Key benchmark indices surged and the rupee jumped against the dollar 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. The Sensex was up 478.02 points or 2.39%, up close to 95 points from the day's low and off about 125 points from the day's high. The market breadth, indicating the overall health of the market, was strong. Except the BSE IT index, all the other sectoral indices on BSE were in the green.
Bank stocks galloped. State Bank of India jumped after the bank announced raising retail term deposit rates, the base rate and the benchmark prime lending rate. NMDC fell as the stock turned ex-dividend today, 19 September 2013, for final dividend of Rs 4 per share for the year ended 31 March 2013.
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 61.66, 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 8.1759%, lower than its close of 8.3715% on Wednesday, 18 September 2013. Bond yield and bond prices are inversely related.
At 9:30 IST, the S&P BSE Sensex was up 478.02 points or 2.39% to 20,440.18. 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.
The CNX Nifty was up 165.05 points or 2.8% to 6,064.50. The index hit a high of 6,092.10 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, 864 shares rose and 235 shares fell. A total of 30 shares were unchanged.
Among the 30-share Sensex pack, 28 stocks rose and only two fell. Bharti Airtel (up 5.23%), M&M (up 4.25%) and HDFC (up 3.91%), surged.
Bank stocks galloped. ICICI Bank surged 7.9%. HDFC Bank rose 4.42%.
State Bank of India jumped 5.04%. The state-run bank after market hours on Wednesday, 18 September 2013, said it has raised the base rate by 10 basis points (bps) to 9.8% per annum (pa) from 9.7% and the benchmark prime lending rate by 10 bps to 14.55% from 14.45% with effect from 19 September 2013. The bank has also raised interest rates for retail term deposits.
Sun Pharmaceutical Industries rose 1%. The stock turned ex-dividend today, 19 September 2013, for dividend of Rs 2.50 per share for the year ended 31 March 2013.
Maruti Suzuki India surged 5.5%. 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.
NMDC fell 1.76% as the stock turned ex-dividend today, 19 September 2013, for final dividend of Rs 4 per share for the year ended 31 March 2013.
NMDC after market hours on Wednesday, 18 September 2013 said that the conveyor belt no.31 of Bailadila Iron Ore Mine, Bacheli Complex, Chhattisgarh was attacked by some miscreants in the early hours of 18 September 2013. Around 150 metres of the conveyor belt has been burnt, NMDC said. The belt restoration work has already been taken up and it is expected that within three days the belt would be repaired. The scheduled dispatches of iron ore are continuing and this incident will not affect the production/dispatches, the company said in a statement.
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 1.54% to 4.5%. 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.
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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