Sensex gains 200 points to end above 20,000 ahead of US Fed meet

3:30 pm Indian markets ended in the green, edging higher during the last hour of trade,helped by continued foreign investment inflows in the past few weeks,ahead of the conclusion of the two-day US Federal Reserve meeting that is expected to result in the start of a rollback of its stimulus.

Most experts are of the view that the US Fed won’t take a hawkish stance on QE. They expect a tapering of about $10 billion, something which they say has been factored in by the markets.

While the Sensex closed 200 points higher at 20001, Nifty ended up 59 points at5909.

Bernanke, presiding over one of his final meetings, will also be setting in motion an exit strategy for his successor to follow. The street expects Fed Vice Chair Janet Yellen to be named Bernanke`s successor after former Treasury Secretary Larry Summers withdrew his bid over the weekend.

FIIs bought Rs 318 crore worth of shares on Tuesday, totalling more than Rs 7200 crore worth of buying over the previous nine sessions.

Consumer goods makers and drug companies perceived defensive rose on caution ahead of the conclusion of the two-day U.S. Federal Reserve meeting later in the day that is expected to result in the start of a rollback of its stimulus.

Sensex closes 200 points up at 20001, Nifty closes 59 points higher at 5909

11:37 am The Indian markets are volatile ahead of the US Fed meeting

The Sensex is more or less flat, up 20 points at 19823 while the Nifty is up 3 points at 5853.

According to market analyst Sudarshan Sukhani, trading ahead of the US Federal Reserve meeting is not a good idea.

“The market is waiting for news. It is never a good idea to trade before the news because unless one has a direct input into Bernanke’s mind, there is no way of predicting what the news will be. Traders stay away. It is not just a narrow range,” said Sukhani in ain interview with CNBC-TV18.

Expectations are that the Federal Open Market Committee will be measured with any cuts to its $85 billion in monthly asset buying, while also seeking to reassure investors that the day of an actual policy tightening is still distant.

Goldman Sachs remains “underweight” on Indian shares in its Asia Pacific portfolio and maintains its Nifty target at 5,700, saying the macro outlook remains challenged, which coupled with tighter financial conditions, may lead to lower valuations.

Sensex opens flat, rupee up marginally ahead of Fed’s two-day policy meet

9:30 am There’s caution and anticipation on the street as investors remains immersed in thought on what the outcome of the Federal Reserve’s policy committee meet would be.

The Indian markets opened flat with the BSE Sensex up57 points at 19869 and Nifty up 15 points at 5864.

Even the rupee opened just marginally higher at63.25 against US dollar against Tuesday’s closing of 63.37.

Arvind Narayanan, DBS said, “Rupee will be rangebound today ahead of the FOMC minutes. The mood remains slightly bullish. We could see rupee move below 63/USD again. The range for the day is seen between 62.50-63.40/USD.”

Whether and by how much the Fed chooses to withdraw its monetary stimulus will be crucial for emerging markets particularly India which have benefited from the Fed’s loose monetary policy.

The decision will be a key determinant of what the Reserve Bank of India does on Friday.

The Fed is expected to announce that it will slow the pace of its $85 billion in monthly purchases of Treasury bonds and mortgage-backed securities. Earlier, the Fed had indicated that it would taper its quantitative easing program sometime this year.

A CNBC poll shows the market watchers are expecting the Bernanke to taper the monthly bond buying programme by nearly $15 billion.

Goldman Sachs is underweight on India with a 12-month target of 5700 for the Nifty. At 14 times one-year forward earnings Moe says India is expensive, considering the deteriorating macro-economic environment.

According to Timothy Moe of Sachs, India is expensive, considering the deteriorating macro-economic environment.

He concedes that the market could rally if the US Federal Reserve maintains a status quo on bond purchases (QE) or reduces it by a quantum lower than what market is expecting. “But we would expect such a rally to fade and for markets to move lower in-line with the deteriorating fundamentals,” he said in an interview with CNBC-TV18.

