Benchmarks rallies in late morning

After opening higher, benchmarks maintained early gains led by buying in heavyweight stocks. The upmove came as market participants confirm their view that India is way better prepared to tackle the tapering of US Federal Reserve's easy money policy also known as quantitative easing-3 (QE-3). The market sentiment also got boosted by data showing that foreign funds made heavy purchases of Indian stocks on December 19, 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 2264.11 crore on Thursday. However, gains remained capped as some pessimism came in as the rupee fell for a fourth session, driven by weak Asian FX a day after US announced tapering of its stimulus. The unit was trading at 62.28 versus Thursday's close of 62.14/15.

On the global front, most of the Asian equity indices were trading in the red at this point of time on account of lack of fresh triggers from the region and some profit taking were contributing to the lackluster trade in some of the markets. Meanwhile, the Japanese market drifted lower in early deals as investors remained on sidelines ahead of the outcome of the Bank of Japan’s two-day policy meeting that ends later in the day. Back home, traders were buying, Oil & Gas, Auto and IT, while selling was seen in Capital Goods, FMCG and Health Care on the BSE. Sugar stocks such as, Rana Sugars, Shree Renuka Sugars, Balrampur Chini, Bajaj Hindusthan edged higher as the Cabinet Committee on Economic Affairs (CCEA) approved an interest-free loan of Rs 6,600 crore for the ailing sugar industry to pay off cane arrears.

The market breadth on BSE remains positive with advances to declines in the ratio of 1103:598. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,700 and 6,150 levels respectively. The BSE Sensex is currently trading at 20798.62 up by 90.00 points or 0.43 % after trading in a range of 20825.72 and 20745.94. There were 23 stocks advancing against 7 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.95% and Small cap index gained 0.83%.

The top gaining sectoral indices on the BSE were, Oil & Gas up by 1.56%, Auto up by 1.37%, IT up by 1.13%, Realty up by 1.06% and Teck up by 0.86%, while Capital Goods down by 0.67%, FMCG down by 0.54% and Healthcare down by 0.16% were the top losers on the sectoral index.

The top gainers on the Sensex were ONGC up by 1.97%, Wipro up by 1.79%, RIL up by 1.57%, Hero MotoCorp up by 1.45% and Tata Motors up by 1.29%. On the flip side, Sun Pharma was down by 2.03%, L&T was down by 1.30%, ITC was down by 0.86%, Bharti Airtel was down by 0.73% and  SSLT was down by 0.32% were the top losers on the Sensex.

Meanwhile, As the US Federal Reserve planned to reduce monthly bond purchases by $10 billion each month from the existing level of $85 billion from January, Finance Minister P Chidambaram asserted that India is better prepared to deal with the impact of US stimulus withdrawal adding that consequences will not be large and more steps will be taken, if needed.

Referring to the adverse impact of the US Fed taper programme on Indian stock markets and currency markets, Chidambaram added that the government is of the view that markets have already factored in the US Federal Reserve's decisions, therefore is not likely to be surprised by these moderate changes. The Finance minister further stressed that India has increased the quantum of bilateral currency swap arrangement with Japan from $15 billion to $50 billion, a move which will help stabilise rupee exchange rate.  Indian authority assessed the exchange rate over the period of time and in near future rupee value is expected to remain stable as US Fed announced to taper its quantitative easing through mild reduction rather than any sequential reduction. Finance Minister has also communicated with Reserve Bank Governor Raghuram Rajan and discussed about the likely impact of US tapering on India. 

Recently, the US Fed Reserve noted that it will continue its purchases of treasury and agency mortgaged-backed securities from January and employ other policy tools as appropriate, until the outlook for the labour market will be improved substantially in the context of price stability. The recently released UN World Economic report highlighted that emerging markets should be well prepared to deal with the impact of US Federal Reserve's taper programme as it would impact the capital inflow into these countries.  The CNX Nifty is currently trading at 6,189.65 up by 23.00 points or 0.37% after trading in a range of 6,196.35 and 6,170.35. There were 33 stocks advancing against 17 stock declines on the index.

The top gainers of the Nifty were Cairn up by 2.27%, ONGC up by 1.97%, Wipro up by 1.97%, Ranbaxy up by 1.66% and Reliance Industries up by 1.65%. On the flip side, Sun Pharmaceuticals down by 2.11%, NMDC down by 1.77%, Grasim down by 1.49%, L&T down by 1.39% and IDFC down by 1.06% were the top losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 12.69 points or 0.60% to 2,115.10, Hang Seng dipped 102.86 points or 0.45% to 22,785.89, Jakarta Composite contracted 44.22 points or 1.04% to 4,187.76, KLSE Composite shed 5.28 points or 0.29% to 1,840.90 and Nikkei 225 was down by 65.44 points or 0.41% to 15,793.78. On the flip side, Straits Times rose 7.63 points or 0.25% to 3,077.86, Seoul Composite added 3.31 points or 0.17% to 1,978.96 and Taiwan Weighted was up by 24.33 points or 0.29% to 8,431.73.