1:05 pmIndian markets were volatile for a fourth consecutive day today. After opening in green, both the Sensex and Nifty swinged into the red.
Saurabh Mukherjea of Ambit Capital is cautious on the market and expects sideways trading for 3-6 months. He does not see market touching new life-time highs soon. According to Ambit, the Sensex will rally once BJP starts showing some momentum in opinion polls.
At 1:15 pm, the BSE Sensex was down110 points at 19783, while Nifty was down 33 points at 5849.
Meanwhile, the rupee rose against the dollar on expectations of improved balance of payments data on Monday. Dollar sales by exporters is also lending support. Infact, the rupee has outperformed all emerging market currencies this week. The rupee gained 21 paise to 61.85 per dollar.
Religare Capital too belieeves the market is unlikely to sustain at currenct levels since the macros are not stable.
"Sensex EPS should go down from current levels in FY14," said Tirthankar Patnaik, Strategist at Religare.
Sensex, rupee strong, markets just 6% away from all-time high
27 September 9:20 am Indian markets, both equity, opened stronger this morning on positive global cues. Overnight, US stocks snapped five-day losing streaks after Initial claims for state unemployment benefits dropped last week near a six-year low.
While Nifty opened 0.25 percent higher at5895, Sensex is up 0.12 percent at 19914.
Kingfisher, JP Associates, Unitech and BHEL are among the top traded stocks on the NSE.
Rupee opened stronger at 61.90 against the US dollarafter the RBI relaxed the minimum maturity tenure for banks' foreign currency borrowings' to one year from three years.
A positive September month with 7% gains has just gone by but October comes with more pessimism than optimism. Indian markets are just 6 percent away from their all-time high but India's fundamentals still look weak.
Fitch's India Ratings says unless the prices of diesel, petrol and LPG are raised, the fiscal deficit could exceed 5%.
Meanwhile, RBI governor Raghuram Rajan says the problems faced by emerging markets is because of excess stimulation of demand post the Lehman crisis and countries like India have to bring both fiscal deficit and inflation down. Rajan also argued that it may not be possible for developing economies to allow their exchange rate to adjust itself.
Globally, South Korea's Kospi index is up 0.28%. China's Shanghai index was trading 0.24% higher at 2,161.69. In the US, the S&P 500 and Dow snapped five-day losing streaks following positive job market data.
Investors are worried if Washington lawmakers would pass bills to avoid government shutdown.
The Dow Jones was up 55.04 points, or 0.36%, at 15,328.30, while Standard & Poor's 500 Index was up 5.90 points, or 0.35 percent, at 1,698.67. The Nasdaq Composite Index was up 26.33 points, or 0.70%, at 3,787.43.
Sensex ends flat, rupee may breach 69 after Fed decision in Oct
3. 30 pm: Sensex ends flat, will rupee breach 69 against dollar?
The Indian stock market ended flat today with the Sensex closing at 19892, up 0.18 percent, while the Nifty closed at at 5879, up 0.10 percent.
The rupee closed stronger at 62.18/19 versus its close of 62.44/45 on Wednesday.The Reserve Bank of India late on Wednesday relaxed the minimum maturity tenure for banks' foreign currency borrowings' to one year from three years, in order to use the central bank's swap facility which was set up to support the ailing rupee.
The rupee has seen a smart recovery of near 10 percent after Raghuram Rajan took over as the Reserve Bank chief. However, experts believe that there is still uncertainty on the rupee as the US Federal Reserve decision on its quantitative easing programmme is expected in October.
Clive McDonnell, Head Equity Strategy, Standard Chartered, told ET Now, "Previously, we were forecasting a value of 62 for the rupee against the dollar by year-end, but now we have raised that to 69.50. We think that the policy moves by the RBI are credible for both inflation and the currency, but that is at the cost of growth. Growth will be slower than expected."
The pressure on the rupee is likely to build up ahead of the Fed meet in October, when a decision on quantitative easing ( QE) is expected.
9:30 amIndian markets opened flat this morning after the inndices pared most of their losses with the Nifty managing to close above 5850 levels on Wednesday. The rupee seems to be stabilizing in a range and remains in the 62 per dollar levels. The Indian currency opened slightly stronger today at 62.39 against yesterday's close of 62.44.
Sensex opened up 17 points at 19873.44 while Nifty opened at 5877, up 3 points.
Kingfisher, JP Associates, BHEL, Unitech are among the top traded stocks on the NSE
Meanwhile,RBI eased norms for banks borrowing through foreign currency. For bank borrowings exceeding half the unimpaired tier-I capital made on or before November 30 for availing of RBI's swap facility, the RBI lowered the maturity requirement from three years to a year.
Mohan Shenoi, Kotak Mahindra Bank said, "The steady flow of dollars through FCNR (B) and bank foreign currency borrowings seem to have stabilised the rupee in the 62-63/USD range."
According to Gautam Chhaochharia, head Of India Research, UBS. Nifty may not go below 5000-5200 level, or break out beyond 6000 in a sustainable way by 2013 end.
"You can remain positive but making a fresh buying position - the risk reward is only below 5300-5400 levels rather than at current levels because currently the market is trading at forward multiples of more than 14 times which is not cheap from any angle. So keeping that in mind - buying level is still around 5300-5400 levels. At these levels purely from a near-term perspective, we are still recommending investors to be in the profit taking mode specifically on the cyclicals, even financials rather than being positive here," he said in an interview with CNBC-TV18.
4:00 PM Sensex closes at one-week low
The BSE Sensex fell on Wednesday, led by declines in blue chip shares like Reliance Industries on caution ahead of equity derivatives expiry. The Nify also ended in the red, although the index was seen taking support around its 200-day moving average for the second day.
Shares also tracked overseas markets which also dipped to a near one-week low on Wednesday as worries over a possible government shutdown in Washington and mixed signals on U.S. monetary policy kept investors in a cautious mood.
The outlook remained grim for the near term as foreign institutional investors (FIIs) were seen pausing for the time being over anxiety ahead of general elections due by May, while macroeconomic conditions remained weak, dealers said.
"The near-term outlook remains grim as the period around elections is usually used by people to lighten positions," said G. Chokkalingam, managing director and chief investment officer at Centrum Wealth Management.
The benchmark BSE Sensex fell 0.32 percent, or 63.97 points, to end at 19,856.24, marking their lowest close in a week.
The broader Nifty also edged down 0.32 percent, or 18.60 points, to end at 5,873.85, after earlier falling as much as 1.38 percent, taking support around its 200-day moving average at 5,841.
Among blue chip shares, Reliance Industries fell 2.9 percent, while cigarette maker ITC ended 1.2 percent lower.
Financial Technologies shares slumped 10.5 percent after its auditor, Deloitte Haskins & Sells, said its audit of the company's fiscal 2013 results should not be relied upon.
The NSE bank index fell 0.9 percent, marking its fourth consecutive day of declines as a surprise rate hike by the Reserve Bank of India on Friday continues to weigh on lenders.( Reuters)
Rupee, Sensex open flat, Unitech gains on Aon Hewitt deal
25 September 9:30 am: Indian markets, both currency and equity, opened flat this morningas traders roll over positions in the futures & options (F&O) segment from the near month September 2013 series to October 2013 series. The September 2013 F&O contracts expire tomorrow.
The Sensex opened 30 points higher at 19949.43 with 20 components in green while the Nifty opened 9.55 points higher at 5902.
Even the rupee opened flat at 62.76 against yesterday's close of 62.75.
