Key benchmark indices surged after stock market regulator Securities and Exchange Board of India (Sebi) relaxed the rules on trading of thinly-traded stocks. The market sentiment was also boosted by data showing that foreign institutional investors (FIIs) made heavy purchases of Indian stocks on Thursday, 19 December 2013. Heavy FII buying coming a day after the US Federal Reserve's decision to gradually reduce monetary stimulus for the US economy, helped the market shrug off fears of slowdown in foreign inflows. The reduced availability of cash in the global financial system could temper the flow of foreign money into India, which has been one of the biggest beneficiaries of foreign capital. Foreign institutional investors (FIIs) have purchased shares worth a net Rs 110792.50 crore in 2013 so far (till 19 December 2013). FIIs had bought shares worth a net Rs 128359.80 crore in calendar 2012. The barometer index, the S&P BSE Sensex, garnered 371.10 points or 1.79%, up 333.78 points from the day's low and off 38.27 points from the day's high. The Sensex settled at over one-week high above the psychological 21,000 mark. The 50-unit CNX Nifty also settled at over one-week high. The market breadth, indicating the overall health of the market, was strong.
Index heavyweight Reliance Industries (RIL) surged on reports that the government has allowed the company to charge higher prices for gas from April 2014 after the company offered financial guarantees to the government to settle any claims against it over a shortfall in its gas output. GAIL (India) rose after the company said that the media reports on Thursday, 19 December 2013, indicating that the company had doubled margin on gas sourced from ONGC are factually incorrect and does not reflect the issue in the right perspective.
IT stocks extended Thursday's gain after Accenture Plc on Thursday, 19 December 2013, said at the time of announcing its Q1 November 2013 results that it expects its consulting business to turn the corner this financial year. IT major Infosys hit record high. Tech Mahindra and Wipro hit 52-week high. Tata Consultancy Services (TCS) rose after the company after market hours on Thursday, 19 December 2013, announced the launch of TCS Insurance Telematics Solution, a mobile application that turns consumers' smartphones into mobile telematics devices.
Bank stocks rose across the board. Most capital goods stocks edged higher. Realty stocks rose after State Bank of India and HDFC on Thursday, 19 December 2013, cut home loan rates. Shares of car maker Maruti Suzuki India hit record high as the Japanese yen touched its lowest level in more than five years against the dollar. Shares of Bosch, known for its technology prowess in the automotive market, hit record high.
Metal and mining stocks rose. Sugar stocks rose after the Cabinet Committee on Economic Affairs on Thursday, 19 December 2013, approved the proposal of the Department of Commerce to continue export of sugar, without any quantitative restriction, in view of the surplus availability of sugar in the domestic market.
Sebi after trading hours on Thursday, 19 December 2013, said it has rationalized the periodic call auction mechanism by modifying how it classifies illiquid stocks. A stock would now be classified as illiquid if its average daily turnover is less than Rs 2 lakh in the previous two quarters and if it is classified as illiquid at all the exchanges where it is traded. Earlier, a stock was classified to be illiquid if its average daily trading volume in a quarter was less than 10,000, the average daily number of trades was less than 50 in a quarter and if it was classified as illiquid by all the exchanges where it traded.
Henceforth, call auctions will not apply to shares where a company is profitable in at least two of the past three years and not more than 20% of promoters' shareholding is pledged in the latest quarter and the book value is three times or more than the face value. The new rules also exclude companies with a market capitalisation of at least Rs 10 crore or which have paid a dividend in at least two of the past three years.
From now, stock exchanges will determine the number of call auction sessions for illiquid stocks. Exchanges will, however, have at least two sessions in a trading day, with one uniform closing session across the exchanges. So far, periodic call auction sessions of one hour each were conducted throughout trading hours, with the first session starting at 9:30 IST.
The market sentiment was also boosted by data showing that foreign funds made heavy purchases of Indian stocks on Thursday, 19 December 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 2244.20 crore from the secondary equity markets on Thursday, 19 December 2013, as per data from Securities & Exchange Board of India.
The S&P BSE Sensex garnered 371.10 points or 1.79% to settle at 21,079.72, its highest closing level since 11 December 2013. The index jumped 409.37 points at the day's high of 21,117.99 in late trade. The index rose 37.32 points at the day's low of 20,745.94 in morning trade.
The CNX Nifty jumped 107.60 points or 1.74% to 6,274.25, its highest closing level since 11 December 2013. The index hit a high of 6,280.55 in intraday trade. The index hit a low of 6,170.35 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,522 shares gained and 991 shares fell. A total of 158 shares were unchanged.
