Indian markets make gap-up opening as Fed maintains stimulus

Extending previous session’s jubilation, Indian equity benchmarks have made a gap-up opening and are trading with a gain of around three percentage points, surpassing their crucial 6,050 (Nifty) and 20,500 (Sensex) bastions after the Federal Reserve chief Ben Bernanke surprised markets by continuing with its $85 billion dollar stimulus injection plan. Sentiments also got some boost after rupee strengthened significantly in today’s trade tracking other emerging market currencies after US Federal Reserve continued with its bond-buying plan. The partially convertible rupee was trading at 61.90 per dollar against the yesterday’s close of 63.38 on the Interbank Foreign Exchange.

Global cues too remained supportive with the US markets closing significantly higher in last session, as Fed refrained from tapering stimulus program at its highly anticipated monetary policy meeting. Moreover, Asian equity indices were rallying at this point of time with Japanese Nikkei trading higher by over one and a half percent as the country’s exports climbed 14.7 percent year on year, beating expectations for an increase of 14.5 percent after collecting 12.2 percent in the previous month.

Back home, foreign institutional investors (FII) had pumped dollars into Indian markets, net-buying into shares worth Rs 580 crore on September 18, 2013. So far this month, these investors have bought to the tune of over Rs 7,000 crore, after selling shares worth about Rs 22,000 crore in the preceding three months. All the sectoral indices on the BSE were trading in the green with Banking and Realty segments gaining the most. Auto, capital goods, public sector undertakings, power and oil and gas too were trading with significant gains. The broader indices too were trading significantly, while the market breadth on the BSE was positive; there were 927 shares on the gaining side against 266 shares on the losing side while 46 shares remain unchanged.

The BSE Sensex opened at 20354.73; about 392 points higher compared to its previous closing of 19962.16, and has touched a high and a low of 20567.61 and 20347.30 respectively. The index is currently trading at 20549.21, up by 587.05 points or 2.94%. There were 29 stocks advancing against 1 declines on the index.

The overall market breadth has made a strong start with 74.82 % stocks advancing against 21.47% declines. The broader indices, the BSE Mid cap and Small cap indices were up by 1.66% and 1.06% respectively. 

The top gaining sectoral indices on the BSE were, Bankex up by 6.96%, Realty up by 5.26%, Auto up by 3.02%, Capital Goods up by 2.86% and PSU up by 2.80%, while there were no losers on the sectoral index.

The top gainers on the Sensex were ICICI Bank up by 8.64%, SBI up by 6.50%, Mahindra & Mahindra up by 5.35%, Maruti Suzuki up by 5.25% and Bharti Airtel up by 5.13%. On the flip side, Wipro was down by 0.44% was the only loser on the Sensex.

Meanwhile, foreign direct investment (FDI) into India increased by 12.9 percent on y-o-y basis to $1.66 billion in July from $1.47 billion recorded in the same month of previous fiscal, highest in the previous three months. During April to July period of current fiscal, FDI inflows were up by 20 per cent to $7.05 billion over the same period of previous fiscal.

The sectors that received large inflows during the first four months of FY14 include services ($1.02 billion), pharmaceuticals ($1 billion), automobile industry ($637 million) and construction ($359 million). Country wise, maximum FDI during the period came from Singapore ($2.21 billion), followed by Mauritius ($1.85 billion), the Netherlands ($520 million), Germany ($518 million), and the US ($371 million).   

FDI is considered crucial for economic development of a country and to attract maximum FDI into the country, the government has been liberalizing the foreign investment policy. Recently, the government has relaxed FDI norms in around 12 sectors which include telecom, tea, pension and petroleum and natural gas. Meanwhile, India would require around $1 trillion in the 12th five year plan (2012-2017), to overhaul its infrastructure sector such as ports, airports and highways to boost growth. Further, a rise in FDI will help support the rupee, which recently depreciated to record low of over 68.50 against the US dollar.

The CNX Nifty opened at 6,044.15; about 144 point higher as compared to its previous closing of 5,899.45, and has touched a high and a low of 6,092.70 and 6,040.15 respectively.

The index is currently trading at 6,085.35, up by 185.90 points or 3.15 %. There were 49 stocks advancing against 1 declines on the index.

The top gainers of the Nifty were IndusInd Bank up by 8.60%, ICICI Bank up by 8.42%, Axis Bank up by 7.98%, PNB up by 7.71% and Kotak Mahindra Bank up by 7.55%. On the flip side, NMDC down by 1.15% was the only loser on the index.

Most of the Asian equity indices were trading in green; Hang Seng surged 394.67 points or 1.71% to 23,512.12, Jakarta Composite zoomed 198.24 points or 4.44% to 4,661.49, KLSE Composite strengthened 18.68 points or 1.05% to 1,790.08, Nikkei 225 soared 218.50 points or 1.51% to 14,723.86 and Straits Times was up by 51.49 points or 1.61% to 3,245.34.

Stock markets in China, Taiwan and South Korea remained shut for the trade today on account of public holidays.