Pramit Brahmbhatt, CEO, Alpari India told CNBC-TV18, "The euphoria of positive measures by Fed has lost its sheen due to a dampener by RBI last week and hence, rupee has been trading weak."
"Rupee is expected to trade with a weak bias owing to choppy equities, weak sentiment in Asia and strong dollar demand by importers. The range for the day is seen between 62.20-63.30/USD," he added.
BSE realty index started the day at the top of the sectoral pack with gains of nearly 1 percent
Realty major Unitech is up 2.7 percent after reports said it has leased 8 lakh sq ft of office space in its Gurgaon SEZ to US-based HR consultancy firm Aon Hewitt with a potential revenue of about Rs 800 crore over the next 15 years.
Rupee ends weak, Nifty flat, Kingfisher soars on Mallya's revival talk
5:00 pm Indian equity markets ended flat with the Nifty up 0.05 percent at 5892 and the Sensex up 0.10 percent at 19920.The rupee too ended weaker at 62.75 against the USD, down 0.24 percent against Monday's close of 62.60.
The market mood was clearly choppy with participants indulging in portfolio churning ahead of the monthly derivative contract expiry.
Kingfisher Airlines shares, however, closed up 10 percent after Vijay Mallya, in company's annual general meeting, said the airline company has submitted three revival plans to Directorate General of Civil Aviation (DGCA).
Markets flip-flop, FIIs snap five-day buying spree
12:05 PM Not much action in the markets today as both the Sensex and Nifty are trading flat since opening trade.However, banking stocks slumped after international rating agencies downgraded the debt rating of the nation's top three public sector lenders.
At 12;08 pm, the Sensex was down 20 points at10029, while Nifty was up 9 points at 5899.
Sentiment dampened further after international rating agencies -- Moody's and Fitch-- yesterday downgraded the debt rating of the country's top three public sector banks -- State Bank of India, Bank of Baroda and Punjab National Bank -- citing worsening credit quality and recapitalisation concerns.
According to analysts, the performance of banking and other rate-sensitive stocks could remain weak till there is more clarity on the RBI action.
Abhay Laijawala, MD and Hd-Research, Deutsche Equities, however is optimistic on the Indian market and has given a Sensex target of 21,000 for 2013. He believes market will continue to follow global as well as domestic cues and will take directions from there.
In an interview to CNBC-TV18 Laijawala said market will see lot of volatility but as far as India is concerned, investors should focus primarily on export and rural recovery plays.
Foreign institutional investors (FIIs) sold Rs 80.57 crore worth Indian shares on Monday, snapping their five-day buying streak, exchange data shows.
FIIs bought around Rs 12,700 crore worth Indian shares over the previous 12 sessions till Friday, regulatory data showed.
Foreign investors also sold Rs 748 crore worth stock futures and Rs.88.5 crore worth index futures on Monday.
Dealers told Reuters the trend remains down for the short term liquidity remain key for the markets, so even a break in FII buying may therefore weigh on the markets.
"Inflows into emerging markets will be purely on the basis of risk-on, risk-off trades given by news flows. We also need to bear in mind that earlier when in the run up to the Fed tapering, there was a lot of discussions whether markets have priced in the taper whereas the developed markets probably priced. We saw the effect of that coming in equity and bond markets, but I am not too sure whether emerging markets had or can price in tapering clearly it is uncharted territory," said Arindam Ghosh, MD & CEO ,Blackridge Financial Expertise.
Rupee weak again, 'wolf is now at the door in India', says Jim Roger
10:40 am PSU banking stocks continue to bleed, with many frontline banks now down 10-15 percent in three trading sessions since Friday.State Bank of India, the country's largest lender, fell as much as 3.66 percent after ratings agency Moody's downgraded its outlook on the bank's financial strength rating to 'negative' from 'stable'.
SBI's standalone credit profile continues to face negative pressures, and it will have to compete with other public sector lenders for capital injection from the government, Moody's said.
Ratings agency Fitch downgraded some ratings for state-owned Indian Bank, Punjab National Bank and Bank of Baroda on expectations of a further deterioration in asset quality and a sharp deceleration on economic growth.
Shares of SBI were down 1.39 percent at Rs 1632. Indian Bank was down 1.16 percent, Bank of Baroda and Punjab National Bank were marginally down.
The BSE Sensex was however in the green, up 60 points at 19961, while Nifty was up 22 points at 5912.
BlackRidge Capital Advisors expects the volatility in the market to increase due to domestic and global factors. Arindam Ghosh, its MD and CEO says that policy uncertainty has been spooking the markets. Pressure on the currency will also continue in the long-term, he says.
Meanwhile,Investment guru and chairman of Rogers Holdings and Beeland Interests, Inc, Jim Rogers in an interview with Business Insider said a crisis is sure to hit emerging markets, especially India whereGDP growth is at a 10-year low.
Rogers thinks the "wolf is now at the door in India."
Rupee inches towards 63 again, Sensex opens flat
9:45 am Indian equity markets opened flat todayafter aggressive selling in the last two sessions.
The Sensex is down 33.46 points or 0.17 percent at 19867.50, and the Nifty down 10.70 points or 0.18 percent at 5879.05.
Even the Indian rupee opened weak and is currently trading at 62.75 against the US dollar.
Ashutosh Raina of HDFC Bank said that the rupee has been trading in a very narrow range with a weakish bias. "Profit booking in equity markets, clubbed with demand from importers has put mild pressure on the currency," he added.
Rupee inches towards 63 again, worst may not be over
24 September 9 :00 am The Indian rupee opened 19 paise weak at 62.79 against yesterday's close of 62.55 even though it has pulled back from record lows in recent weeks.
"I'm hesitant to suggest the worst is over for the rupee," Mitul Kotecha, head of foreign exchange strategy at Credit Agricole, was quoted as saying by CNBC.
"Eventually this near-term consolidation will give way to a resumption of downward pressure," he said, adding that he forecasts the rupee to breach the 70 to the dollar level in the first quarter of next year.
US markets closed lower for the third straight session on Monday amidst fears of tapering and ongoing worries over the debt ceiling. Europe too is dragged lower by uncertainty over the fate of a coalition government in Germany.
Sensex ends nearly 400 points down, Bank Nifty loses 1000 pts in 2 days
3:30 PM Indian equity markets continued their decline for a second consecutive day after RBI surprised markets on Friday by raising interest rates to ward of rising inflation.
Both Sensex and Nifty fell nearly 2 percent today,led by banking, realty and capital goods stocks.
The Sensex ended down 362.75 points or 1.79 percent to end at 19900.96, and the Nifty slumped 122.35 points or 2.04 percent at 5889.75.
Banking stocks were the biggest losers with bank Nifty losing 1,000 points in the last two sessions. Rupee also weakened against the dollar.
The BSE Realty Index fell nearly 10 percent in two trading sessions with the major ones like DLF (down 17% percent), Indiabulls Real Estate (down 10 percent) and HDIL (down 12 percent) losing the most on reports thatinventories of these companies have piled up due to economic slowdown, higher inflation and job cuts in several sectors.
