A bout of volatility was witnessed as key benchmark indices pared gains after hitting fresh intraday high in mid-afternoon trade. The S&P BSE Sensex was up 100.45 points or 0.55%, up close to 200 points from the day's high and off about 115 points from the day's low. The market breadth, indicating the overall health of the market, was positive.
Capital goods pivotals rose on bargain hunting after recent losses. Most bank stocks gained. Tata Power Company extended intraday gain.
A bout of volatility was witnessed as key benchmark indices slipped into the red after a higher opening triggered by firm Asian stocks. High volatility was witnessed as key benchmark indices regained positive terrain in morning trade. Intraday volatility continued as the Sensex cut entire intraday gains after hitting fresh intraday high in mid-morning trade. Key benchmark indices were a tad higher in early afternoon trade. Key benchmark indices extended gains to strike fresh intraday high in afternoon trade. A bout of volatility was witnessed as key benchmark indices pared gains after hitting fresh intraday high in mid-afternoon trade.
At 14:20 IST, the S&P BSE Sensex was up 100.45 points or 0.55% to 18,413.39. The index jumped 214.42 points at the day's high of 18,527.36 in mid-afternoon trade, its highest level since 21 August 2013. The index fell 102.19 points at the day's low of 18,210.75 in morning trade.
The CNX Nifty was up 43.50 points or 0.8% to 5,451.95. The index hit a high of 5,471.90 in intraday trade, its highest level since 21 August 2013. The index hit a low of 5,377.80 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,218 shares rose and 865 shares fell. A total of 148 shares were unchanged.
Among the 30-share Sensex pack, 21 stocks rose and rest of them fell. Jindal Steel & Power (up 3.03%), ONGC (up 3.57%) and Tata Motors (up 3.57%), edged higher.
Capital goods pivotals rose on bargain hunting after recent losses. L&T rose 0.5% to Rs 729. The stock had hit 52-week low of Rs 698.60 in intraday trade on Thursday, 22 August 2013. The company announced during market hours on Thursday, 22 August 2013, that its construction division has won new orders valued at Rs 1504 crore across various business segments in August 2013.
Shares of power equipment major Bharat Heavy Electricals (Bhel) extended intraday gains. The stock was up 8.24%.
Most bank stocks gained. HDFC Bank rose 1.34%. Axis Bank gained 0.23%.
But, State Bank of India fell 1.06%, with the stock extending intraday losses.
The Reserve Bank of India (RBI) on 20 August 2013, said it would repurchase government bonds to increase the availability of cash in the banking system, a step that appears to be a partial reversal of the slew of measures it took since mid-July to tighten liquidity. The RBI said it would buy back Rs 8000-crore of government bonds on Friday, 23 August 2013. Further repurchase will depend on evolving market conditions, it said. It is important to ensure that the liquidity tightening doesn't harden long-term bond yields and impact the flow of credit to productive sectors of the economy, the central bank said, referring to its buyback plan.
The RBI on 20 August 2013 also relaxed some rules that will help banks deal with the notional or marked-to-market (MTM) loss in their government bond portfolios due to a recent sharp fall in bond prices. They now don't have to record their current marked-to-market losses immediately as the RBI has allowed them to spread the losses equally over the remaining period of this fiscal year.
Private sector banking giant ICICI Bank gained 2.93%. The bank after market hours on Thursday, 22 August 2013, said it has increased base rate by 0.25% to 10% per annum with effect from 23 August 2013. With effect from 1 July 2010, interest rates on new loans and advances, including consumer loans, are determined with reference to base rate. ICICI Bank has also announced an increase of 0.25% in its benchmark prime-lending rate and in its Floating Reference Rate (FRR) for consumer loans (including home loans) with effect from 23 August 2013. These benchmark rates are used for determining interest rates on loans and advances sanctioned upto 30 June 2010. The fixed rate customers will not be impacted by the above revision and their contracted rates will remain unchanged, ICICI Bank said.
Tata Power Company gained 4.2%, with the stock extending intraday gain.
Diamond Power Infrastructure was locked at 20% upper circuit at Rs 46.80 on BSE after the company fixed 27 August 2013 as the record date for 1:3 bonus issue.
