Markets hits highest intraday level in over 2-1/2 years on Fed’s stance

In the rock-solid session of trade, benchmark equity indices are trading near their January 2011 highs, as bulls continue to cheer Fed’s decision of not dialing back its easy money policy for now. Markets witnessed the incremental bounce on the hopes of increased capital inflows after the US Federal Reserve's decided to keep its stimulus programme intact. Nevertheless, the decision which also fuelled the expectation that Reserve Bank of India will now have greater flexibility if it wants to roll back some of the cash tightening steps it initiated since mid-July to stabilize the plunging rupee, mainly got all the guns blazing over Dalal Street, with banking stocks acting as the major beneficiaries to this development. Thus, trading near day’s high, Sensex and Nifty are comfortably cruising the past the new found support levels of 20,500 and 6,050 respectively, with gains of close to three odd percent. Meanwhile, broader indices, although gaining traction are underperforming frontline indices, and currently trading with gains of close to a percent.

On the global front, receiving a positive handover from Asian markets, European shares have risen to the highest level in more than five years after Fed’s surprising move. The Fed wrong-footing the markets unexpectedly refrained from reducing its $85 billion monthly bond buying, saying it needs to see more indications that the U.S. economy is improving sustainably.

Closer home, with across the board taking place, sole shares from Information Technology counters were the losers. IT stocks dished out all their stem gathered in the recent past, on account of Rupee appreciation. The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1232:876; while 132 shares remained unchanged. The BSE Sensex is currently trading at 20545.20, up by 583.04 points or 2.92% after trading in a range of 20567.61 and 20,347.30. There were only 29 stocks advancing against 1 decline on the index.

The broader indices were trading in green; the BSE Mid cap and Small cap index were trading up by 1.83% and 0.97% respectively.

The top gaining sectoral indices on the BSE were, Bankex up by 6.70%, Realty up by 5.48%, Capital Goods up by 3.69%, PSU up by 3.30% and Metal up by 3.15%. While, IT down by 0.11% was remained the only losing indices on BSE.

The top gainers on the Sensex were, SBI up by 7.97%, ICICI Bank up by 6.77%, Tata Steel up by 6.20%, Maruti Suzuki up by 6.16% and ONGC up by 5.09%. On the flip side, Wipro down by 1.75% was the only losers on the Sensex.

Meanwhile, in the wake of a grim economic scenario, the government on Wednesday unveiled a string of minor austerity measures, aimed at restricting non-plan expenditure by 10%. This includes a ban on five-star venues for government meetings; foreign locations for conferences, exhibitions and seminars; and executive class airline tickets for officials. Further, the finance ministry via its circular also pushed officials to keep the size of delegations going abroad at an absolute minimum. It also directed other ministries and departments to not buy new vehicles, create fresh jobs or fill posts lying vacant for over a year.

The ministry hopes that these measures, which include a 10% cut in non-plan expenditures, but excludes interest payments, repayment of debt, the defense budget, salaries, and pensions, will help to curb the fiscal deficit at 4.8% of the GDP in 2013-14.

However, the measures are nothing new and are a reiteration of such steps taken in the past. Back in 2009, when the economy had slowed down due to the economic meltdown, the government had introduced similar austerity measures. The finance ministry had asked various ministries and departments to slash non- plan expenditure by 10%. Additionally, India’s finance ministry announced similar austerity measures in November last year, which helped it contain the fiscal deficit at 4.9% of GDP. 

The CNX Nifty is currently trading at 6,088.40, up by 188.95 points or 3.20% after trading in a range of 6,092.70 and 6,040.15. There were 47 stocks advancing against 3 declines on the index.

The top gainers of the Nifty were PNB up by 9.98%, Bank of Baroda up by 8.71%, SBI up by 8.03$, JP Asscoiate up by 7.57% and IndusInd Bank up by 7.52%. On the flip side, NMDC down by 1.15%, Power Grid down by 0.45% and HCL Tech down by 0.37% were the top losers on the index.

The Asian equity indices were trading in green; Nikkei 225 was up by 1.80%, Straits Times up by 1.76%, Hang Seng up by 1.68%, Jakarta Composite up by 4.74% and KLSE Composite up by 1.10%.

European markets also got a boisterous start; with CAC 40 spurting by 1.21%, DAX adding 0.45% and FTSE 100 ascending by 1.36%.