Key benchmark indices surged after the US Federal Reserve after a monetary policy review on Wednesday, 18 September 2013, decided 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 546.12 points or 2.75%, off about 60 points from the day's high and up close to 160 points from the day's low. The market breadth, indicating the overall health of the market, was positive. Except BSE IT index, all the other sectoral indices on BSE were in the green.
Among FMCG stocks, Britannia Industries scaled record high. PSU OMCs rose as a rally in rupee against the dollar eased concerns of higher cost of crude oil imports. Steel shares rallied. Other metal stocks 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 regained strength in early afternoon 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 61.77, 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 8.1847%, lower than its close of 8.3715% on Wednesday, 18 September 2013. Bond yield and bond prices are inversely related.
At 12:20 IST, the S&P BSE Sensex was up 546.12 points or 2.75% to 20,508.28. 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 175.45 points or 2.97% to 6,074.90. 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 positive. On BSE, 1,220 shares rose and 884 shares fell. A total of 132 shares were unchanged.
Among the 30-share Sensex pack, 29 stocks rose and only one fell. ICICI Bank (up 6.57%), State Bank of India (up 7.6%), and Maruti Suzuki India (up 6.59%), surged.
Bharti Airtel rose 3.99% to Rs 350.80. A block deal of 10 lakh shares was executed in the counter on BSE at Rs 355.20 per share at 10:06 IST
Steel shares rallied. JSW Steel (up 8.35%), Tata Steel (up 6.15%), Sail (up 3.87%), Jindal Steel & Power (up 1.23%) and Bhushan Steel (up 1.55%), edged higher.
Among other metal stocks, Hindalco Industries (2.7%), and Hindustan Zinc (up 3.22%), gained
PSU OMCs rose as a rally in rupee against the dollar eased concerns of higher cost of crude oil imports. PSU OMCs meet most of their crude oil requirement through imports. HPCL (up 3.02%), Indian Oil Corporation (IOCL) (up 1.85%) and BPCL (up 5.18%), edged higher.
PSU OMCs had hiked petrol prices by Rs 1.63 a litre with effect from 14 September 2013.
The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas on 16 September 2013, said that the under-recovery on High Speed Diesel (HSD) applicable for second fortnight of September 2013 has increased to Rs 14.50 per litre from Rs 12.12 per litre during the first fortnight of September 2013. PSU OMCs are currently incurring combined daily under-recovery of about Rs 486 crore on the sale of Diesel, PDS Kerosene and Domestic LPG at government controlled prices. PSU OMC's incurred Rs 25579 crore as under-recoveries in Q1 June 2013 on Diesel, PDS Kerosene and Domestic LPG.
Britannia Industries rose 2.27% to Rs 768.50 after hitting record high of Rs 778 in intraday trade.
Prism Cement jumped 3.64% to Rs 29.90 after the company said its wholly-owned foreign subsidiary Lifestyle Investments (LIPL) has sold its entire stake in Norcros Plc, a company listed on the London Stock Exchange, for a net consideration of GBP 26.55 million. Post the sale LIPL does not hold any shares of Norcros Plc. LIPL's capital gain on this transaction would be approx. GBP 12.8 million, Prism Cement said.
Suzlon Energy rose 3.06% after the company said it divested 75% stake in its China-based subsidiary to Poly LongMa Energy for $28 million. The company made the announcement after market hours on Wednesday, 18 September 2013.
Suzlon Energy said it entered into an agreement with China's Poly LongMa Energy (Dalian), a conglomerate focused on conventional and green energy investments, to divest 75% stake in its China-based manufacturing subsidiary Suzlon Energy Tianjin (SETL) for $28 million. Suzlon in a statement said the first tranche of the payment has already been completed.
Suzlon Group will continue to own 25% share in the company and participate in its operations as joint venture (JV) partner. Thereafter, Poly LongMa Energy (Dalian) will lead marketing and sales operations in China, with Suzlon acting as technology partner with its existing China portfolio - including the S66-1.25 megawatts (MW), S82-1.5 MW and S88-2.1 MW turbines, and manage manufacturing and quality for the venture.
Speaking on the development, Mr. Tulsi Tanti, Chairman, Suzlon Group said, "This is an important step forward for our future business in China. With this joint venture, we monetize an asset we have built up from 2006, and through our partner, Poly LongMa Energy (Dalian), maintain our strong presence in the world's largest market, which remains strategically important for us. With the combined strength of both groups, the new joint venture will be very well positioned in China, and offer the potential to explore exports as well."
"While this deal has taken time and changes to fructify, we believe this achieves the best possible balance for the Group and our stakeholders, including our customers, vendors, lenders and employees," Mr. Tanti added.
Ashoka Buildcon rose 3.47% to Rs 47.75 after the company said that a special purpose vehicle viz. GVR-Ashoka Chennai ORR, incorporated by the company and GVR Infra Projects with 50% stake each, has executed a concession agreement with the Highways and Minor Ports Department of the Tamil Nadu state government for a road development project in Chennai. The project will be executed on design, build, finance, operate and transfer annuity basis.
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 1.6% 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 20 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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