The Fed’s record stimulus has helped fuel a $33 trillion jump in the value of global equities from a 2009 low, according to data compiled by Bloomberg.

Meanwhile, the Indian government on Tuesday said that to protect the interests of small artisans, the customs duty on articles of jewellery and of goldsmiths’ or silversmiths’ wares and parts thereof is being increased from 10% to 15%.

The Reserve Bank of India (RBI) reportedly cracked down on offshore foreign exchange trading by Indians through online trading websites, asking banks to report any such remittances to the regulator. In a circular issued late on Tuesday, the Reserve Bank of India (RBI) asked banks to advise customers not to undertake forex trading on foreign websites that offer currency contracts by accepting margins through credit card and online money transfer mechanisms. The RBI also asked banks to close the credit card or online bank account of a customer that is found to be in violation of the rule.

End of updates on 17 September, 2013

Nifty snaps three-day losing streak, GMR rallies on stake sale in highway unit

4:00 pmThe BSE Sensex rose on Tuesday, led by gains in technology stocks including Tata Consultancy Services which rose tracking weakness in the rupee and as recent underperformance of the sector made short-term valuations attractive.

Tata Consultancy Services Ltd) provisionally rose 2.2 percent, Infosys Ltd gained 0.8 percent, while Wipro Ltd surged 4.9 percent.

The Sensex rose 0.34 percent, while the broader Nifty ended 0.18 percent higher after slipping below its 200-day moving average for a brief period earlier in the day.

Shares of GMR Infra rallied 3.5 percent intraday on Tuesday as it sold its majority stake in a highway construction unit to India Infrastructure Fund of IDFC. GMR Infra sold 74 percent stake in Ulundurpet Expressways to the the fund for Rs 222 crore

Sensex in red, rupee weak, Ranbaxy recovers marginally

9:3O AMThe Indian rupee opened lower this morning amid concerns that the US central bank may announce scaling back its quantitative easing scheme on Wednesday.

While, analysts are bracing for reductions up to $10 billion in monthly asset purchases (from the current $85 billion), a larger tapering may lead to sharp fall across emerging markets.

The Federal Reserve will probably start to scale back on its massive bond-buying program this week and will try to help ease the market impact of the taper, Pimco`s Mohamed El-Erian told _CNBC o_n Monday.

The rupee opened at 63.37 against the US dollar, down nearly 1 percent from Monday’s close of 62.83.

Pramit Brahmbhatt, CEO, Alpari India in an interview with CNBC-TV18 said, “The dollar has a strong support level near mid-61 levels and hence rupee is expected to continue in the range of 62-63/USD. The range for the day is seen between 62.20-62.80/USD.”

Treasury Secretary Lawrence Summers exit spurred risk appetite sending the dollar to a four week low.

Stock markets also opened in the red with the BSE Sensex falling over 0.3 percent in early trade.

While the BSE Sensex opened down around 75 points at 19678, Nifty was down 16 points at 5820.

Banking stocks were the biggest loser, with the bank index down 1.1 percent.

IT index is sitting at the top of the sectoral pack with gains of nearly 1 percent.

Ranbaxy, which fell as much as 32 percent yesterday, is currently trading at Rs 327, up nearly 3 percent

End of updates on 16 September

Sensex erases all gains to end flat, Ranbaxy tanks 30%

3:30 pm: The Indian markets under-performed its global peers todayas India’s headline inflation hit a six-month high in August, driven by a surprise surge in food prices, hardening the case for RBI governor Raghuram Rajan to keep interest rates high at his first policy meeting later this week.

The BSE Sensex erased all morning gains and closed down 14 points at 19718 after jumping more than 300 points in morning trade.

Nifty ended flat at 5840, down 10 points.

The rupee, however, was steady at 62.71 against the USD.