Vibhav Kapoor, IL&FS, expects recent volatility in the market to continue going ahead . According to him, the market is too volatile and therefore, he won't call it an investor's market. "I would call it speculative to some extent," he says in an interview to CNBC-TV18. Kapoor further adds that Nifty is likely to trade in a broad range of 5400-6200. He believes the Indian currency will trade in the range of 60-64/USD. "Some measures have been taken which should prevent the type of volatility we saw in the rupee earlier." He says, US tapering has been postponed, but it will be announced sometime later and "the later it comes, there are more chan
Sensex slips nearly 400 points, rupee weakens to 62.63
2:30 pmBSE Sensex and Nifty fell more than 2 percent percent after Reserve Bank of India Governor Raghuram Rajan surprised markets in his maiden policy review on Friday by raising interest rates to ward off rising inflation.
The BSE Sensex was trading down 373 points at 19881 while the Nifty was at 5887, down 123 points.
Even the Indian rupee weakened to 62.61 against the USD, down 40 paise.
The RBI may raise policy rates again after shocking markets by increasing them in only his first meeting, signalling Rajan is willing to risk prolonging what is already the lowest economic growth in years in order to quash persistent inflation.
The NSE bank index falls 4.5 percent, adding to Friday's 4.1 percent slump.
DLF , Punjab National Bank , Bank of Baroda and Axis Bank are the major losers in the Nifty, falling more than 6 percent. Country's major lenders State Bank of India and ICICI Bank crashed 5 percent each followed by ONGC and Maruti with 4 percent loss. However, HCL Technologies , Ranbaxy Labs , Sesa Goa and Hero MotoCorp were major gainers, rising 1-2 percent.
Meanwhile,MCX gold futures are trading down 182 rupees at Rs 29730 per 10 grams.
Investors will pay attention to the government's borrowing calendar for Oct-Mar which is likely to be announced this afternoon. The finance ministry and Reserve Bank of India (RBI) are reported to be in talks to arrive at a mechanism to provide a direct line of credit to some industrial sectors.
Sensex down more than 300 points, IIFL terms volatility as speculative
1:09 pm Banking stocks are the worst hit today and most brokerages are neutral on banks.
Vaibhav Kapoor, IL&FS expects recent volatility in the market to continue going ahead. According to him, the market is too volatile and therefore, he won't call it an investor's market. "I would call it speculative to some extent," he says in an interview to CNBC-TV18.
"Next 3-6 months look challenging for equities unless investment cycle is kick started, added IIFL's Nilesh Shah.
The Nifty is down almost 2 percent on the back of disappointing global markets and fears of more rate hikes at home.
While the Sensex is down 332.82 points or 1.64 percent at 19930.89, the Nifty is down 111.15 points or 1.85 percent at 5900.95.
Bonds are also selling off ahead of the government's borrowing calendar for the second half of the year.
Meanwhile, Montek Singh Ahluwalia , deputy chairman of the Planning Commission told CNBC-TV18 that the government must progressively phase out diesel subsidies and no plans are on the anvil to cut down planned expenses.
Sensex slips 300 points as banks tank, brace for a bigger fall
12:18 The BSE Sensex fell more than 300 points in afternoon trade, heading for a second consecutive day of declines, after Reserve Bank of India Governor Raghuram Rajan surprised markets in his maiden policy review on Friday by raising interest rates to ward off rising inflation.
The BSE Sensex was trading down 330 points at 19930, while Nifty was down 117 points at 5899.
The NSE bank fell 3.7 percent, adding to Friday's 4.1 percent slump.
ICICI Bank fell 3.9 percent while State Bank of India was down 3.95 percent.
Global investment bank BofA-ML expects the markets to correct 6-8 percent from current levels as the RBI's credit policy quashes hopes of easy monetary policy.
"Our base case for the market has been that the markets will be range-bound in the 18,500-20,500 range as weak economic and earnings growth caps the upside while hopes of rate cuts and policy measures protect the downside," said the BofA-ML report.
It further said that inflation has become the focus of RBI once again. "WPI inflation has consistently risen post May 2013 and would likely go up again as effect of currency depreciation and fuel price hikes are accounted for. This would likely hurt the markets as rate cuts will slower than earlier expected," it said.
Sensex below 20000, 'sell on every rally'
10:45 am Banks continue to be the biggest losers pulling the Nifty and the Sensex lower.
At 10:45 am, the BSE banking index fell 3.9 percent.The RBI may raise policy rates again after shocking markets by increasing them in only his first meeting, signalling Rajan is willing to risk prolonging what is already the lowest economic growth in years in order to quash persistent inflation.
The BSE Sensex, meanwhile was down 280 points at 19985 while Nifty was down 88 points at 5923.
According to market analyst Sudarshan Sukhani,the Nifty is headed lower.
"We have done rather well over the last couple of months catching all the swings, but the sense is that a temporary top or may be even a long-term top has been made at 6,170 two days ago and probably the markets are now looking for lower levels," he said in an interview with CNBC-TV18.
He feels today intraday traders can be short.
Ridham Desai of Morgan Stanley too is bearish on the markets despite the recent buoyancy.
"When the Nifty moved to an intraday low of 5100 and a high of 6100, in both the scenarios the market was clueless as to what it wanted to do next. India continues to remain a savings deficit country," he told CNBC-TV18 in an interview.
He further cautioned that the Nifty may see previous low of 5,300. "Though the Fed's surprise move to not touch the bond buying programme has come as a relief to the markets, the Nifty can still move lower as most of the positives are already factored in," he said.
He does not see much of an upside in the market from current levels and advises traders to sell on every rally. He adds the turf won't be easy for equity investors over the next three months.
Volatile Sensex down over 100 pts, rate-sensitives biggest losers
09:20 amThe Indian rupee opened weaker today tracking the non-deliverable forwards while lower stock futures also hurt sentiment.
The RBI's surprise of a repo rate hike led to a sell-off on the bourses and the markets seem to be cautious today as well.
The rupee opened atat 62.55 per dollar, 31 paise weaker, while 10-year bond yields at 8.63% vs 8.58% on Sept 20 on fears thatReserve Bank of India Governor Raghuram Rajan may raise policy rates again after shocking markets by increasing them in only his first meeting, signalling he is willing to risk prolonging what is already the lowest economic growth in years in order to quash persistent inflation.
The equity markets also opened in the red with the BSE Sensex opening down half a percent at 20113 and the Nifty down 0.77 percent at 5964.
BSE bankex fell 2 percent and is the top sectoral loser this morning.
BSE IT index is the best sectoral performer with gains of 0.7 percent.
Top Sensex losers include SBI, ICICI and Bharti Airtel.
In the coming week, markets may consolidate and there maybe volatility ahead of the quarterly expiry of futures and options at the end of the month.
" The Indian market will be particularly choppy this week given the September derivatives contract expiry. A lot of readjustments may take place in portfolios which could result in wild movement in the coming days. Investors will pay attention to the government's borrowing calendar for Oct-Mar which is likely to be announced this afternoon. The finance ministry and Reserve Bank of India (RBI) are reported to be in talks to arrive at a mechanism to provide a direct line of credit to some industrial sectors," said IIFL in a research note.
Meanwhile, the rupee emerged as the worst performer among its global peers with a fall of 8.7 per cent last month, owing largely to India's economic slowdown and poor investor confidence in the country.In September, the rupee fell to an average of 66.07 against dollar, compared with 60.80 in the previous month - a drop of 8.7 per cent. However, there was some recovery in the current month.
"In addition to impact of change in global investment fund flow, India's peculiar reasons like high trade deficit and worsening investor confidence amid tax uncertainty and policy paralysis have contributed to rupee depreciation," said Atul Dhawan, partner of Deloitte Haskins & Sells.
