Key benchmark indices extended intraday gains and hit fresh intraday high in afternoon trade as world stocks rose 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. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. The barometer index, the BSE Sensex, hit its highest level in more than 32 months. The 50-unit CNX Nifty hit its highest level in almost 16 weeks. The Sensex was up 603.55 points or 3.02%, up 218.41 points from the day's low and off 14.86 points from the day's high. The market breadth, indicating the overall health of the market, was strong. Except BSE IT index, all the other sectoral indices on BSE were in the green.
Shares of private sector bank Yes Bank jumped a staggering 23.54%. FMCG stocks rose as good rains this year could boost rural sales, with biscuits major Britannia Industries hitting record high. Index heavyweight and cigarette major ITC extended intraday gains. Oil exploration major ONGC and Tata Power Company also extended intraday gains. IndusInd Bank jumped after block deal.
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. 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. Key benchmark indices extended intraday gains and hit fresh intraday high in 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 61.86, 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 8.1736%, lower than its close of 8.3715% on Wednesday, 18 September 2013. Bond yield and bond prices are inversely related.
At 13:15 IST, the S&P BSE Sensex was up 603.55 points or 3.02% to 20,565.71. The index surged 618.41 points at the day's high of 20,580.57 in afternoon 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 193.45 points or 3.28% to 6,092.90. The index hit a high of 6,099.40 in intraday trade, its highest level since 31 May 2013. The index hit a low of 6,040.15 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,327 shares rose and 883 shares fell. A total of 140 shares were unchanged.
The total turnover on BSE amounted to Rs 2883 crore by 13:20 IST.
Among the 30-share Sensex pack, 29 stocks rose and only one fell. State Bank of India (up 8.11%), ICICI Bank (up 6.86%), and Tata Steel (up 6%), surged.
ONGC surged 5.61% to Rs 298.50, with the stock extending intraday gain.
Tata Power Company advanced 4.94% to Rs 81.80, with the stock extending intraday gain.
FMCG stocks rose as good rains this year could boost rural sales, with biscuits major Britannia Industries hitting record high. Demand from rural areas is likely to pick up as this year's abundant monsoon rainfall is expected to help boost farm output and farmers' income.
Colgate-Palmolive (India) (up 2.4%), Dabur India (up 0.83%), Godrej Consumer Products (up 0.41%), Hindustan Unilever (up 4.68%), Marico (up 0.2%), Nestle India (up 0.24%) and Tata Global Beverages (up 1.42%) gained.
Britannia Industries rose 1.94% to Rs 766.05 after hitting record high of Rs 778 in intraday trade.
Index heavyweight and cigarette major ITC rose 2.71% to Rs 352.80, with the stock extending recent gains. ITC's hospitality unit ITC Hotels early this week said it has tied up with RP Group Hotels & Resorts to manage 5 hotels in India and Dubai, under ITC Hotels' 5-star 'WelcomHotel' brand and the group's mid-market to upscale 'Fortune' brand. The tie-up has been firmed up through a Memorandum of Understanding between ITC Hotels and RP Groups Hotels & Resorts. While the two WelcomHotels are already under a management contract and will be flagged off immediately, the three Fortune hotels are a part of the signed MOU and will be launched subsequently, ITC Hotels said in a statement.
Shares of private sector bank Yes Bank jumped a staggering 23.54%. The bank early this week said it has successfully closed equivalent to $255 million by way of dual currency, multi-tenor syndicated loan facility which will be utilized for general corporate purposes and trade finance. The facility has a maturity of 1 and 2 years with majority commitments coming in the 2 year tenure bucket. The loan has been widely distributed with commitments from 11 banks representing 8 countries across US, Europe, Middle East and Australia, Yes Bank said.
The recent RBI guidelines on offering swap facility to banks for the foreign currency borrowings at 100 basis points below the market rate will further make the landed rupee cost of these funds extremely competitive vis-vis rupee funds of equivalent maturity, Yes Bank said.
IndusInd Bank jumped 7.49% to Rs 443.50. A block deal of 3 lakh shares was executed in the counter on BSE at Rs 462.35 per share at 9:32 IST.
Reliance Communications (up 10.19%), Union Bank of India (up 9.99%), Punjab National Bank (up 9.98%), LIC Housing Finance (up 8.23%) and Canara Bank (up 8.95%) were among the major gainers from the BSE's 'A' group.
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.
European stocks surged on Thursday, 19 September 2013, after the US Federal Reserve decided not to taper its asset purchases as many analysts had expected. Key benchmark indices in UK, France and Germany were up 1.14% to 1.34%.
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 1.71% to 4.76%. 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 26 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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