The Indian markets, despite choppiness managed a close of modest gains in last session. Today, the start is likely to be cautious ahead of Fed’s policy meeting announcement, though some strength can be seen in latter part of the day as the modest cut in Fed’s bond buying programme seems to be already priced in. However, the traders will be watching the movement of rupee, which depreciated in last session, wary of FOMC meeting and lacking any intervention from Reserve Bank of India. Meanwhile, the traders will get a reason to cheer, as Foreign Direct Investment (FDI) into India grew by 12 percent year-on-year to $1.65 billion in July from $1.47 billion in July 2012, highest since April. However, the gold and jewellery stocks will be buzzing, as the Finance Ministry has raised the import duty on gold and silver jewellery to 15 percent from 10 percent, in a move to protect the domestic industry and curb the precious metal’s imports.
The US markets extended their gaining streak, gaining modestly in last session. Though, the trade remained somewhat subdued ahead of Fed announcement after its two days meeting. There is general expectation that Fed will announce its plan to begin scaling back its asset purchase program. The Asian markets have made a mixed start waiting for the Fed release, though the Japanese market has surged, gaining over a percent on yen weakness. Chinese market is marginally in red ahead of the release of property prices data.
Back home, Indian equity benchmarks, after trading cautiously throughout the session, managed to negotiate a positive close with frontline gauges recapturing their crucial 5,850 (Nifty) and 19,800 (Sensex) levels supported by pullback in dying hours. Earlier, markets exhibited lacklustre trade with volatility in a tight range, as investors opted to remain on sidelines ahead of outcome of the US Federal Reserve meeting and Reserve Bank of India’s (RBI) monetary policy review. Meanwhile, chairman of the PMEAC, C Rangarajan said that he expects the central bank to take into account inflation and the situation with regard to rupee while it takes a view on the monetary policy. Global markets too remained choppy with European markets trading lower in early deals, while most of the Asian equity markets ending in the red as traders’ exercised caution ahead of a crucial US Federal Reserve meeting. Back home, sentiments also remained dampened after Prime Minister’s key economic advisor C Rangarajan, pitching for a non-restrictive regulation in the financial sector, said that too many norms can impede financial innovations. Profit booking in banking space too dampened the sentiments. Moreover, shares of gold finance companies such as Muthoot Finance and Manappuram Finance too edged lower after the Reserve Bank of India (RBI) tightened regulations governing non-banking finance companies (NBFCs) lending against gold jewellery. As per the new norm, gold loan financing companies should have appropriate infrastructure for storage of gold ornaments. It also made mandatory for NBFC to obtain prior approval of the Reserve Bank to open branches exceeding 1000. However, markets witnessed decent pullback in dying hours to get back to their positive trajectory supported by buying in software and technology counters after Indian rupee depreciated against dollar during the session. Buying in Auto space too provided some strength to the bourses. Most of the two-wheeler stocks rose on expectations of pickup in sales during the upcoming festive season and on hopes that good rains this year will boost rural sales. Finally, the BSE Sensex gained 61.56 points or 0.31% to settle at 19804.03, while the CNX Nifty added 9.65 points or 0.17% to 5,850.20.