Volatility to rule markets on derivatives expiry, rate hike
23 September 8:30 am Indian stock markets are likely to remain volatile this week as investors come to terms with an unexpected hike in interest rate by the Reserve Bank of India (RBI) and portfolio churning ahead of the September derivatives contract expiry.
However, it is a known fact that markets do not mirror the true state of the economy and move on the basis of liquidity- i.e. money flowing into them, which should continue till US tapering of quantitative easing begins.
The surprise move from the apex bank has reversed the bullish tone of the markets as the 0.25 percent hike in repo rate caught market participants completely off-guard, brokers told PTI.
The RBI raised the short-term policy repo rate to 7.5 per cent from 7.25 percent, saying inflation had to be lowered to more tolerable levels. The apex bank also partially eased its liquidity-tightening steps that were unveiled to defend a weakening rupee.
"This week will see expiry of September month's F&O contracts (on Thursday) so volatility will tend to remain high. Meanwhile, the markets are likely to consolidate in the broad range of 5,800-6,150 and form a base for next directional move," said Jayant Manglik, president of retail distribution at Religare Securities.
Overseas investors have pumped in over Rs 11,000 crore ($1.7 billion) in the Indian stock market so far this month.
The BSE benchmark lost 383 points on Friday - most in three weeks - after the RBI's monetary policy review. The Sensex had surged 684.48 points to an almost 3-year high the previous day after the US Federal Reserve refrained from easing its stimulus programme.
For the entire week, the index gained 2.69 percent to close at 20,263.71.
"The deferment in withdrawal of quantitative easing by the US has given Indian policy makers a breathing space of three months at the least and six months at the best," said P H Ravikumar, managing director of Capri Global Capital. ( PTI)
End of updates on 20 September
6.00 pm: Rupee, bonds fall after RBI surprises with repo rate increase
The rupee fell and bond yields surged after the Reserve Bank of India (RBI) surprised markets with an increase in the repo rate on Friday, putting its focus squarely back on managing inflation and the fiscal deficit.
The RBI provided some reprieve to the bond market by unwinding some of the cash tightening steps undertaken since mid-July.
Still, the surprise 25 basis points increase in the policy rate to 7.50 percent and the cautious stance on inflation, led to fears that the central bank was not done with raising the repo rate. The bond and interest rate swap curves steepened.
"We actually think the entire policy statement is slightly hawkish given the modestly greater focus on inflation over growth and the central bank's admittance that the WPI inflation is likely to be higher than originally anticipated," said Nizam Idris, a strategist with Macquarie Capital.
Bond yields rose, with the 10-year bond yield closing at the day's high of 8.58 percent, up 39 bps on the day. The negative spread between the 1-year and 5-year OIS shrunk to 46 bps from 70 bps on Thursday.
The RBI lowered the marginal standing facility rate for banks by 75 basis points to 9.5 percent and the minimum daily average cash balance that banks need to maintain to 95 percent from 99 percent previously.
The cash-tightening steps were initiated by the central bank in mid-July when the rupee began sliding to a series of record lows, to fall to as much as 68.85 to a dollar in late August.
RBI Governor Raghuram Rajan said the RBI would further ease tight cash conditions if the rupee stabilised.
The overnight rate, at which banks lend to each other, fell to 9.25 percent from 10.25-10.40 percent levels after the RBI decision.
"It is an honourable exit for the RBI and is the best way Rajan could take a step back towards normalising things. The hike in repo rate gives the message that inflation is still high but he is trying to bring down the MSF corridor," said Manish Wadhawan, head of interest rate trading at HSBC in Mumbai.
"The bond yield curve and the OIS curve is steepening and it will steepen more until the central bank's next policy review in end-November."
The rupee extended losses after the decision, falling as much as 62.61 to a dollar, before suspected central bank intervention helped ease some of the losses. It closed at 62.23/24 to a dollar versus 61.77/78 on Thursday.
Still, it gained 2 percent during the week reflecting the recent inflows from the RBI's forex swap facilities as well as the Federal Reserve decision to continue with monetary stimulus.
It had fallen as much as 20 percent to record lows in late August, but has recovered around 9 percent since Rajan took office on Sept 4.
Sensex extended falls to nearly 3 percent, with banking stocks leading declines before they retraced some losses to close down 1.85 percent. The main banking index ended down more than 4 percent.
3:30 pm RBI's shocking rate hike to ward off rising inflation sparked a sell off in the Indian equity markets today, wiping out almost all of yesterday's gains after US Fed chairman kept its stimulus intact.
While BSE Sensex ended 360 points lower at 20286, Nifty ended 103 points at 6013.
Real estate and banking stocks were the worst hit as investor grow concerned over RBI's mid-quarter credit policy review.'
The central bank has hiked repo rate by 25 basis points to 7.5 percent, but the bank left cash reserve ratio unchanged at 4 percent though the minimum CRR requirement is cut from 99 percent to 95 percent.
Even the rupee weakened further to 62.19 against the USD.
Nirmal Jain of IIFL feels that there is nothing in the RBI crdit policy which is so negative.
"Yesterday also it overreacted and it is again overreacting today as well," Jain said in an interview to CNBC-TV18.
R Sivakumar, head of fixed income, Axis Mutual Fund, termed the RBI move as a mixed policy.
" We have a rate cut and a rate hike in the same document. From a medium-term perspective, we see LAF rate becoming the operative rate that is clear, however the LAF rate itself will be higher than it cost before. While we do expect yields to settle down over a period of time, it will be at a higher level. Net net, the market is treating it as a rate hike rather than a rate cut," he said.
Worry not, Sensex fall just a kneejerk reaction to rate hike
3PM: High inflation prompted the central bank to hike repo rate by 25 basis points to 7.5 percent, but the bank left cash reserve ratio unchanged at 4 percent though the minimum CRR requirement is cut from 99 percent to 95 percent. Following the surprise move by the RBI, markets plummeted, weighed down majorly by rate sensitives.
At 3 pm, the Sensex was down 449 points at 20197, while Nifty was down 131 points at 5984.
Realty stocks were hit the most on unexpected hike in repo rate; the BSE Realty Index fell 6 percent. DLF , the realty major, crashed 11 percent.
Banking shares were the star peformers in the last session but are among the worst performers today with the Bank Nifty trading down 5.7 percent
However,Nirmal Jain, chairman, IIF believes a repo rate hike by 25 basis points does not make much of a difference because the short-term rates have been much higher.
"In the next few days, if the market gets more confidence on the rupee, which should happen with rising Foreign Currency Non-Resident (Banks), or FCNR(B), as well as overall rebound, then the easing of liquidity in MSF and LAF window will have a much better impact on the market or at least on sentiment with the banks, so the market reaction right now is just kneejerk, he said in an interview with CNBC-TV18.
He feels the market will have a positive bias which has nothing to do with monetary policy, but more with the global liquidity as Quantitative Easing (QE) has not been tapered and more money can be expected to flow into the Indian equity market.
With inflation as RBI priority, market should brace for more rate hikes
1:34 pm: Even as the markets recouped some losses after the RBI clarified that it is not looking to impose capital controls,Samiran Chakrabarty of Standard Chartered believes the RBI in all probability will hike repo rates further.
The central bank governor has made inflation his top priority, and this focus would drive all the policy actions going ahead.
"For the time being, I think withdrawal of the cumulative measures on liquidity would go to the backburner. Nobody is going to be too bothered by the pace at which they are getting withdrawn. The focus will come back completely on repo rate and more repo rates hikes are definitely possible," said Chakrabarty in an interview with CNBC-TV18.
