 2013. Bond yield and bond prices are inversely related.
At 11:20 IST, the S&P BSE Sensex was up 488.67 points or 2.45% to 20,450.83. The index surged 605.45 points at the day's high of 20,567.61 in early trade, its highest level since 4 January 2011. The index gained 385.14 points at the day's low of 20,347.30 in opening trade.
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The CNX Nifty was up 159.15 points or 2.7% to 6,058.60. The index hit a high of 6,092.70 in intraday trade, its highest level since 23 July 2013. The index hit a low of 6,040.15 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,182 shares rose and 723 shares fell. A total of 113 shares were unchanged.
Among the 30-share Sensex pack, 28 stocks rose and only two fell. ICICI Bank (up 7.27%), State Bank of India (up 6.8%), and Bharti Airtel (up 4.24%), surged.
Capital goods pivotals rose. L&T (up 3.28%) and Bhel (up 1.96%), gained.
Auto stocks gained on renewed buying. Maruti Suzuki India surged 5.3%. The company after market hours on Wednesday, 18 September 2013, said that a minor fire was reported earlier on Wednesday from one of the heat treatment furnaces at Maruti Suzuki Manesar Powertrain plant. The fire was quickly extinguished, the company said. There was no injury to anyone due to this incident. Also, there was no loss of production. Work in the plant remains normal, Maruti Suzuki said in a statement.
Mahindra & Mahindra (M&M) rose on expectations of increase in tractor sales due to good rains this year. The stock was up 4.39%.
Tata Motors gained 2.09%.
Two-wheeler stocks rose on expectations of pick up in sales during the upcoming festive season and on hopes good rains this year will boost rural sales. The festive season starts with the Durga Puja in October. The festival is followed by Dussehra and Diwali. Bajaj Auto rose 1.04%. TVS Motor Company gained 1.51%. Hero MotoCorp gained 2.03%.
Bharti Infratel rose 4.25% to Rs 165.75. A block deal of 7.96 lakh shares was executed in the counter on BSE at Rs 165 per share at 10:40 IST.
Hind Rectifiers rose 1.84% after the company said it received two orders worth Rs 26.56 crore from the Indian Railways. The company made the announcement after market hours on Wednesday, 18 September 2013. Hind Rectifiers said the orders are a milestone for the company as each of them mark the placing of complete order by Indian Railways on a single vendor, the company said.
Investors' focus will now shift to the outcome of the Reserve Bank of India's mid-quarter policy review tomorrow, 20 September 2013. At its mid-quarter monetary policy review tomorrow, 20 September 2013, the Reserve Bank of India will have to decide whether to give in to industry demands and lower interest rates in order to boost slowing economic growth, or leave interest rates unchanged for the third straight policy review as it guards against risks of a fresh rise in inflationary pressures. The RBI will release Mid-Quarter Review of Monetary Policy 2013-14 at 11:00 IST tomorrow, 20 September 2013. This will be followed by Governor Raghuram Rajan addressing the media in the afternoon on that day.
Asian stocks jumped on Thursday, 19 September 2013, after the Federal Reserve unexpectedly refrained from reducing US economic stimulus on Wednesday, 18 September 2013. Key benchmark indices in Hong Kong, Indonesia, Japan and Singapore rose by 1.29% to 4.37%. The stock markets in Mainland China, Taiwan and South Korea were closed for a holiday.
Japan's exports rose the most since 2010 in August, boosting Prime Minister Shinzo Abe's growth drive. Japanese exports rose 14.7% on year in August, the Ministry of Finance said Thursday.
Trading in US index futures indicated that the Dow could gain 13 points at the opening bell on Thursday, 19 September 2013. US stocks climbed to record highs on Wednesday and the benchmark 10-year Treasury yield fell sharply after the Federal Reserve abstained from reducing its bond buys. The Federal Open Market Committee after two-day policy meet on Wednesday said it wants more evidence of an economic recovery before paring its $85 billion-a-month bond buying program. Fed Chairman Ben S. Bernanke said there is no fixed schedule for tapering and it could still start this year should data confirm the central bank's basic outlook.
In fresh quarterly projections, the Fed cut its forecast for 2013 economic growth to a 2% to 2.3% range from a June estimate of 2.3% to 2.6%. The downgrade for next year was even sharper. It cited strains in the economy from tight fiscal policy and higher mortgage rates as it explained why it decided to maintain asset purchases at the current pace. The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market, it said in a statement. Nevertheless, the Fed said the economy was still making progress despite tax hikes and budget cuts in Washington. Taking into account the extent of federal fiscal retrenchment, the committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy, it said.
Meanwhile, the US Commerce Department reported that housing starts rose 0.9% to a smaller-than-expected 891,000 annual pace in August.
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