The Reserve Bank of India's (RBI) surprise deicison on Monday evening to improve liquidity conditions in the banking system triggered a firm opening on the bourses. The barometer index, the S&P BSE Sensex, moved past the psychological 20,000 level. Bank stocks gained across the board after the RBI on Monday evening cut the rate at which it lends emergency funds to banks by half a percentage point, further easing measures it took in July to stabilize the local currency. The market breadth, indicating the overall health of the market, was strong. The Sensex was up 212.42 points or 1.07%, up 52.47 points from the day's high and off 27.20 points from the day's low. Gains in Asian stocks also aided the upmove on the domestic bourses.
The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Monday, 7 October 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 494.13 crore on Monday, 7 October 2013, as per provisional data from the stock exchanges.
Bond prices rose after the Reserve Bank of India (RBI) on Monday evening announced measures to improve liquidity conditions in the banking system. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.5198%, lower than its close of 8.6833% on Monday, 7 October 2013. Bond yield and bond prices are inversely related. The RBI announced a reduction in the marginal standing facility (MSF) rate by 50 basis points to 9% with immediate effect. The central bank has also decided to provide additional liquidity through term repos of 7-day and 14-day tenor for a notified amount equivalent to 0.25% of net demand and time liabilities (NDTL) of the banking system through variable rate auctions on every Friday beginning from 11 October 2013. The notified amount and tenor of the term repo auctions will be announced prior to the dates of the auctions, the RBI said in a statement. Starting with the Mid-Quarter Review of September 2013, the RBI began a calibrated withdrawal of exceptional measures undertaken since July 2013. This was done with a view to normalising liquidity conditions, the RBI said. RBI said that open market purchase operations of Rs 9974 crore were conducted on Monday, 7 October 2013, to inject liquidity into the banking system.
At 9:25 IST, the S&P BSE Sensex was up 212.42 points or 1.07% to 20,107.52. The index jumped 239.62 points at the day's high of 20,134.72 in early trade. The index rose 159.95 points at the day's low of 20,055.05 in early trade.
The CNX Nifty was up 60.35 points or 1.02% to 5,966.50. The index hit a high of 5,981.70 in intraday trade. The index hit a low of 5,954.55 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 730 shares gained and 302 shares fell. A total of 40 shares were unchanged.
The total turnover on BSE amounted to Rs 136 crore by 09:25 IST.
Among the 30-share Sensex pack, 26 stocks gained and rest of them declined. Tata Motors (up 2.18%), L&T (up 1.97%) and Bharti Airtel (up 1.69%) edged higher from the Sensex pack. TCS (down 0.43%), Coal India (down 0.52%) and Wipro (down 0.06%) edged lower from the Sensex pack.
Bank stocks gained across the board after the RBI on Monday evening cut the rate at which it lends emergency funds to banks by half a percentage point, further easing measures it took in July to stabilize the local currency.
Among private sector bank stocks, HDFC Bank (up 2.2%), Kotak Mahindra Bank (up 3.61%), Axis Bank (up 3.71%), Yes Bank (up 7.81%), and ICICI Bank (up 3.2%) edged higher.
Among PSU bank stocks, Punjab National Bank (up 2.66%), Bank of Baroda (up 3.17%), Bank of India (up 2.7%) and Union Bank of India (up 3.24%) gained.
State Bank of India rose 2.3%. The bank after market hours on Monday, 7 October 2013, announced the appointment of Arundhati Bhattacharya, Managing Director, State Bank of India as the Chairman of the bank for a period of three years from the date of her taking over the charge of the post i.e. 7 October 2013, or until further orders, whichever is earlier. Bhattacharya has become the first woman to lead the country's biggest commercial bank in terms of branch network.
Godrej Consumer Products (GCPL) shed 0.3%. The company said after market hours on Monday, 7 October 2013, it has entered into an agreement to acquire a 30% stake in Bhabani Blunt Hair Dressing (B:blunt). B:blunt is a premier hair salon company with one of the strongest consumer franchises in this space. Since launching the chain in 2005, Adhuna Bhabani Akhtar and Osh Bhabani have grown the brand across India. B: blunt, today has a pan-India presence with 17 outlets and 4 academies, GCPL said
GlaxoSmithKline Pharmaceuticals slipped 0.48%. The company said after market hours on Monday, 7 October 2013, that it has come to the company's knowledge that in the major pockets of the country its products are not being purchased by the trade from 15 September 2013. On account of this, sales of the company continue to be affected, it added.
Asian markets were mostly higher on Tuesday, 8 October 2013. Key benchmark indices in China, Taiwan, Hong Kong, Singapore and Indonesia, rose by 0.17% to 0.62%. Key benchmark indices in Japan and South Korea fell by 0.07% to 0.34%.
The HSBC China Services Purchasing Managers' Index fell to 52.4 in September from 52.8 in August, HSBC Holdings PLC said on Tuesday. A reading above 50 denotes expansion.
US stocks declined on Monday, with the S&P 500 index closing at a four-week low, as a stalemate on Capitol Hill over preventing a government default persisted.
US President Barack Obama reiterated on Monday that he won't negotiate with Republicans over the debt limit. "We're not going to negotiate under the threat of economic catastrophe," Obama said during a visit to the Federal Emergency Management Agency in Washington. Republicans are insisting on changing the 2010 Affordable Care Act, while Obama refuses to engage in discussions about policy conditions tied to opening the government or raising the debt ceiling. Treasury Secretary Jacob J. Lew has warned the U.S. may be unable to pay its bills after Oct. 17.
Federal Reserve Bank of Dallas President Richard Fisher said in a speech in that city that the US cannot afford to default and that debt ceiling talks "will come down to the wire". Fisher, who doesn't hold a policy vote this year, has said he favors a reduction in the central bank's $85 billion monthly bond purchases.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. The lack of data may make it harder for the Federal Reserve to assess the economy's strength as policy makers mull the timing of reductions in bond buying. Government data from payrolls to retail sales will be delayed as long as the shutdown continues. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.
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