Pratip Chaudhuri, chairman of State Bank of India also expects bank rate and lending rates to go higher.
Sensex back from brink as Rajan says no to capital controls
12:35 pm The Indian markets today recovered after RBI governor Raghuram Rajan's press conference, where he exuded confidence that the markets will weather the inevitable tapering by the US Fed and clarified that the RBI is not looking to impose capital controls.
Reserve Bank of India Governor Raghuram Rajan also indicated the marginal standing facility rate would be lowered more than the quantum of repo rate hikes.
While BSE Sensex recovered around 200 points from day's low, Nifty gained 70 points from the day's low.
At 12:40 pm, Sensex was down 380 points at 20258 while Nifty was down 116 points at 5999. Even the rupee recoverd to 61.98/62.00 to a dollar from 62.20/23 after RBI chief comments at the post policy conference.
"It is an honourable exit for the RBI and is the best way Rajan could take a step back towards normalising things. The hike in repo rate gives the message that inflation is still high but he is trying to bring down the MSF corridor," Manish Wadhawan, head of interest rate trading at HSBC in Mumbai, was quoted as saying by Reuters.
RBI governor Raghuram Rajan also clarified that the central bank intends to keep the repo rate in line with inflation- both CPI and WPI.
"We have to look at temporary changes in inflation, which will be corrected by new harvest of crops. We have to look at what inflation will be in the long horizon," he said.
"Pace of inflation will be calibrated to the economy," he added, stressing that the RBI will continue to fight inflation and bring it down.
He reiterated thatthe RBI's next move will depend entirely on economic conditions.
On the external front, he said noises on Syria are now more comfortable which will help stabilse crude prices, while Europe is seen recovering and exports are positive. These factors should ease pressure on India's current account deficit.
He also said that the intention of the government is to return to normal monetary operation.
On whether banks would raise lending rates, Rajan said that bankers will set rates appropriate to their cost of funding.
12:15 pm Will do what I have to do irrespective of Fed taper, says Rajan
Key highlights of Rajan's speech:
• Imperative to balance state of economy with fight against inflation. Emphasis on inflation, growth varies with economy conditions
•Hiked Repo Rate as inflationary pressures remain high.Want to use repo rate to anchor inflation expectations
•Intent of policy today is to say that cost of funding is very high. Given market conditions have been favorable in the last few weeks, we were confident that some liquidity tightening measures could be withdrawn.
•As we build confidence in economy and rupee, external value of rupee would adjust appropriately
•Control on capital was only precautionary measure. Govt liberalised when plenty of money was pouring in, we contracted when money was flowing out. RBI will be happy to liberalise once inflows resume
•Banks raised $1.4 billion in four days on the back of recent RBI measure.
•RBI aims to reduce financial distortions in economy and strain on corporate balance sheets.
•We can finance this year's current account deficit without much drawdown from reserves
•Growth picking up in Europe, Japan is positive for our exports
• We must create a bullet-proof national balance sheet with regard to the present rupee appreciation after Fed postponed tapering of its stimulus
• CRR issue "peanuts" in the overall scheme of things
•Market is waiting for measures on fuel subsidy, which will instill more confidence in the finance minister
•OMC window will slowly be tapered once economy improves
• Markets were prepared for more tapering and the Fed's move to defer it has created more uncertainty. However, India is ready for tapering and we have taken measures
•I thought we would have to worry a lot about what the Fed will say, but RBI policy stance was required regardless of what the Fed does
11:31 am The markets have reversed almost all of yesterday's gains after the RBIunexpectedly raised its policy interest rate by 25 basis points on Friday but rolled-back some of the measures it had implemented to support the battered rupee currency.
While the BSE Sensex was down 550 points at 20093, Nifty was down 170 points at 5940.
Bank Nifty was the worst hit, down 6.22 percent, reversing all of yesterday's gains.
Banks are among the top Nifty losers -- IndusInd Bank was down nearly 9 percent, PNB was down 8.6 percent, Bank of Baroda was down 7.3 percent, Axis Bank lost 6.6 percent while HDFC Bank was down 6.3 percent.
"RBI's repo rate takes away all hope of a market rally fuelled by US Fed's decision to keep stimulus intact," said brokerage IIFL.
Rangarajan welcomes RBI move, says growth will not be effected due to rise in repo rate
11:12 am:"We cannot ignore the fact that overall inflation-both wholesale and retail- are high and hence a signal needs to be sent on this front, said C Rangarajan, chairman of the Prime Minister's Economic Advisory Council.
If inflation does not show any signs of coming down, further action will be required, added Rangarajan.
He also stressed that growth will not be impacted with the 25 basis point hike in the repo rate due to the number of reforms taken up in the recent past to improve investment sentiment.
"The need to control inflation is RBI's biggest priority," he said.
Mkt update: Meanwhile, even though theSensex gained around 700 points yesterday, it has lost around 520 points today after the RBI surpised markets by hiking the key repo rate by 25 basis points.
11:00 amHawkish RBI refuses to join party, hikes policy rates
The Reserve Bank of India refused to join the party and unexpectedly raised its policy rate by 25 bos to 7.5 percent.
The central bank also eased the pressure on liquidity in the banking system by cutting the marginal standing facility rates for banks to 9.5 percent from 10.25 percent and also cut banks' daily cash reserve ratio requirement to 95 percent of deposits from 99 percent.
RBI says despite good monsoons leading to some moderation in CPI inflation, there is no room for complacency.
"In the absence of an appropriate policy response, WPI inflation will be higher than initially projected over the rest of the year. What is equally worrisome is that inflation at the retail level, measured by the CPI, has been high for a number of years, entrenching inflation expectations at elevated levels and eroding consumer and business confidence," said the Reserve Bank of India in its quarterly monetary review.
The RBI's earlier measures had been criticised for sending confusing signals on monetary policy measures. The move is likely to set this anomaly right as it clearly means that the bank is more bothered about inflation than growth.
The measures are likely to increase already high interest rates in the economy.
"The need to anchor inflation and inflation expectations has to be set against the fragile state of the industrial sector and urban demand. Keeping all this in view, bringing down inflation to more tolerable levels warrants raising the LAF repo rate by 25 basis points immediately," RBI said in a statement today.
Markets plunged soon after with the Nifty falling 99 points at 6017 and the BSE Sensex plunging by 490 points down at 20302.
Bank Nifty was the biggest sectoral loser.
"Inflation worries have driven the RBI to hike interest rates, said Nomura.
Commenting on the turbulence in financial markets, the RBI said that the decision by the US Federal Reserve to hold off tapering has buoyed financial markets but tapering is inevitable.
RBI may roll back rupee volatility curbing measure
10:45 am According to a CNBC-TV18 poll, a majority of the bankers and economists expect Reserve Bank Governor Raghuram Rajan to partially roll back the measures taken in July to prop up the rupee.
The RBI had restricted banks from borrowing at 7.25 percent from the repo window. It had forced them to borrow at a higher rate of 10.25 percent from a special window called marginal standing facility (MSF).
Around 55 percent of those polled expect the central bank to cut the MSF rate. Some expect a 50 bps (basis points) cut, while others expect as much as 200 bps. Only 45 percent expect the rate to be maintained at 10.25 percent.
Around 60 percent of the market now expects RBI to bring down this daily requirement to 90 percent of CRR, while 20 percent expect it to come down below 90 percent.
10:11 am Economists expect a partial rollback of measures taken by the Reserve Bank (RBI) to stem the rupee's fall.