BSE bankex was the top sectoral gainer, up nearly 2 percent while healthcare index fells 2.4 percent to end at the bottom of the sectoral pack.

The current rally is great chance for investors to exit the market, Sandeep Bhatia of Kotak Institutional Equities said. Fundamentally nothing has changed to warrant a market rally and will take around two-three years before things improve structurally, he told CNBC-TV18 in an interview.

CNBC-TV18’s Udayan Mukherjee is also of the view that the rally seen in emerging markets is the past few days is driven by global liquidity and has nothing to do with domestic factors.

Ranbaxy Laboratories closed 30 percent lower at Rs 318.15 after the US FDA Issued import alert on Ranbaxy Laboratories ’s Mohali Unit.

The latest import alert filed issued for Mohali unit is a huge setback for the pharma major believes Sarabjit Kour Nangra of Angel Broking.

“Mohali is a very important unit for the company given that most of the recent filings and specially after Dewas and Ponta Sahib have been under the trial for so many years,” she told CNBC-TV18 in an interview.

Sensex off day’s high as August WPI inflation rises to 6.1 percent

12:03 The markets fell another 100 points as the WPI inflation came in higher at 6.10 percent against expectations of 5.8 percent, led by higher food prices.

Inflation rose to 6.1 percent in August as compared to 5.79 in July, with the food articles index up 5.3 percent month-on-month.

Of the vegetables, onion price are up 51 percent year-on year.

While the Sensex was trading up 125 points at 19960, the Nifty was up just 28 points at 5880.

The food inflation rose to18.9 percent against 11.1 percent ( month-month month)

Fuel and power also rose 1.3 percent to 11.34 percent.

The minerals group index is up 0.7 percent, while the non food articles index is down 0.5 percent month on month.

July WPI was also revised to 5.16 percent from 4.8 percent.

Core inflation came in below 2 percent at 1.9 percent, implying that manufacturers will have very little impetus to produce more.

Dr C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council said inflation data indicates that the increase has been caused by a spike in primary articles, particularly vegetables, while manufacturing inflation has actually come down.

“I expect food inflation to ease in the coming months given good monsoons this year,” said Rangarajan.

Meanwhile, vverseas investors have pumped in nearly Rs 6,000 crore in the Indian capital markets in a fortnight ended September 13. Inflows in equities were about Rs 6,372 crore ($966 million) during September 2-13, while there was a pull-out of Rs 382 crore ($64 million) from the debt market, translating into net inflows of Rs 5,990 crore ($922 million), as per latest data available with market regulator Sebi.In August there was a net withdrawal of nearly Rs 16,000 crore (about $2.5 billion) from the domestic capital markets.

Sensex up 200 points thanks to global rally not ‘Rajan effect’

11:22 am The market are steady ahead of the FOMC and RBI monetary policy review lined up this week.

Continuing its upmove, the Sensex is up 209 points at 19947, while the Nifty is up 55 points at 5906.

Asian markets too edged higherafter Lawrence Summer withdrew his name from the race for the Fed’s top job. The relief rally was on account of the fact that many investors considered him to be a candidate that was more likely to curtain the central bank’s aggressive moves.

The question that a lot of people are asking is whether withdrawal of Summers could mark the end of the long winter for emerging markets.

According to CNBC-TV18’s Udayan Mukherjee, Larry Summers’ withdrawal from the Fed chairman race is the key event for the markets w. After the US non-farm payroll numbers emerging markets started to sense that there won’t be very aggressive tapering of quantitative easing (QE) by the Fed, he said this morning.

““A lot of people have fashioned it as a Raghuram Rajan rally, I think that is not the truth. It is an emerging market rally because those got terribly oversold,” Mukherjee said.

Rupee at four-week high, Sensex off day’s high

9:58 am The rupee today strengthened by 90paise to trade at four-week high of 62.58 against the dollarat the Interbank Foreign Exchange market on increased capitalinflows and dollar selling by exporters,after Larry Summers, the man tipped to be namedBen Bernanke’s successor as Fed chairman, withdrew from the

race, also supported the rupee.

