Shares rose on Thursday after the country’s government moved to ease rules for shadow banks, tracking gains in Asian markets following a dovish stance by the US Federal Reserve. The BSE Sensex climbed over 150 points on Thursday tracking gains in other Asian equities after US Federal Reserve kept interest rates unchanged at its policy meeting and hinted at an accommodative stance throughout next year, according to a PTI report.
The 30-share index was trading 149.75 points or 0.37 percent higher at 40,562.32 in morning trade. The broader Nifty was trading 47.60 points or 0.40 percent up at 11,957.75.
Yes Bank was the top gainer in the Sensex pack rallying up to 4.32 percent, followed by Tata Motors, Tata Steel, Vedanta, IndusInd Bank, Hero MotoCorp, SBI and Sun Pharma.
Among stocks, Vedanta moved up by 2.7 percent at Rs 142.25 per share while Hindalco edged higher by 2.4 percent, Tata Steel by 2.1 percent and JSW Steel by 1.4 percent. Pharma major Cipla added gains of 2.6 percent at Rs 461.75 per share and Sun Pharma was up by 1.4 percent, according to IANS.
The NSE Nifty 50 index rose 0.3 percent to 11,947 and the S&P BSE Sensex advanced 0.3 percent to 40,547.80.
In the previous session, the 30-share gauge finished 172.69 points or 0.43 percent higher at 40,412.57, and the Nifty climbed 53.35 points or 0.45 percent to close at 11,910.15.
— CNBC-TV18 (@CNBCTV18Live) December 12, 2019
ONGC was the top loser, shedding up to 1.25 percent. Bharti Airtel, Kotak Bank, PowerGrid, ICICI Bank and HDFC were also trading in the red. According to traders domestic investors following cues from global markets, which were enthused by US Federal Reserve's dovish outlook in its policy meet last night.
The Fed, as expected, made no change to interest rates after cutting the last three meetings in an effort to maintain solid economic growth. The central bank chief Jerome Powell said the US outlook "remains favouable despite global developments and ongoing risks" as he described the grinding US-China trade war as a drag on global growth. Domestic market sentiment was also positive as foreign investors turned net buyers in the capital market on Wednesday, traders said, adding that investors are also awaiting factory output data to be released later in the day.
Foreign institutional investors purchased Rs 605.41 crore, while domestic institutional investors bought shares worth Rs 239.87 crore, data available with stock exchange showed. The federal cabinet approved easier lending rules for shadow banks, the government said on Wednesday, to help them get more access to funds, a Reuters report said.
The government’s measures to improve the health of non-banking finance and housing finance companies always boost the sentiment of investors and increase inflows in the market, Shrikant Chouhan, senior vice-president, equity technical research, Kotak Securities said in a note. “Technically, the market has formed a reversal formation and we would see rally towards the upper boundary of the trading range, which is at 12,000 level,” he said. State-owned banks were the top gainers with their index rising 0.9 percent.
Investors also awaited the consumer price inflation and Index of Industrial Production data due later in the day.
The Indian rupee appreciated by 21 paise to 70.64 against the US dollar in early trade on Thursday as higher opening in domestic equities and sustained foreign fund inflows strengthened investor sentiments.
— CNBC-TV18 (@CNBCTV18Live) December 12, 2019
Forex traders said the domestic unit gained ground ahead of the release of key macro-economic numbers.
At the interbank foreign exchange the rupee opened at 70.67, then gained further ground and touched 70.64, registering a rise of 21 paise over its previous close.
On Wednesday, rupee had settled for the day at 70.85 against the US dollar.
The domestic unit however could not hold on to the gains and was trading at 70.68 against the dollar at 0935 hrs.
Forex traders said investors were optimistic about the US-China trade talks. Moreover, positive opening in domestic equities also supported the local unit.
Domestic bourses opened on a positive note on Thursday with benchmark indices Sensex trading 158.19 points higher at 40,570.76 and Nifty up by 47.30 points at 11,957.45.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.09 percent to 97.03.
Foreign institutional investors (FIIs) remained net buyers in the capital market, as they purchased shares worth Rs 605.41 crore on Wednesday, according to provisional exchange data.
Asian shares climb on dovish Fed, but Brexit hurdle looms
Asian stocks rose on Thursday to the highest in a month after the Federal Reserve signalled rate settings were likely to remain accommodative, but the imminent UK election and a deadline for Sino-US trade talks kept investors cautious, a Reuters report said.
The Fed kept interest rates unchanged, as expected, at its policy meeting on Wednesday but indicated interest rates would remain on hold, which nudged Wall Street stocks higher.
That helped MSCI's broadest index of Asia-Pacific shares outside Japan climb 0.8 percent to the highest since 11 November. Japan's Nikkei stock index rose 0.18 percent and US stock futures ESc1 edged up 0.1 percent. Australian shares were down 0.7 percent, however, weighed by the financial sector after a money-laundering scandal.
“The Fed’s accommodative stance does support equities, but the chance of a disruptive election outcome in Britain is very real,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“You also have the US-China trade problem. We’re likely to see subdued trading and some investors may lock in profits as the day progresses.”
The S&P 500 rose 0.29 percent on Wednesday after the Fed's rate decision, which included enough dovish tones to cheer markets.
Traders are bracing for a series of make-or-break events over the next few days that have the potential to cause huge swings in financial markets for months to come.
Sterling traded near the highest in more than two years versus the euro and close to an eight-month high versus the dollar before voting begins in an election that will determine whether Britain exits the European Union in an orderly fashion.
Polls show the Conservatives’ lead shrinking ahead of an election starting later on Thursday, which could jeopardise chances of a smooth Brexit.
Exit polls for Britain’s election will begin around 2200 GMT after voting closes, then official results will begin to trickle in.
UK Prime Minister Boris Johnson’s ruling Conservative Party is running on a pledge to enact a swift split from the EU, ending more than three years of uncertainty.
Traders say a hung parliament or a victory for the main opposition Labour Party could cause huge disruptions because Labour is promising another referendum on membership of the bloc.
Against the euro, sterling rose 0.1 percent to 84.26 pence, close to its firmest level since May 2017. The pound rose 0.2 percent to $1.3225, just shy of its highest since March.
The euro traded at $1.11405, close to a five-week high before a European Central Bank meeting later on Thursday where policymakers are expected to keep rates on hold.
Chinese shares slipped 0.06percent. Activity was subdued as investors awaited more news about the Sino-US trade war.
US President Donald Trump is expected to meet Thursday with top advisers to discuss tariffs on nearly $160 billion of Chinese consumer goods that are scheduled to take effect on 15 December, three sources told Reuters.
Trump is expected to go ahead with the tariffs, a separate source told Reuters, which could scuttle efforts to end a 17-month long trade dispute between the world’s two largest economies.
The dollar index against a basket of six major currencies fell 0.35 percent to 97.076, approaching a four-month low reached on Wednesday after Powell it would take a significant pick-up in inflation to cause the Fed to raise rates.
Treasury yields initially fell in reaction to Powell’s comments, but they rebounded slightly in Asia. The yield on benchmark 10-year Treasury notes rose to 1.8017 percent.
US crude edged up 0.24 percent to $58.90 a barrel. Brent crude rose 0.46 percent to $64.01 per barrel. A report by OPEC released on Wednesday suggested that oil markets are tighter than previously thought.
Traders are also focused on state oil company Saudi Aramco, whose shares surged the maximum permitted 10% above their IPO price on their Riyadh stock market debut on Wednesday, making it the world’s most valuable listed company.
--With inputs from agencies
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Updated Date: Dec 12, 2019 10:59:11 IST