Aditi Nayar, senior economist at ICRA believes there will be a gradual reversal of all these measures.
Most likely, the average daily cash reserve ratio (CRR) might reverse on Friday, she said in an interview with CNBC-TV18. She does not expect a change in the marginal standing facility (MSF) on the back of mixed signals from inflation in the past couple of months.
Even Dalton Capital Advisors expects the RBI to ease some tightening measures today.
"The US Federal Reserve's move to not taper its bond buying program has given the Reserve Bank room to ease some of the rupee volatility curbing measures, said UR Bhat, managing director, Dalton Cap."
CLSA economist Rajeev Malik expects the RBI to take a hawkish stance at its policy review meet today, as inflation continues to pose a major headache.
"The pleasant current wave of global risk-on doesn't change the hard reality of the uncomfortably high inflation for the RBI," he wrote in a note to clients this morning.
He, however, does not expect the RBI to announce a reversal of its recent liquidity tightening measures in a hurry. In July, RBI had raised short term borrowing rates for banks also stiffened the CRR norms.
"An outright dismantling of the convoluted short-term interest rate defence announced in July is more likely only in November/December. This is because there will be greater clarity on the overseas capital inflows, especially from non-resident Indians, via the RBI's temporary swap windows," Malik wrote.
He expects the rupee to strengthen to around 60 to the dollar near term, but expects it to slide into a range of 65-68 over the next 6 months. And that may not be a bad thing for the rupee he argues.
Sensex flat, rupee marginally weak, caution rules
9: 20 am Indian markets opened in the red as the newReserve Bank of India chief Raghuram Rajan makes his first monetary policy statement at 11 am today with expectations he may scale back some of the emergency measures that have helped the rupee bounce from a record low.
While the BSE Sensex opened0.40 percent lower at 20561, Nifty opened down 0.34 percent at 6096.
Market experts have advised investors to book profits andreshuffle their portfolio today after the RBI announcement.
The rally on Thursday was one of the biggest in recent times and any cooling will only be healthy for the market.
Even the rupee opened weak at 62.09 against the USD against Thursday's close of 61.71. On Thursday, the rupeesurged as much as 2.8%, hitting its highest in a month asBen Bernanke's surprise decision on Wednesday not to wind down its monetary stimulus has come as a shot in arm for Rajan. However, the Fed's decision also means that expectations from Rajan have risen manifold.
"There is certainly the danger of a more relaxed stance from the policymakers till the next round of tapering concerns hit the markets. They should just see this as a 2-3 months reprieve," said Robert Prior-Wandesforde, economist at Credit Suisse in Singapore.
"The RBI should not use this to ease monetary conditions. The rupee has only retraced a month's losses and is certainly not strong or stable. My sense is RBI will not touch the key rates but the tone will be somewhat more dovish," Prior-Wandesforde was quoted as as saying by Reuters.
The principal economic adviser at the Ministry of Finance, Dipak Dasgupta, said the Fed decision "was a huge surprise" and a "very positive decision."
He said it could add half a percentage point to India's economic growth in the near term.
Rupee opens weak at 62.09 as cautious market awaits Rajan's maiden policy
9:00 am The US Fed move to keep liquidity taps on has driven financial markets across the world to new highs; and India is no exception.
Indian equity markets surged to their highest level in nearly three years on Thursday, led by banks, after the US Federal Reserve stunned markets by delaying plans to cut asset-purchase programme. The rise was in tune with global markets.
Foreign institutional investors (FIIs) bought equities worth $574 million on Thursday. FIIs had bought equities worth $1 billion up to the FOMC's meet.
According to a report in the Business Standard, of the $4-billion selloff since May, Indian equities have already recouped $1.6 billion.
However the markets today may open flat today as it waits inanticipation for RBI's Monetary Policy today as the new governor Raghuram Rajan makes his debut.
The currency markets too seem cautious this morning as the rupee opened 32 paise weaker at 62.09 against the US dollar after closing at 61.78 on Thursday.
Rajan is expected to hint at some rollback of measures imposed in defence of the rupee while key policy rates may be left unchanged.
"There is a change of guard, so we don't know what the flavour will be, but Rajan is likely to be hawkish and reiterate the importance of low and stable inflation for sustained economic recovery," said Rajeev Malik, senior economist at CLSA in Singapore.
Finance Ministry has expressed hope that Reserve Bank of India (RBI) will focus on promoting growth.
Meanwhile, US stocks retreated slightly on Thursday as investors paused after the Federal Reserve's decision to keep its stimulus intact sparked a rally that lifted the Dow and S&P 500 to record highs.
End of updates on 19 September, 2013
5. 50 pm: Sensex ends at 34-month high as Big Ben chickens out of taper
Indian shares surged over 3 percent today with the benchmark index marking its highest close in nearly three years, led by banks, after the U.S. Federal Reserve surprised the markets by sticking to itsstimulus plan.
The rupee surged 2.6 percent, hitting its highest in nearly five weeks.
The Fed's move also means that the RBI will have greater flexibility if it wants to roll back some of the cash tightening steps it initiated since mid-July to stabilise the plunging rupee.
The RBI's decision to bump up its emergency funding rate by 200 basis points to 10.25 pct and cap banks' borrowing from it roiled bond markets and pushed up corporate borrowing costs, adding to strains on the already slowing economy.
State Bank of India, the country's largest lender, on Thursday raised its base rate, or the lowest rate at which it lends, by 10 basis points to 9.80 percent.
"A delay in the tapering agenda paves the way for the RBI to relook at the liquidity tightening measures put in place in July and possibly ease the restrictions. With the rupee already halving the losses seen from May to August, there might not be sufficient justification to keep those measures to place," said Radhika Rao, economist at DBS in Singapore.
"The policy commentary could adopt a move dovish and growth-supportive stance," she said, referring to the RBI's policy announcement after its meeting on Friday.
The partially convertible rupee closed at 61.77/78 per dollar compared to its close of 63.38/39 on Wednesday. The unit rose as high as 61.64, its strongest since August 16.
Bonds rallied with the benchmark 10-year yield falling to 8.14 pct, its lowest since Aug 8. It closed at 8.19 percent, down 18 bps. The Sensex and the Nifty closed more than 3 percent up.
"It is too early to say that everything is rosy for INR as global factors have played in favor of INR. We have to wait for tomorrow's policy to take a more concrete view," said Paresh Nayar, head of fixed income and currencies trading at First Rand Bank in Mumbai.
RBI Governor Raghuram Rajan will detail monetary policy on Friday and is widely expected to keep the policy rate and the cash reserve ratio unchanged, according to a Reuters poll. The poll, which was conducted before the Fed decision, also expects the July cash tightening steps to be retained.
A resurgence of inflation to a six-month high in August has muddied waters for the central bank, which has been battling a falling rupee and trying to revive the economy with growth having slumped to a decade low. ( Reuters)
Bad-ass Ben Bernanke fuels global rally, India parties hard
3:45 pm Economic worries took a back seat as a bull fury seized global markets after US Federal Reserve decided to hold back its tapering plans for a later date. Indian investors joined the party and bought shares as if there was no tomorrow, pushing the benchmark indices nearer record highs.
The BSE Sensex today posted its biggest one-day gain since May 2009 after the US Fed shocked markets by refraining from reducing the pace of monthly bond purchases it makes under the quantitative easing programme it introduced a year ago.
