Key benchmark indices remained firm in morning on firm Asian stocks. The market breadth was strong. The BSE Sensex was up 299.43 points or 1.48% to 20,493.83. Bank and capital goods stocks lead gains.Asian stocks climbed the most in a month on Thursday while metals gained after Federal Reserve chairman nominee Janet Yellen signaled stimulus will be maintained until the US economy improves. Reserve Bank of India (RBI) governor, Raghuram Rajan, expressed comfort on Wednesday about core inflation and highlighted the narrowing current account deficit.
At 10:15 IST, the BSE Sensex was up 299.43 points or 1.48% to 20,493.83.
The market breadth was strong. 1114 shares rose and 506 stocks fell.
Tata Motors (up 4.51%), ICICI Bank (up 3.75%) and L&T (up 3.61%), gained from the Sensex pack.
The domestic bourses remain shut tomorrow, 15 November 2013 on account of Moharram.
Reserve Bank of India (RBI) governor, Raghuram Rajan, expressed comfort on Wednesday about core inflation and highlighted the narrowing current account deficit as he sought to reassure investors worried the country would be hit hard in a global market sell-off. Most immediately, he pledged to move slowly if needed in winding down an oil window that provides dollars directly to state-run oil companies, while announcing a bond purchase of 80 billion rupees on Monday to inject liquidity in markets. Both had been key concerns in markets.
The news briefing, announced earlier on that day, was an unprecedented departure for the traditionally cautious central bank. Since taking the helm of the RBI in September, Rajan has pledged to be more communicative and has so far been warmly welcomed by investors.
"It's important that the RBI clarifies interpretation of economic events and the likely direction of economic policies at times of uncertainty so that the market worries about the right things and does not get into a tizzy about the wrong ones. That is my quote today," Rajan told reporters.
"There is no fundamental reason for volatility in value of the rupee," he also said. "At some time, it makes sense to take a deep breath and examine the fundamentals. I hope you all will do that."
Rajan addressed reporters after stronger-than-expected U.S. jobs data last week had sparked concerns about an early end to the Federal Reserve's stimulus, hitting the rupee and sending Indian bonds and shares tumbling, although markets remain well above the levels of the summer lows.
At his briefing, Rajan called food inflation "worryingly high", but said he was comforted by a downward trend in the core consumer price index. Rajan also surprised marketmen by saying the RBI's estimate for the current account deficit for the fiscal year ending in March was $56 billion, the first time in recent memory the central bank has given such a forecast. Rajan also sought to reassure investors worried about the rupee's stability after the RBI has allowed oil companies to source dollars directly in markets instead of a special window provided by the central bank.
That window was opened as an emergency measure by the RBI in late August and was cited as a key reason behind the recovery in the rupee, which is still up 8.8% since its record low in late August. Rajan said the RBI had flexibility in managing the return of oil companies to markets, and would go slow if needed.
Asian stocks climbed the most in a month on Thursday while metals gained after Federal Reserve chairman nominee Janet Yellen signaled stimulus will be maintained until the U.S. economy improves. Key benchmark indices China, Hong Kong, Indonesia, Japan, Taiwan, Singapore, and South Korea rose 0.01% to 2.38%.
US stocks rose on Wednesday, sending benchmark indexes to records, as Macy's Inc. led a rally among retailers and investors speculated the Federal Reserve'sJanet Yellen will continue the central bank's stimulus policy as chairman.
Janet Yellen, nominated to be the next chairman of the Federal Reserve, said the economy and labor market are performing "far short of their potential" and must improve before the Fed can begin reducing monetary stimulus. A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases," Yellen, the Fed's vice chairman, said in testimony prepared for her nomination hearing tomorrow before the Senate Banking Committee. "I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy." The remarks show Yellen is committed to the central bank's strategy of attempting to boost the economy and lower 7.3% unemployment, more than four years after the economy began to recover from the longest and deepest recession since the Great Depression. She also signaled support for capital and liquidity rules to help reduce the perception that some banks are too big to fail.
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