Key benchmark indices trimmed intraday losses in early afternoon trade after Finance Minister P. Chidambaram said that India is better prepared to deal with any consequences of the US Federal Reserve's move to reduce monetary stimulus. The barometer index, the S&P BSE Sensex, was down 141.50 points or 0.68%, up 72.33 points from the day's low and off 299.09 points from the day's high. The market breadth, indicating the overall health of the market, was negative. Investor sentiment was hit adversely today, 19 December 2013, after the US Federal Reserve after a two-day monetary policy meeting on Wednesday, 18 December 2013, announced plans to cut its monthly bond purchases to $75 billion from $85 billion, taking its first step toward unwinding the unprecedented stimulus put in place to help the US economy recover from the worst recession since the 1930s. The decision of the US central bank triggered fears of slowdown in inflow from foreign institutional investors in India. Fed's bond-buying program had become a source of funds for investment in Indian as well as other emerging markets in recent years. In the foreign exchange market, the rupee edged lower against the dollar.
Bharti Airtel edged lower. ONGC also dropped. Shares of public sector oil marketing companies (PSU OMCs) edged lower as crude oil futures rose on Wednesday, 18 December 2013. Sugar stocks edged higher on reports that the Union Cabinet will today, 19 December 2013, consider a proposal of interest-free loan to sugar mills.
Volatility ruled the roost in early trade as the key benchmark indices reversed direction after a firm opening. The Sensex fell below the psychological 21,000 level soon after breaching that level at the onset of the trading session. Key benchmark indices extended initial losses in morning trade. Weakness persisted on the bourses in mid-morning trade. Key benchmark indices trimmed losses in early afternoon trade after Finance Minister P. Chidambaram said that India is better prepared to deal with any consequences of the US Federal Reserve's move to reduce monetary stimulus.
At 12:20 IST, the S&P BSE Sensex was down 141.50 points or 0.68% to 20,718.36. The index lost 213.83 points at the day's low of 20,646.03 in morning trade. The index jumped 157.59 points at the day's high of 21,017.45 in early trade, its highest level since 12 December 2013.
The CNX Nifty was down 48.80 points or 0.78% to 6,168.35. The index hit a low of 6,150.70 in intraday trade. The index hit a high of 6,263.75 in intraday trade, its highest level since 12 December 2013.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,103 shares declined and 944 shares rose. A total of 164 shares were unchanged.
The total turnover on BSE amounted to Rs 1658 crore by 12:15 IST, compared with Rs 1329 crore by 11:15 IST.
Among the 30-share Sensex pack, 20 stocks declined and rest of them gained.
ICICI Bank (down 2.9%), L&T (down 2.61%) and HDFC (down 2.56%) edged lower from the Sensex pack.
Bharti Airtel reversed initial rise in volatile trade. The stock declined 2.45% at Rs 319.90. The stock hit a high of Rs 329.90 and low of Rs 318.60 so far during the day.
ONGC reversed initial upmove in volatile trade. The stock fell 2.37% at Rs 274.35. The stock hit a high of Rs 283 and low of Rs 273.80 so far during the day.
National Thermal Power Corporation (NTPC) fell 0.41%. The Ministry of Power on Wednesday, 18 December 2013, said that NTPC has tied up a fixed interest term loan facility for euro 55 million with KfW, the German government developmental financial institution to part finance the capital expenditure on Electro Static Precipitators and other selected packages of its Mouda Stage-II power project. The facility has a door to door maturity of 12 years including availability period of 4 years. The loan is on a standalone basis without sovereign guarantee reflecting the trust and confidence reposed by the German financial institution in NTPC's strong credit quality and professional management. KfW has in the past provided financial support to NTPC's renovation and modernization and emission reduction schemes.
NTPC has also signed a financing agreement with KfW-Germany to set up of Solar Thermal and Photovoltaic Lab at NETRA under the aegis of Indo-German Research Cooperation through a Grant of euro 5 million and matching contribution from NTPC. These world class labs are being setup with assistance from German R&D institutions M/s DLR, Cologne and ISE, Fraunhofer for characterization of Solar Thermal and Photovoltaic prototypes and components.
Shares of public sector oil marketing companies (PSU OMCs) edged lower as crude oil futures rose on Wednesday, 18 December 2013. BPCL (down 3.16%), HPCL (down 2.69%) and Indian Oil Corporation (down 1.19%), edged lower.
West Texas Intermediate (WTI) crude oil for January delivery rose 58 cents to settle at $97.80 a barrel on Wednesday, 18 December 2013, the highest settlement since 10 December 2013.