The BSE Mid-Cap rose 1.73% and the BSE Small-Cap index gained 1.28%. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 2198 crore, lower than Rs 3084 crore on Thursday, 19 December 2013.
Among the 30-share Sensex pack, 28 stocks gained and only two of them declined.
Index heavyweight Reliance Industries (RIL) surged in volatile trade on reports that the government has allowed the company to charge higher prices for gas from April after the company offered financial guarantees to the government to settle any claims against it over a shortfall in its gas output. The stock jumped 4.53% at Rs 893.25. The stock hit a high of Rs 896.70 and low of Rs 862.30. "Bank guarantee will be equivalent to the incremental revenue that Reliance will get from the new gas pricing," Oil Secretary Vivek Rae told reporters after a cabinet meeting on Thursday, 19 December 2013.
The government in June this year approved a move to higher, market-related rates for locally-produced gas from April 2014, but the finance ministry later said prices for RIL should be capped because the company's gas production from the offshore D6 block was far below its supply commitment. RIL, which operates the D6 block off India's eastern coast, has reported a sharp decline in gas output since 2010. Falling output had already prompted the government to disallow proportionate cost recovery to Reliance, leading to arbitration proceedings over the issue.
GAIL (India) rose 1.32%. ONGC advanced 4.17%. GAIL (India) during market hours said that the media reports on Thursday, 19 December 2013, indicating that the company had doubled margin on gas sourced from ONGC are factually incorrect and does not reflect the issue in the right perspective. GAIL (India) clarified that it is charging marketing margin on APM and non-APM gas at different rates. The company said that it charges a uniform marketing margin on non-APM gas consumers on a Pan-India basis since the commencement of non-APM supplies and that there is no discrimination amongst the customers.
The customers in Mumbai region, alleging higher marketing margin being charged by GAIL, are new to supply of non-APM gas since November 2013, GAIL said. In fact, RCF, Thal in Mumbai region is taking non-APM gas supplies since February 2012 and is being charged marketing margin at the same rate as all other non-APM customers, GAIL (India) said in a statement. Further, producers may not be charging marketing margin as their risks and returns associated with exploration and production are included in the Gas Producer Price, the company said.
Shares of PSU OMCs gained. HPCL (up 4.66%), BPCL (up 2.4%) and Indian Oil Corporation (up 1.55%), edged higher.
IT stocks extended Thursday's gain after Accenture Plc on Thursday, 19 December 2013, said at the time of announcing its Q1 November 2013 results that it expects its consulting business to turn the corner this financial year as orders rise.
IT major Infosys rose 1.21% to Rs 3,557.10. The stock hit record high of Rs 3,569.90 in intraday trade. Infosys announced after market hours on Thursday, 19 December 2013, that Mr. Subrahmanyam (Subu) Goparaju, Member of the Executive Council has conveyed his intention to resign from the services of the company.
Tata Consultancy Services (TCS) rose 2.26%. TCS after market hours on Thursday, 19 December 2013, announced the launch of TCS Insurance Telematics Solution, a mobile application that turns consumers' smartphones into mobile telematics devices. Facilitating usage-based insurance (UBI) practices that more closely align consumer driving patterns and habits with auto insurance premiums, the TCS Insurance Telematics Solution minimizes the need for a separate, potentially expensive, telematics device provided by the insurer, TCS said in a statement.
TCS Insurance Telematics Solution is the latest in a series of product innovations from the company's Insurance Innovation Lab -- a state-of-the-art environment for customers to test new ideas and trial new solutions, TCS said.
Wipro gained 3.98% to Rs 551. The stock hit 52-week high of Rs 552 in intraday trade.
HCL Technologies shed 0.08% to Rs 1,233. The stock had hit record high of Rs 1,257 in intraday trade on Thursday, 19 December 2013.
Tech Mahindra gained 2.92% to Rs 1,844. The stock hit 52-week high of Rs 1,871.95 in intraday trade.
Oracle Financial Services Software (up 0.09%), Polaris Financial Technology (up 3.04%), Hexaware Technologies (up 4.47%) gained.
Mastek jumped 14% to Rs 153.90 on high volume of 12.52 lakh shares. The company during market hours said that it has observed that the company's share price has sharply increased with very high volumes in the first hour at trade today, 20 December 2013. "We are very much concerned about the above activity. We would like to clarify to your goodselves that there is no development in Mastek to warrant such volatility in the share price", Mastek said in a statement to the Bombay Stock Exchange.