The consensus on Wall Street was that the FOMC would elect to taper its monthly bond buys to $75 billion from the current $85 billion pace. Hence's Ben Bernanke's decision to keep stimulus intact at the current pace sent global stocks and gold surging, while interest rates collapsed and the dollar weakened to a seven-month low.
In India, the Bank Nifty led the rally with the index gaining more than 3,400 points since its 28 August lows.
While the BSE Sensex closed up 663 points at 20625, the Nifty closed 208 points higher at 6107.
"In a salute to Fed's Taper Hold decision, global markets rose sharply. There was relief among emerging markets as threat about immediate FII outflows receded. Indian markets also rose on reduced threats of foreign money as well as in anticipation of a favourable policy from the new RBI Governor," said Dipen Shah, Head- Private Client Group Research, Kotak Securities.
But the real question on everyone's mind is whether the current rally is sustainable.
"It's very tough to say whether this is a start of a structural bull market because tho other legs of a 'bull market are absent' given the way India's economy is posied at the moment. Any volatility globally can hurt us even now.. so markets will continue to be volatile," said Amish Vohra of brokerage Prabhudas Liladher.
Technical market analyst too is not buying into the current rally and has advised long-term investors to book profits and exit markets as he expects a correction soon.
As Firstpost said earlier, Ben Bernanke's chickening out of taking on the risk of finding out what will happen if he reduces liquidity is an indirect confirmation that liquidity is key.
"What does the Fed's monthly bond purchase of $85 billion do? It increases liquidity. And where does the increased liquidity go? Usually into assets - shares, gold, et al. This is really the secret of making money on the stock market: look for liquidity surges and ebbs. When it surges, stocks go up. When it declines, markets move down. It is true as much of stocks as onions. The money chasing an asset decides prices in the short run. Long-term fundamentals like demand and supply are important, but the only fundamental that matters in the short run is liquidity," Firstpost's R Jagannathan said.
And it is this liquidity that is driving several brokerages to remain bullish on India.
Sanjay Dutt of Quantum Securities sees the market soaring to new high in the immediate short-term, but says breaching 6100-6120 range would be difficult for Nifty. On the downside, 5600-5800 is the concrete base for the market now.
The biggest concern, however, is that the rally may fizzle out sooner or later if government fails to act.
Now, all eyes are on Raghuram Rajan and what policies he doles out in his first policy meeting on Friday, 20 September to kick start India's growth process.
"Combined with the new leadership in RBI as well as in the government, one will probably get to see a new round of growth," said Raamdeo Agrawal, Joint MD, Motilal Oswal Fin Services in an interview with CNBC-TV18.
And while W RBI governor Raghuram Rajan may not be able to go in for big bang rate cuts or easing on the liquidity side, market expects him to ease some of the extreme steps that were taken during the course of July 15 and July 22.
"Because of factors like reduced threat of immediate outflows, the recent appreciation in the rupee, reduced core inflation and continuing low growth, we believe that, the RBI will not increase rates. On the other hand, with the reduced pressure on rupee we expect reversal of some of the measures taken by the RBI over the past 3-4 months to curb the currency depreciation," added Kotak's Shah.
2:30 pm The Indian markets are continuing there uptrend with the Nifty up more than 1000 points in the last 16 trading sessions and the Bank Nifty trading at a two-month high. The Sensex has also touched a 30 month high and is trading at its highest level since January 2011.
According to IIFL, markets will now watch for signs of liquidity easing by the Reserve Bank of India.
"Unless something unforseen happens, positive sentiment will continue in the market," said Nirmal Jain of IIFL, adding that markets will now run ahead of fundamentals.
He also said that banks will be a favorite for investors and expects buying in these stocks.
The Bank Nifty has gained 3400 points since August 28 lows while30 Nifty stocks have gained over 20 percent since 28 August.
Banking stocks have gained in the range of 3 and 23 percent.Among large-cap banks, ICICI bank Ltd gained 6.8 percent while HDFC Bank is up 4.8 percent.
Around 24 BSE stocks hit their 52-week highs as the Sensex gained 700 points at 20666.
According to HSBC, The fact that the money train will continue for a while means the risk of a hard-landing or a balance of payments crisis has been greatly reduced, if not averted. But, the Fed only postponed its tapering and even the BoJ will not print money forever.
"To avoid another rough summer, policy-makers in Asia will need to use this brief window to implement structural reforms to put Asian growth on a more sustainable path. That would make for a true bull market," said the brokerage.
Economies with huge balance of payment crisis are likely to get some temporary relief, as inflows are likely to stay for long. India and Indonesia, experiencing the greatest balance of payments pressures of late, should benefit the most, it added.
It, however, reiterated that the window will not be open for long, the Fed still thinks it will be done with QE by mid-2014 and tapering has probably been postponed by only three months.
Sensex soars on 'Big Ben' booster, is it just a one-day glory?
1:17 pm: The BSE Sensex surged over 600 points to a 30-month high and the Indian rupee pulled back below 62 per dollar after the U. Federal Reserve stunned markets and decided not to taper its asset-buying programme.
At 1;18 pm, the Sensexwas up 636 points at 20601, while Nifty was up 204 points at 6104amid hopes that easy money will continue its way into emerging economies especially India which so far bore the brunt of selling pressure.
According to Prashant Jain, Ed & Cio, HDFC Asset Management, the Fed's delay will give India more time to set right existing imbalances.
""We have to bring down our fiscal deficit and current deficit. You will get more capital when you are strong and capital will not come to you if you are in a weak position. Therefore, we need to set right the imbalances and make full use of this small window because ultimately Quantitative Easing (QE) will be withdrawn," he said in an interview with CNBC-TV18.
According to him, if diesel price is increased significantly then fiscal worries will abate to a large extent.
"There is good value in this market and that value will unfold whenever we manage to set right these twin deficits," he elaborated.
Some, however, expect the rally to continue.
""I think there is more leg to this rally as the Fed move completely surprised the markets. The key point that the Fed mentioned was regarding unemployment numbers which are above targeted level of 6.5 per cent. This further puts December tapering in question. Therefore we do believe that this rally will sustain as most fund managers who missed earlier gains will buy in greater chunks now," Vinay Khattar, head of research and Vice President at Edelweiss Securities, was quoted as saying by the Business Standard.
Fed move a 'get-out-of-jail card for markets', rally won't sustain
12:13 pm Fueled by Fed's decision to continue buying bonds at the current rate of $85 billion a month for now, the market manages to maintain its uptrend.
Sensex is still up 531 points or 2.69 percent at 20497 while the Nifty is up 175 points or 3 percent at 6075.
However, Sanjeev Prasad of Kotak Institutional Equities believes the current market rally will not sustain over 5 percent as India's macros continue to be challenging.
"The market will probably jump 3 percent at the start itself, so I think that trade is done pretty much. After that we will have to wait and see how much of reforms actually take place because once this trade is done one has to get back to the basics once again. It is not as if all of our problems have been solved by whatever announcements made by the Federal Reserves (Fed) last night.The way I look at it is India has basically got get out of jail card but how we use that card is going to be pretty important going forward. Keep in mind the fact that this tapering is not something which is not going to happen," he said in an interview with CNBC-TV18.
Markets cheer easy money, Sensex hits over 2-1/2 year high
11:03 am BSESensex today rose as much as 3 percent to its highest intra-day level in over 2-1/2 years after the US Federal Reserve stunned markets and decided not to taper its asset-buying programme.
The broader Nifty too is higher by 3 percent after surging as much as 3.3 percent to its highest level since July 23, 2013.