Public sector oil marketing companies (PSU OMCs) suffer under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. In January 2013, the government allowed PSU OMCs to raise diesel prices in small measures at regular intervals while completely deregulating diesel prices sold to institutional or bulk buyers. The government has already freed pricing of petrol.
Sugar stocks edged higher on reports that the Union Cabinet will today, 19 December 2013, consider a proposal of interest-free loan to sugar mills to help mills pay government-set rates to cane growers at a time when sugar prices have fallen. Bajaj Hindusthan (up 2.03%), Dhampur Sugar Mills (up 1.75%), Sakthi Sugars (up 1.65%), Balrampur Chini Mills (up 1.76%) and Shree Renuka Sugars (up 0.76%) gained.
In the foreign exchange market, the rupee edged lower against the dollar after the US Federal Reserve after a two-day monetary policy meeting on Wednesday, 18 December 2013, announced plans to cut its monthly bond purchases to $75 billion from $85 billion, taking its first step toward unwinding the unprecedented stimulus put in place to help the US economy recover from the worst recession since the 1930s. The partially convertible rupee was hovering at 62.29, compared with its close of 62.09/10 on Wednesday, 18 December 2013.
India is better prepared to deal with any consequences of the US Federal Reserve's move to reduce monetary stimulus, Finance Minister P. Chidambaram said in a statement today, 19 December 2013. "(The) government is of the view that the markets had already factored in the US Federal Reserve's decision and therefore is not likely to be surprised by these moderate changes," Chidambaram said in a written statement released by his office. Chidambaram also spoke to Reserve Bank of India Governor Raghuram Rajan on Thursday morning to discuss the Fed tapering, the statement added.
The Government of India on Wednesday, 18 December 2013, approved the enhancement of the bilateral currency swap arrangement between the Reserve Bank of India (RBI) and Bank of Japan from $15 billion to $ 50 billion. This measure will further strengthen the bilateral financial cooperation between Japan and India, the Ministry of Finance said in a statement.
Asian markets were mostly higher on Thursday, 19 December 2013, after the US Federal Reserve expressed enough confidence in the US labor market to taper asset purchases while still promising to hold interest rates close to zero in the world's biggest economy. Key benchmark indices in Taiwan, Japan, Indonesia and South Korea rose by 0.05% to 1.74%. Key benchmark indices in China, Hong Kong and Singapore fell by 0.02% to 0.77%.
The Bank of Japan's (BoJ) two-day monetary policy meeting begins today, 19 December 2013. The Japanese central bank currently buys more than 7 trillion yen ($67.6 billion) of Japanese Government Bonds (JGBs) every month in its bid to stoke inflation.
Trading in US index futures indicated that the Dow could drop 30 points at the opening bell on Thursday, 19 December 2013. US markets soared with the Dow Jones Industrial Average and the S&P 500 closing at all-time highs on Wednesday as markets interpreted the Federal Reserve's decision to begin the tapering of bond purchases in January as confidence in the underlying strength of the economy and welcomed its commitment to low rates for a considerable time.
The Federal Reserve on Wednesday took the first step to exiting from its controversial bond-buying program, showing greater confidence that the US economy will grow faster and hiring will pick up over the next year. Starting in January, the Fed will reduce the pace of asset purchases to $75 billion from $85 billion a month. And if the economy improves at the pace the Fed expects, outgoing Chairman Ben Bernanke said in a press conference that he could foresee the bond-purchase program coming to an end by late next year. "We are hopeful the economy will continue to show progress," Bernanke said, and return to a "more normal" path of growth. The central could taper at each meeting if the economy continues to improve. He didn't rule out pausing if the economy stumbles or tapering more quickly if growth surprises to the upside.
The Fed split the reduction in asset purchases evenly between Treasurys and mortgage-backed securities. It will now purchase $40 billion per month of Treasurys, down from $45 billion, and $35 billion of mortgage-related securities, down from $40 billion.
In an effort to keep market rates stable, the Fed stressed that it will be in no hurry to raise short-term interest rates. The central bank added new language that it plans to maintain the target Fed funds rates "well past the time that the unemployment rate declines below 6.5%".
The US Senate on Wednesday, 18 December 2013, cleared and sent to President Barack Obama a $1.01 trillion budget deal, lowering the US deficit over 10 years and easing $63 billion in automatic spending cuts. The plan keeps in place about half of the reductions known as sequestration for next year, and about three-quarters of the planned cuts for 2015.
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