Accenture's consulting business has been hit in the past few quarters as companies cut down on discretionary spending. Revenue from the business has declined in five of the last six quarters.
Consulting bookings rose to $4.3 billion in the first quarter from $4.2 billion a year earlier. Revenue from the consulting business fell 1% to $3.94 billion in the quarter ended November 30. Outsourcing accounted for 51% of total bookings in the quarter, up from 44% a year earlier.
Bank stocks rose across the board. ICICI Bank gained 2%.
HDFC Bank gained 2.06%. The bank on Wednesday, 18 December 2013, said that it has filed an application with the Foreign Investment Promotion Board (FIPB) seeking approval for increasing foreign shareholding limit in the bank in accordance with the now prevailing guidelines as the total foreign shareholding in the bank (FII and FDI) has crossed 49%.
The Reserve Bank of India had recently notified that the foreign shareholding through Foreign Institutional Investors (FIIs)/Non Resident Indians (NRI)/Persons of Indian Origin (PIO)/Foreign Direct Investment (FDI)/ADRs/GDRs in HDFC Bank has crossed the overall limit of 49% of its paid-up capital and that no further purchases of shares of HDFC Bank would be allowed through stock exchanges in India on behalf of FII/NRI/PIO/FDI/ADRs/GDRs.
Total foreign shareholding in the bank as on 13 December 2013 was 52.18% of its paid-up capital. This includes investments through the FDI route in ADRs/GDRs of 17.01% which were raised in accordance with the then applicable guidelines, and other foreign holdings made under the FII route of 35.17%. Necessary approval from the shareholders is in place for FII investments up to 49%, HDFC Bank said in a statement.
State Bank of India (SBI) rose 1.28%. A day after RBI governor Raghuram Rajan decided to hold rates, SBI on Thursday, 19 December 2013, slashed home loan rates by up to 35 basis points for new borrowers and has unveiled a further discount of 5 basis points for women customers. Loans of up to Rs 75 lakh would be available to fresh borrowers at 10.15% against the existing rate of 10.50%. For women borrowers, the rate of interest after an additional concession of 0.05% would be 10.10% for home loans of up to Rs 75 lakh. With regard to loans of above Rs 75 lakh, the new rate would be 10.30%. For women borrowers it is 10.25%.
Among other PSU bank stocks, Canara Bank (up 3.31%), Union Bank of India (up 4.21%), Bank of India (up 2.44%), Bank of Baroda (up 1.83%) and Punjab National Bank (up 2.9%) gained.
The Reserve Bank of India (RBI) kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review on Wednesday, 18 December 2013, contrary to market expectations of a 25 basis point increase. The central bank said its decision to keep the repo rate unchanged was a close call. The RBI said while it has maintained status quo now, the central bank can help guide market expectations through a clearer description of its policy reaction function: if the expected softening of food inflation does not materialise and translate into a significant reduction in headline inflation in the next round of data releases, or if inflation excluding food and fuel does not fall, the Reserve Bank of India will act, including on off-policy dates if warranted, so that inflation expectations stabilise and an environment conducive to sustainable growth takes hold. The Reserve Bank's policy action on those dates will be appropriately calibrated, the central bank said.
The Reserve Bank of India early this week released on its website a Discussion Paper on 'Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for Lenders: Framework for Revitalising Distressed Assets in the Economy'. The Discussion Paper outlines a corrective action plan that will incentivize early identification of problem cases, timely restructuring of accounts which are considered to be viable, and taking prompt steps by banks for recovery or sale of unviable accounts.
With the slowdown of the Indian economy, a number of companies/projects are under stress. As a result, the Indian banking system has seen increase in NPAs and restructured accounts during the recent years. Not only do financially distressed assets produce less than economically possible, they also deteriorate quickly in value, the central bank said in a statement. Therefore, there is a need to ensure that the banking system recognises financial distress early, takes prompt steps to resolve it, and ensures fair recovery for lenders and investors, the RBI said. 'Improving the system's ability to deal with corporate distress and financial institution distress by strengthening real and financial restructuring as well as debt recovery' has been indicated by the Governor, RBI as one of the five pillars on which Reserve Bank of India's developmental measures will be built for improving the financial system over the next few quarters. This Discussion Paper is a step in that direction, the RBI said.
HDFC gained 3.42%. The housing finance major on Thursday, 19 December 2013, announced a cut of up to 50 basis points in home loan rates in its "special winter bonanza". The new rates for HDFC's home loans up to Rs 75 lakh will be 10.25 per cent per annum. "This is a limited period offer and is valid for all new applications submitted before 31 January 2014 and first disbursement taken by 28 February 2014," HDFC said in a statement.