The NSE bank index gains 6.9 percent on hopes that the RBI in its policy review on Friday, may ease some of emergency cash tightening steps it had initiated in mid-July.
Banks, realty and auto stocks among top gainers today.
However, the BSE mid-cap index is up only 1.5 percent, as compared to BSE Sensex.
Banking stocks are the star performers today; Bankex is up 6.4 percent, while Yes Bank surged over 16 percent
However, CNBC-TV18's Udayan Mukherjee believesfundamentally nothing has changed, so in the current scenario the market does not deserve to be trading at an all-time high.
Meanwhile, the rupee surged as much as 2.8 percent on Thursday,as the US Federal Reserve's decision not to dial back its easy money policy is expected to provide a reprieve to the Reserve Bank of India (RBI) in its policy making.
"A delay in the tapering agenda paves the way for the RBI to relook at the liquidity tightening measures put in place in July and possibly ease the restrictions. With the rupee already halving the losses seen from May to August, there might not be sufficient justification to keep those measures to place," Radhika Rao, economist at DBS in Singapore, was wupted as saying by Reuters.
The rupee and the Indonesian rupiah stand to gain the most if foreign funds return to riskier assets in the wake of the Fed's surprise decision. Both bore the brunt of the recent sell-off in emerging market currencies since the Fed bank signalled in May that it may begin tapering stimulus this year.
Focus on emerging mkts as Sensex inches up 600 points
10:10 amThe BSE sensex surged to 20544, up by 580 points, even as the Nifty hit 6088, up 188 points.
With the US Federal Reserve lowering economic growth forecast the focus will now shift to emerging markets again and open opportunities for India, Sunil Garg, managing director of JPMorgan Securities said. He advises investors to stay long on India.
He believes majority of the FOMC outcome has already been factored in the Indian market. Equities, currencies and bonds will rally in the short-term, he told CNBC-TV18. Though in the long run, focus will be back on core issues plaguing the country, he warned.
Meanwhile, he sees the rupee going below 60 per USD in the near-term. According to him, the RBI may not unwind its tightening measures on September 20 policy meet.
09:32 am Banking stocks are on a roll with the Bank Nifty up 7 percent.
Banking stocks have gained in the range of 2 to 7 percent today as therupee appreciated nearly two percentage points against US dollar after the Federal Reserve decided to continue liquidity infusion through asset purchases.
Nifty is slowly inching towards the 6100 level.
At 9:35 am, the Nifty was up 175 points at 6075 and the Sensex was up 547 points at 20509.
Party on Dalal Street as Sensex soars more than 500 points on no taper
9:20 amLooks like a new bull rally is back in the market as Indian equity markets soared in opening trade.
While the Sensex opened540 points higher at 20,559, Nifty opened 183 points higher at 6085.
The Bank Nifty too jumped 6.5 percent.All frontline stocks were trading in the green.
BSE bankex is the top sectoral index with gains of nearly 7 percent.
ICICI Bank is up 8.4 percent, Maruti is up 6 percent, SBI gained 5.1 percent.
"There is good value in the markets which will unfold once India's twin deficits are dealt with," said HDFC Asset Management.
The Nifty is trading at the highest level since 23 July as theUS Federal Reserve has sprung a surprise by saying it would continue buying bonds at an $85 billion monthly pace for now. The markets world over had geared for a reduction in the central bank's economic stimulus.
"The committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases," the US central bank said in a statement.
So while strains remain in the US economy emerging markets including India are in no mood to feel any gloom.
Market analyst Sudarshan Sukhani believes this is the right time to book profits and get out out of the market.
"Do not overstay, book profits," he said in an interview with CNBC-TV18.
The Indian rupee was however of the day's high and was trading at 61.81 against the USD.
Bulls are back as Nifty surges in pre-open, rupee touches 61.7
9:00 am It is a killer start to markets with the Nifty and Sensex surging in pre-opening trade.
Even the rupee zoomed past 62 against the US dollar to touch 61.71 after the US Federal Reserve decided not to taper its asset-buying programme.
The rupee is currently trading at a one-month high as sentiment improves in the market after the US Federal Reservedefied investor expectations by postponing the start of the wind down of its massive monetary stimulus, saying it wanted to wait for more evidence of solid economic growth.
The Indian currency is up 2.7 percent, posting its biggest gain since 16 August.
However, CNBC-TV18's Udayan Mukherjee believes this is only a temporary reprieve for the rupee as the liquidity signal from the US Fed will be tapered after December 2013.
All eyes will now be on RBI governor Raghuram Rajan who will review the monetary policy tomorrow as it will provide a first glimpse on the new governor's approach to tackling the country's growth-inflation dynamics and external vulnerabilities.
Sensex, rupee seen zooming as Fed defers stimulus cut
8:45 AM:Markets are likely to see a gap up opening after the Federal Reserve stunned markets and decided not to taper its asset-buying programme. Marketswere braced for a modest cut and thebroader consensus was that the Fed would cut the monthly stimulus of $85 billion by $10-15 billion.
SGX Nifty futures on the Singapore Stock Exchange was 6114.5, up 3 percent, indicating a gap up opening for Indian shares.
Nifty witnessed a sharp pull-back on Wednesday in the last half an hour of trade but closed marginally below its crucial psychological level of 5900 on the back of short-covering rally ahead of the US Federal Reserve meet.
The US Federal Reserve, however, today defied investor expectations by postponing the start of the wind down of its massive monetary stimulus, saying it wanted to wait for more evidence of solid economic growth.
"I am sure the 'easy' money will be used by investors to take a punt on riskier or higher-yield assets, such as the Australian dollar and emerging market stocks," hedge fund manager Peter Schwartz told Firstpost.
According to Credit Suisse, the rupee will gain today. Market analyst Sudarshan Sukhani believes today is a very good day to make profits in the market.
"We will watch the fun today and take profits on long-term bets, especially the Bank Nifty," he said in an interview with CNBC-TV18.
Brokerage Edelweiss agrees and said today's rally will provide investors an opportunity to exit the market.
After Wednesday's Fed status quo, investors would be looking forward to the mid-quarter review of R BI's monetary policy review on September 20 - the first one under Governor Raghuram Rajan. He had postponed the policy review by two days to factor in Fed's moves.
And while the rupee mayappreciate on Fed's decision in the near term, experts say, it would remain under pressure unless policymakers address the wide current account deficit.
Overnight, US stocks rallied to record highs after the Fed decided against scaling back a stimulus program that has helped fuel Wall Street's rally of more than 20 percent this year.
Stocks were lower before the announcement, but after the Fed announced it would continue buying bonds at an USD 85 billion monthly pace for now, the Dow and S&P 500 indexes quickly climbed to all-time highs.
While equities jumped on the Fed's decision, questions remained how long the rally would last as the central bank expressed concerns about the economy's future growth with likely budget and debt limit battles in Washington to come.
MSCI's broadest index of Asia-Pacific shares outside Japan jumped 0.9 percent to its highest in almost four months.
Australia's main index gained 1.1 percent to a five-year high and Japan's Nikkei managed to brush aside a rise in the yen to climb 0.8 percent to a two-month peak.
"The Fed today chose an extremely dovish course of action," said Michelle Girard, a senior U.S. economist at RBS. "It did not just postpone tapering for three months - today's developments open the door for a longer-lasting QE3 programme."
With inputs from Reuters
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Updated Date: Dec 21, 2014 03:41:06 IST