The rupee had settled at 63.48 against the dollar onFriday, up marginally by two paise over previous day’s close.Meanwhile, the BSE benchmark Sensex was down by around 100 points from the day’s high atat 19999.58, up 266 points, while the Nifty was up 77 points at 5927.

Shares of Ranbaxy Laboratories Ltd slipped 27% at Rs334 after report said that US Food and Drug Administration (USFDA) issued import alert on the company.

The stock has hit a high of Rs411 and a low of Rs297.Total traded quantity on the counter stood at over 16.28 lakh shares.

Reliance Industries has slammed the DGH’s move to snatch 86% of its KG-D6 block area, including eight gas discoveries worth USD 10 billion, as “arbitrary” and said the oil regulator was responsible for the delay in developing the finds. The scrip is 0.92% up.

Meanwhile, HSBC downgraded Indian shares to ‘underwight’, citing risks to growth.

The bank said that after the recent bounce, India looks relatively expensive and is most exposed to growth adjustments.

HSBC added that it expects GDP forecasts to decline and earnings growth forecasts to follow.

9:23 am Sensex jumps 300 points asLarry Summers pulls out of US Fed race

Investors took the withdrawal on Sunday of former Treasury Secretary Larry Summers as a candidate to head the US Federal Reserve as relief betting the bank’s next chief would extend an era of easy money that has flooded global markets with cash.

Markets viewed Summers’ move as leaving Fed number two Janet Yellen, a well-known advocate of looser monetary policy to support the US recovery, the favorite to succeed the current chairman, Ben Bernanke.

The market boost was caused by perceptions that Summers would have pulled the plug more quickly on the Fed’s easy money policies than other contestants for the job.

Indian markets jumped in opening trade with the Sensex immediately crossing the 20,000 mark, and the Nifty is comfortably sitting closer to the 5950 level on the possibility of a dovish future US Fed chairman after the withdrawal of Summers from the race.

Emerging markets had feared that if Summers replaces Ben Bernanke, whose second term as Fed chairman expires in January, any scaling back in the central bank’s asset-purchase program would be ramped up by the hawkish Summers and deal a further blow to battered emerging markets.

Paul Krake, founder of the consultancy View from the Peak: Macro Strategies, said that it isn`t when the Fed starts to take back its massive monetary stimulus but who takes over as Fed chairman next year, that`s important to markets right now.

“The US president is a pretty important job; but ask the Indians, the Indonesians, the Brazilians who`s had more influence over their lives and the answer would be the Fed chief,” he told CNBC.

Emerging markets from Brazil to India and Turkey have been hit hard since May on talk of an unwinding of the US monetary stimulus that has provided global markets with liquidity in the past few years.

And markets were viewing Summers becoming Fed chief as a break in the continuity in policy making.

The prospect of a more protracted easing cycle would be a big relief as India has been hammered by expectations offshore funds would switch to developed markets as yields there rose.

While the Sensex opened 309 points higher at20061, Nifty opened 104 points higher at 5950.

US stock index futures and Treasury futures rallied as a result of the news, and investors and analysts said those gains will likely extend further into the Monday session.

Even the Indian rupee gained in opening to trade at 62.71 against the US dollar.

Agam Gupta, Standard Chartered, told CNBC-TV18, “Rupee will probably open between 63 and 63.20. The dollar has weakened against major EM currencies and hence we expect dollar weakness against rupee too. Expect exporters to sell on upticks. The range for the day is seen between 62.50-63.25/USD.”

According to _CNBC-TV1_8’s Udayan Mukherjee, “This is an emerging market rally and not the result of the Rajan effect. “This is a global liquidity phenomenon as emerging market stocks were highly oversold,” he said this morning.

