Key benchmark indices pared steep initial gains amid volatility to hit intraday low in afternoon trade. The CNX Nifty regained positive zone after hitting intraday low in negative zone. The S&P BSE Sensex was up 16.95 points or 0.09%, off 304.71 points from the day's high and up 16.70 points from the day's low. The market breadth, indicating the overall health of the market, was positive. Global stocks were mostly lower with investors closely awaiting the minutes from the latest US Federal Reserve meeting, which could shed more light on the potential reduction of asset purchases.
Index heavyweight and cigarette maker ITC declined. IT stocks edged lower despite weak rupee. Power equipment maker Bharat Heavy Electricals (Bhel) gained on bargain hunting after recent slide.
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. The Sensex trimmed gains to hit fresh intraday low in morning trade. A bout of volatility was witnessed as key benchmark indices trimmed gains once again to hit fresh intraday low after regaining strength in mid-morning trade. It regained strength in early afternoon trade. Key benchmark indices pared steep initial gains amid volatility to hit intraday low in afternoon trade.
At 13:15 IST, the S&P BSE Sensex was up 16.95 points or 0.09% to 18,262.99. 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 0.25 points at the day's low of 18,246.29 in early afternoon trade.
The CNX Nifty was up 3.80 points or 0.07% to 5,405.25. 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 5,402.25 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,186 shares rose and 911 shares fell. A total of 141 shares were unchanged.
The total turnover on BSE amounted to Rs 1182 crore by 13:20 IST.
Among the 30-share Sensex pack, 17 stocks rose and rest of them fell. HDFC Bank (up 3.04%), HDFC (up 2.45%), Tata Power Company (up 1.77%), Bajaj Auto (up 2.03%) and L&T (up 1.53%) edged higher from the Sensex pack.
Sun Pharmaceutical Industries (down 2.22%), NTPC (down 1.47%) and Bharti Airtel (down 1.46%) edged lower from the Sensex pack.
Index heavyweight and cigarette maker ITC declined 0.73% to Rs 313.05.
IT stocks edged lower despite weak rupee. HCL Technologies (down 0.92%), Wipro (down 0.09%), TCS (down 1.42%) and Infosys (down 2.58%) declined.
A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Power equipment maker Bharat Heavy Electricals (Bhel) gained 5.22% to Rs 106.80 on bargain hunting after recent slide. The stock had hit a 52-week low of Rs 100.35 on Tuesday, 20 August 2013. Shares of Bhel had tumbled 16.05% in four trading sessions to Rs 101.50 on 20 August 2013, from a recent high of Rs 120.90 on 13 August 2013.
Apollo Hospitals Enterprise (up 8.03%), MRPL (up 5.59%), Gitanjali Gems (up 5%), MCX (up 5%) and Neyveli Lignite Corporation (up 4.95%) were among the top gainers from the BSE's 'A' group.
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 8.3744%, 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. The rupee was hovering at 63.53, weaker than its close of 63.25/26 on Tuesday, 19 August 2013.
European stock markets were mostly lower in early action on Wednesday, with investors closely awaiting the minutes from the latest US Federal Reserve meeting, which could shed more light on the potential reduction of asset purchases. Key benchmark indices in UK and Germany were down by 0.16% to 0.38%. France's CAC 40 rose 0.11%.
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 and South Korea were down by 0.46% to 1.08%. Key benchmark indices in Japan, China and Indonesia rose by 0.02% to 2.01%. Taiwan's Taiwan Weighted was flat.
Trading in US index futures indicated that the Dow could fall 22 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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