IDFC rose 0.96% to Rs 104.90, with the stock reversing initial decline in volatile trade. The stock hit a high of Rs 105.40 and low of Rs 100.45. The company after market hours on Thursday, 19 December 2013, said that the Reserve Bank of India's guidelines on licensing of new banks in private sector require the eligible promoters of a bank to be 'owned and controlled by residents'. Hence, it is necessary for IDFC to bring down the foreign shareholding in the company to less than 50% if it gets a banking license. In this regard, the board of directors of the company on 19 December 2013 passed a Circular Resolution approving Postal Ballot process for seeking an enabling resolution from the shareholders of the company to authorize the board of directors to keep reducing ceiling limit of foreign shareholding in the company from existing 54% to 49.9% in various stages as and when the actual foreign shareholding goes down to get a banking license under prevailing guidelines. Total foreign shareholding in IDFC stood at 51.27% as on 6 December 2013, IDFC said. IDFC in July this year filed an application seeking banking license from the RBI.
IDFC further said that in case the company does not receive the banking license from RBI, the company will take steps to reinstate the ceiling on the foreign shareholding in the company to 74%, subject to complying with the then prevailing regulations. It may be recalled that IDFC had obtained the approval of its shareholders at the Annual General Meeting of the company held on 29 July 2013 for restricting the foreign shareholding to 54%. At the time of making application to the RBI for banking license, the then applicable ceiling limit on foreign shareholding in the company was 74% and the actual foreign shareholding in the company was around 53.17%.
Most capital goods stocks edged higher. ABB (up 1.27%), L&T (up 0.14%), Bhel (up 2.37%), BEML (up 2.13%), Crompton Greaves (up 1.28%) and Siemens (up 2.97%) gained.
Alstom T&D India rose 2.79% after the company said it has secured two orders worth Rs 298.30 crore in Himachal Pradesh. The new orders were announced during trading hours today, 20 December 2013.
Alstom T&D India said it has been awarded two contracts worth Rs 298.30 crore to supply two 400/220/66 kV gas-insulated substations (GIS) at Wangtoo and Gumma in Himachal Pradesh. The projects respectively received from L&T and HP Power Transmission Corporation (FIPPTCL)1, respectively, aim to improve the transmission capacity of HPPTCL for the transport of electricity generated by hydropower sources across the state, Alstom T&D India said.
The scope of the VVangtoo project, worth about Rs 155 crore, covers the design, engineering, manufacture, supply, testing, and commissioning of 400 kV, 220 kV and 66 kV gas-insulated switchgear, power transformers, instrument transformers and substation automation system, the company said.
The Gumma project, worth Rs 143.30 crore, includes design, engineering, manufacture, supply, erection, testing, commissioning and covers civil works of 400 kV and 220 kV GIS substation on a turnkey basis. All key equipment for both the projects will be produced by Alstom's state-of-the-art manufacturing facilities across India, the company said.
Commenting on the orders, Rathin Basu, Managing Director, Alstom T&D India says, "With these dual contract wins for HPPTCL, Alstom is pleased to earn the confidence of its customer for the provision of advanced G15 solutions at the Wangtoo and Gumma substations. Alstom is the leader in India's 615 activity and has so far supplied over 500 615 bays in India, covering a range of voltages from 66k1/ to 400A-V. Over 50% of the supplied solutions are produced in India".
Auto stocks edged higher on renewed buying. Tata Motors (up 0.68%), Mahindra & Mahindra (M&M) (up 3.74%) and Ashok Leyland (up 0.32%) gained.
Shares of car maker Maruti Suzuki India hit record high as the Japanese yen touched its lowest level in more than five years against the dollar. The stock rose 1.53% at Rs 1,808 after hitting a record high of Rs 1,829.90 in intraday trade. The yen's weakness could reduce import costs for Maruti as the car major sources a large portion of its parts from Japan.
Shares of two wheeler makers rose. Bajaj Auto (up 2.27%) and TVS Motor Company (up 5.75%) gained.
Hero MotoCorp gained 2.1% to Rs 2,127.90, with the stock reversing initial decline in volatile trade. The stock hit a high of Rs 2,135.45 and low of Rs 2,063.
Bosch jumped 4.54% to Rs 9,330 after striking a record high of Rs 9,600 in intraday trade.