The idea of a Summers-led Fed worried emerging markets because of the belief that he would scrap QE much faster than Janet Yellen, in ways that would push nations like India, Indonesia and Thailand with widening current-account deficits into free fall.

“My first thought was that the markets will rally on this,” said Scott Frew, managing partner and owner of Rockingham Capital Advisors in Hartford, Connecticut. “There’s certainly a perception that Yellen is more dovish than Summers.”

The Fed has taken extraordinary steps to try to buoy the world’s largest economy both during and after the financial crisis.

Currently the bank is buying $85 billion per month in Treasuries and mortgage-backed securities, its quantitative easing program.

That wave of easy money has helped take U.S. stocks to record highs and yields on U.S. government debt to record lows.

“Summers’s exit makes Monday a huge day for curve/risk on trades. Treasury 5/30 curve may steepen by 10. Stocks should do very well,” Bill Gross, chief executive at Pimco, was quoted as saying by Reuters.

Dan Fuss, Vice Chairman and Portfolio manager, Loomis Sayles, Boston said Larry’s exit is a short-term plus for the bond market.

“Treasuries will rally on this news as investors saw Summers as hawkish toward quantitative easing.”

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.5 percent, while South Korea.KS11 jumped 1.1 percent.

Sentiment was further helped by Saturday’s deal between Russia and the United States to demand that Syrian President Bashar al-Assad account for his chemical arsenal within a week and let international inspectors eliminate all the weapons by the middle of next year.

On a total return basis, the S&P 500 stock index is up 20 percent so far this year - its best return since 2009, when stocks began recovering from their swoon during the financial crisis in which they lost more than half their value.

The Fed’s efforts to keep interest rates low have sent investors scurrying for yield. High-yield debt - known as junk bonds because of their low ratings - has sold steadily, with the Merrill Lynch US High Yield Master II Index surging about 126 percent from 2009 through 2013.

Globally, investors have borrowed in dollars to invest in higher-yielding markets abroad, the so-called carry trade. MSCI’s 45-country world index is up about 12 percent so far this year.

But the view that the Fed could withdraw its stimulus soon has rocked global markets, taking benchmark U.S. Treasuries yields to above 3 percent recently, a more than two-year high - underscoring how the U.S. central bank’s every move affects investors big and small all over the world.

A spike in rates is worrisome because U.S. government debt is used as a benchmark around the world for everything from obscure derivatives contracts to mortgage rates.

If, in fact, yields rise too high, some economists fret the U.S. recovery could be derailed. Mortgage applications in the latest week fell, as 30-year mortgage rates matched a year-high of 4.8 percent - well over 100 basis points from earlier in the year.

Yellen has been a forceful advocate of the aggressive steps taken under Bernanke to spur U.S. economic growth, earning her a reputation as a policy “dove” who would tolerate a bit more inflation to drive down unemployment that she deemed too high.

Analysts said a Yellen nomination would boost markets because of that sense of continuing Bernanke’s approach.

“I expect not only a rally in stocks but also a decrease in yields, as the Fed remains in the same path Bernanke set” under a Yellen nomination, said Michael Yoshikami, CEO and Founder at Destination Wealth Management in Walnut Creek, California.

Markets had already been leaning back into riskier assets such as stocks on a raft of strong U.S. economic data and eased worries about a military strike on Syria.

Investors in funds based in the United States poured $12.8 billion into stock funds in the latest week, according to data from Thomson Reuters’ Lipper service.

But Yellen’s nomination - and her perceived dovishness - are hardly guaranteed, with other options such as Donald Kohn, Roger Ferguson or Timothy Geithner - who has said he does not want the job - possibly in the mix.

“The Obama administration has shown little, if any, enthusiasm for Yellen, however, so we’re not convinced she will necessarily get the nod,” noted Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

The Federal Open Market Committee meets on Sept. 17 and 18 and will discuss whether to slow the bank’s asset purchase program.

With inputs from Reuters