In the foreign currency market, the rupee edged higher after Finance Minister P. Chidambaram and Reserve Bank of India Governor D. Subbarao on Thursday, 22 August 2013, said in separate news conferences that India doesn't plan to introduce capital controls. The partially convertible rupee was hovering at 64.41, higher than its close of 64.55/56 on Thursday, 22 August 2013.
Chidambaram said the restrictions imposed by the Reserve Bank of India recently on money that Indian individuals and companies can send overseas would be revisited once the currency market stabilizes. In separate news conferences in New Delhi, both Chidambaram and Subbarao attributed the rupee's recent sharp decline to global trends.
Chidambaram said that revival and encouragement of growth will continue to be the focus of the government. Chidambaram said that stronger growth will, in course of time, alleviate many of the challenges that India faces today. He said that there is no cause for the panic that seems to have gripped the currency markets and that is feeding into other markets.
Chidambaram believes that the rupee is undervalued and has overshot what is generally believed to be a reasonable and appropriate level. Capital inflows will, in due course, correct the position. India's debt indicators are within prudent limits. India does not have excessive public debt (Central and State Governments taken together). The overall public debt to GDP ratio has declined from 73.2% in 2006-07 to 66% in 2012-13. The economy's external debt is only 21.2% of GDP. India's reserves are $277 billion.
India's inflation could accelerate in the current fiscal year due to the rupee's sharp depreciation, the Reserve Bank of India (RBI) said in a report on Thursday. The pass-through of the depreciation of the rupee exchange rate by about 11% in the four months of 2013-14 is incomplete and will put upward pressure as it continues to feed through to domestic prices, the RBI said in its annual report for 2012-13. Risks on the inflation front are still significant, the RBI said. The rupee's weakness could also increase subsidy payouts for fuel and fertiliser in 2013/14, the central bank said. However, the report said normal monsoon rains in India have taken a major risk off the horizon" but said a close vigil was necessary after food prices showed an upsurge during April to July. If high food inflation persists into the second half of 2013-14, the risks of generalised inflation could become large, it said. India's current account gap, which widened to a record high of 4.8% of GDP in the fiscal year to March 2013, is likely to ease in the current fiscal year but may continue to be much above the sustainable level, the report said. Global risks coupled with domestic structural impediments have dampened prospects of a recovery in 2013-14, and posed immediate challenges for compressing the current account deficit, it said. The central bank's report added that utmost attention is needed to contain risks to financial stability arising from deteriorating asset quality of banks.
Most European stocks rose on Friday, 23 August 2013, after the latest data showed Germany's economy expanded by 0.7% in the second quarter, confirming official estimates released last week. Key benchmark indices in UK and Germany were up by 0.11% to 0.31%. France's CAC 40 fell 0.28%.
Germany's economy sharply rebounded in the second quarter from a weak start to the year, gaining steam from a pickup in investment and robust consumption, official data showed Friday. Gross domestic product swelled 0.7%, corresponding to an annualized rate of 2.9%, the national statistics office said. The figures confirm official estimates issued last week. That makes Germany the fastest growing of the world's largest industrialized economies in the second quarter.
Data on euro zone consumer confidence for August 2013 is due for release today, 23 August 2013.
Most Asian stocks rose on Friday, 23 August 2013, after reports from Europe to the US boosted confidence in global economic recovery. Key benchmark indices in Singapore, Japan, Taiwan and South Korea were up by 0.17% to 2.21%. Key benchmark indices in Hong Kong, China and Indonesia fell by 0.12% to 0.47%.
Trading in US index futures indicated that the Dow could fall 12 points at the opening bell on Friday, 23 August 2013. US stocks edged higher on Thursday after a monthly average of jobless claims fell to a more than five-year low in the US, and as manufacturing Purchasing Managers' Index readings from China and Germany indicated expansion.
Investors are keeping a close watch on the Federal Reserve's three-day annual monetary conference in Jackson Hole, Wyo which begins today, 23 August 2013, on whether Fed officials give any indication of the timing of the potential tapering of the Fed's bond purchases. Fed Chairman Ben Bernanke is not attending this year's Fed's annual monetary conference. The Fed currently buys $85 billion worth of securities a month to help support the US economy, but it has signaled its intent to soon slow the pace of those purchases as the economy recovery gains pace.
Bernanke's term expires in January, and US President Barack Obama is considering candidates to succeed him, including Fed Vice Chairman Janet Yellen and former Treasury Secretary Lawrence Summers.
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