UltraTech Cement gained 1.5%. The company during trading hours announced convening the meeting of the shareholders of the company to be held on 20 January 2014 for the purpose of considering, and if thought fit approving, with or without modification(s), the Scheme of Arrangement between Jaypee Cement Corporation and the company and their respective shareholders and creditors.
Asian Paints rose 0.61%, with the stock reversing initial fall. The company today, 20 December 2013, said that the operations at the company's paints plant situated at Sriperumbudur, Tamil Nadu will be affected due to the strike called by the Asian Paints Employees' Union Sriperumbudur and workmen with effect from today, 20 December 2013.
Metal and mining stocks were in demand on renewed buying. Hindalco Industries (up 0.5%), Hindustan Zinc (up 1.54%), JSW Steel (up 0.4%), SAIL (up 2.43%), Hindustan Copper (up 1.19%) and NMDC (up 0.59%) and Tata Steel (up 1.64%) gained. Jindal Steel & Power rose marginally by 0.04%. Sesa Sterlite slipped 0.76%.
Just Dial jumped 4.01% to Rs 1,319.10 ahead of the stock's inclusion in the FTSE All Cap index starting 23 December 2013. An inclusion in global benchmark indices such as FTSE prompts buying from passive trackers of the FTSE indices.
FTSE, which is a part of the London Stock Exchange Group, is a world-leader in providing global index and analytical solutions. FTSE indices are used extensively by a range of investors such as consultants, asset owners, fund managers, investment banks, stock exchanges and brokers.
Adani Ports and Special Economic Zone (APSEZ) lost 2.12% to Rs 163.55, with the stock sliding on profit booking after recent rally. Shares of APSEZ had rallied 9.93% in four trading sessions to settle at Rs 167.10 on Thursday, 19 December 2013 from a recent low of Rs 152 on 13 December 2013.
APSEZ said on 18 December 2013 that it has completed the Rs 400-crore steam coal import terminal at Visakhapatnam port, eight months ahead of schedule marking an entry on the east coast of India. The Adani Vizag Coal Terminal, a subsidiary of APSEZ, had entered into a concession agreement with Vishakhapatnam Port Trust to set up a steam coal handling facility project with a capacity of 6.4 million tonnes a year in March 2011 with a completion deadline of August 2014.
Realty stocks rose after State Bank of India (SBI) and HDFC on Thursday, 19 December 2013, cut home loan rates. The reduction in home loan rates by these two major lenders could lead to a revival of interest in the real estate sector, which has been hit by high prices amid a sluggish economy. Purchases of both residential and commercial property are largely driven by finance. DLF (up 2.33%), Indiabulls Real Estate (up 3.67%), HDIL (up 6.56%), Unitech (up 3.02%) Oberoi Realty (up 0.7%), Sobha Developers (up 0.79%) gained.
Omaxe rose 0.32% to Rs 125.55 after two block deals aggregating 8.31 lakh shares were executed in the counter on BSE at Rs 125 per share at 11:26 IST. One block deal was of 4 lakh shares while another deal was of 4.31 lakh shares. The two block deals constitute 0.45% of Omaxe's equity.
Zee Entertainment Enterprises rose 0.27%. The company after market hours said that the Bombay High Court has, at the hearing held today, 20 December 2013, approved the Scheme of Arrangement between the company and its equity shareholders for issuance of bonus preference shares to the company's equity shareholders.
Sugar stocks rose after the Cabinet Committee on Economic Affairs on Thursday, 19 December 2013, approved the proposal of the Department of Commerce to continue export of sugar, without any quantitative restriction, in view of the surplus availability of sugar in the domestic market. There will be no financial outgo on the part of the Government of India on account of this approval. This is expected to give a positive signal to exporters and the international community on the efforts of the Government of India to pursue a stable, long term and consistent export policy regime in the agriculture sector, a government statement said.
Bajaj Hindusthan (up 2.9%), Dhampur Sugar Mills (up 1.97%), Sakthi Sugars (up 5.16%), Balrampur Chini Mills (up 1.3%) and Shree Renuka Sugars (up 0.76%) edged higher.
Max India rose 1.73% to Rs 200, with the stock recovering on bargain hunting after recent slide. Shares of Max India had declined 5.52% in five trading sessions to settle at Rs 196.60 on Thursday, 19 December 2013 from a recent high of Rs 208.10 on 12 December 2013.
Shree Ganesh Jewellery House (I) was locked at 5% upper circuit at Rs 24.40 after the company said it has approached the State Bank of India for corporate debt restructuring of its debts. The announcement was made after market hours on Thursday, 19 December 2013.
Shree Ganesh Jewellery House (I) said that the company has approached State Bank of India (SBI), the lead bank of the consortium for referring the matter to Corporate Debt Restructuring Cell for Corporate Debt Restructuring (CDR) of its debts. The Flash Report for the same is being submitted to the lead bank and SBI has convened the consortium meeting of all the bankers today, 20 December 2013.
CDR is a mechanism adopted in India which permits viable companies additional time to meet debt obligations, subject to certain terms and conditions.
European stocks edged higher in volatile trade on Friday, 20 December 2013, as the US Federal Reserve's decision to taper its bond buying continued to spur optimism about the US economy. Key benchmark indices in UK and Germany were up 0.12% to 0.6%. In France, the CAC 40 slipped 0.1%.
The U.K.'s economy has been growing better than initially thought, according to official data released on Friday. Gross domestic product rose by 1.9% in the third quarter compared with the same period in 2012, the Office for National Statistics said, a revision upwards of 0.4 percentage points on its previous estimate. In addition, the ONS increased several GDP estimates from the first quarter of 2012 onwards, based on later data for household consumption. As a result, it revised its figure for economic growth between 2011 and 2012 to 0.3%, an upwards change of 0.2 percentage points on its previous estimate of 0.1%. Its initial estimate for 2013 third-quarter growth over the second quarter stayed unchanged at 0.8%
The European Union lost its top credit rating from Standard & Poor's, which said the group's cohesion has weakened and its financial profile has deteriorated. S&P cut its long-term rating on the EU to AA+ from AAA and maintained its short-term rating at A-1+. The outlook is stable, the agency said in a statement today. "The downgrade reflects our view of the overall weaker creditworthiness of the EU's 28 member states," S&P said. The reduction follows ratings cuts in recent years on EU members including France, Italy and Spain, as a sovereign-debt crisis roiled the region. "We believe the financial profile of the EU has deteriorated and that cohesion among EU members has lessened," S&P said. "EU budgetary negotiations have become more contentious, signaling what we consider to be rising risks to the support of the EU from some member states," it said.
French business confidence unexpectedly rose in December from November, bouncing back to its long-term average, official statistics bureau Insee said Friday. Business confidence in the manufacturing sector rose to 100 in Insee's monthly survey in December. Encouraging business confidence data follow Insee's forecast, however, that French economic growth will slow in the first half of next year after a rebound in the last quarter of 2013.
In Germany, data from Nuremberg-based GfK SE showed a gauge of consumer confidence in Europe's largest economy will climb to 7.6 in January from 7.4 this month, the highest reading since August 2007.
UK consumer confidence unexpectedly fell for a third month in November. A consumer sentiment index by GfK NOP dropped 1 point from October to minus 13, the London-based research group said.
Asian stocks were mostly higher on Friday, 20 December 2013 as the US Federal Reserve's decision to taper its bond buying continued to spur optimism about the US economy. Key benchmark indices in Japan, Taiwan, Singapore and South Korea rose 0.01% to 0.79%. In Indonesia, the Jakarta Composite was off 0.86%.
Chinese stocks fell amid concern funding costs for the nation's lenders will remain high even after the central bank injected cash into the financial system. Key benchmark indices in Hong Kong and China were off 0.33% to 2.02%. The Chinese central bank said at the close of market trading yesterday, 19 December 2013, that it added funding to selected lenders using short-term liquidity operations.
The Bank of Japan kept its asset-purchase levels and overall monetary policy unchanged after a monetary policy review. The central bank's statement also retained previous language on the economic outlook, saying the nation's economy "has been recovering moderately," while "inflation expectations appear to be rising on the whole."
Trading in US index futures indicated that the Dow could advance 25 points at the opening bell on Friday, 20 December 2013. US stocks on Thursday recovered most earlier losses as investors shrugged off disappointing housing, manufacturing and employment reports, sending the Dow Jones Industrial Average to a record closing.
The Federal Reserve said after a two-day monetary policy review on 18 December 2013 that it will cut its monthly bond purchases to $75 billion from $85 billion starting in January 2014 amid an improved outlook for the job market in the world's largest economy. The Fed has said it will keep buying bonds until the outlook for the labor market has "improved substantially". Federal Reserve Chairman Ben S. Bernanke said after the Fed's monetary policy review on 18 December 2013 that the program was on its way to meeting that test, as the jobless rate fell to a five-year low of 7 percent in November.
The US central bank is poised to continue winding down its stimulus measures gradually over the next year.
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