Economy Sep 13, 2013
3:35 pm The Indian markets ended relatively flat today but the mid-caps outperformed the frontline stocks.
While the BSE Sensex ended down64 points at 19717, while the Nifty ended down 4 points at 5846.
Despite a no-show by markets today, the Sensex gained 2.4 percent in this week and the broader Nifty gained almost 3 percent.
IT stocks had a rough day today, particularly FTIL which provisionally ended down 9 percent, followed by Wipro which lost 3.7 percent; HCL Tech, Tech Mahindra, TCS, Infosys also ended in the red.
ICICI Bank provisionally ended down 1.8 percent, HDFC Bank was down 1.4 percent while Yes Bank lost 0.2 percent. However, some banking stocks closed the day with - Union Bank, PNB, Axis Bank gained around 4 percent each.
Adani Group stocks, however, had a good run today as BJP is all set to announce Narendra Modi as the party's prime minister candidate today.
According to a CNN IBN report, BJP President Rajnath Singh finally decided to bite the bullet on Modi's anointment, calling the Parliamentary board to anoint Modi as the party's PM candidate despite protests from Advani and Sushma Swaraj.
While Adani Enterprises ended up 3.44 percent, Adani Ports closed up 6 percent and Adani Power ended 3.2 percent higher.Media reports had earlier said that Gautam Adani is close to Modi.
According to Jeffery Gundlach, a well known bond expert, the outlook for Indian stock markets is negative.
He thinks Indian markets are "very scary" in the medium term due to therisk of capital outflows.
Indian stock markets are heavily driven by foreign capital flows. Anything that may cause to exit Indian stocks could bring Indian stocks tumbling.
The US Fed had hinted about a likely tapering in its QE program,E starting September. If IT happens, it could trigger a mass exodus of capital from emerging markets. And India would be among the worst affected.
Adani stocks gain as BJP to announce Modi as PM candidate today
2:09 pm BJP party president Rajnath Singh today informed his allyShiv Sena that Narendra Modi will be declared as the party's Prime Ministerial candidate today, according to a CNN IBN report. However, the markets continued to trade in red as a formal announcement is yet to be made.
While the BSE Sensex is down 27 points at 19755 the Nifty is up 7 points at 5851.
However, Adani Group stocks were trading higher. Media reports had earlier said that Gautam Adani is close to Modi.
According to Election Commission of India, the Adanis are among the biggest corporate donors to BJP.
Earlier this year Gautam Adani had even cancelled his trip to Wharton's India Economic Forum 2013 after Modi was dropped as the keynote speaker there. The move was largely viewed as a gesture of loyalty to Modi.
While Adani Power was up 4.5 percent,Adani Enterprises gained 4.25 percent and Adani Ports was trading higher at 5.25 percent.
The Adani Group has often come under attack from the opposition Congress in Gujarat which has accused it of receiving huge tracts of land from the Modi government at throwaway prices.
The rupee, meanwhile, is trading near the day's high at 63.6 after touching 64.15 in morning trade today.
Sensex choppy, rupee stuck at 64, IIP surprises but may be overstated
10 AM After opening in red, Sensex moved up 81.98 points or 0.41 percent at 19863.86, and the Nifty added 21.45 points or 0.37 percent at 5872.15. About 684 shares advanced, 262 shares declined, and 43 shares remained unchanged.
The Indian rupee was still trading at 64.05 against the USD.
Ashutosh Raina, HSBC said, "The easing of tension in Middle East coupled with good IIP numbers from India are positive triggers for the currency. Technically, 63/USD is a strong support for USD/Rupee pair, the break of which should pave way for 60.50/USD level. However, we expect the 63/USD level to hold till the FOMC. The range for the day is seen between 63-64/USD."
The Index of Industrial Production (IIP) for July 2013 came in at 2.6%, significantly higher than consensus estimates at -0.8%. However, according to brokerage Emkay substantial recovery in IIP growth is still away as leading sectors continue to be weak.
commercial vehicle sales contracted 23.1%, truck and bus sales contracted 38.2% whereas motorcycle sales rose a meager 3.8% in August. Moreover, any improvement in mining production tracking the removal of mining bans levied in states such as Karnataka and Goa would only be gradual.Power generation data for August indicates a marginal month-on-month contraction.
"We do not expect any significant improvement in the Aug IIP data. Despite a weak base last year, the insidious slowdown in growth sentiment has kept production numbers muted throughout this fiscal," said Dhananjay Sinha and Meghna Shah, analysts at Emkay Global.
Rupee breaches 64, Sensex yo-yos again, it's time to sit tight
9:30 am The Indian markets opened in the red this morning even as foreign investors continued to buy into the markets for the sixth consecutive day.
The BSE Sensex opened 76 points down at19710, while the Nifty opened down 25 points at 5827.
The top losers were ICICI (down 1.7 percent), Bharti (down 1.6 percent), ONGC (down 1.4 percent), JSPL (down 1.2 percent.)
JP Associates extended losses, down 2 percent after slumping 11.6 percent yesterday following its deal with UltraTech cements.
The FIIs were net buyers of Rs 930 crore in the cash segment on Thursday, while the domestic institutional investors (DIIs) were net sellers of Rs 395 crore, as per the provisional figures released by the NSE.
"Markets are very choppy. After such a sharp up move markets are bound to correct. This is not a trad able market. Now is the time to be patient," said market analyst Sudarshan Sukhani in an interview with CNBC-TV18.
The rupeeis trading at 64.07 versus the dollar, lower than yesterday's close of 63.50/51.
Rupee nears 64, Sensex may open flat
9:00 am Given tepid global cues, the Sensex is likely to open flat today. US stocks slipped on Thursday, ending seven straight days of gains by the S&P 500 index. New US claims for state unemployment benefits slipped 31,000 to 292,000 in the latest week. The Dow Jones industrial average fell 25.96 points, or 0.17 percent, at 15,300.64. The Standard & Poor's 500 Index fell 5.71 points, or 0.34 percent, at 1,683.42. The Nasdaq Composite Index fell 9.042 points, or 0.24 percent, at 3,715.97.
Investors will also have to factor in the inflation numbers too which could keep them optimistic of the near term.The consumer price inflation fell to 9.52% for August from 9.64% in July.
Meanwhile, industrial production entered positive territory in July . After contracting for two months, industrial production saw a growth of 2.6% following improvement in the manufacturing and power sectors.
The rupee opened weak this morning at 63.75 against the dollar against yesterday's close of 63.50. The currency weakened further to 63.90 and is now inching
The rupee, however,fell on Thursday, after five days of gains, on heavy dollar demand from oil marketing companies.
The Indian currency dropped 12 paise to close at 63.50 against the Dollar. During the day, it rose to 62.92 and touched a low of 63.97 against the dollar. The Reserve Bank of India (RBI) is understood to have sold dollars at 63.95 levels. The currency had closed at 63.38 on Wednesday
End of updates on 13 September
7. 24 pm: IIP surprises with 2.6% growth, stocks fall forfirst time in Rajan era at RBI
After contracting for two straight months, industrial production entered the positive zone in July, recording a growth of 2.6 percent on account of improved performance of manufacturing and power sectors.
Factory output measured in terms of the Index of Industrial Production (IIP) had contracted 0.1 percent in July last year, as per the data released by Central Statistical Organisation Thursday.
Meanwhile, IIP for June was revised upwards to a decline of 1.78 percent from a provisional 2.2 percent dip in production. It contracted by 2.8 percent in May this year.
The manufacturing sector, which constitutes over 75 percent of the index, grew by 3 percent in July compared to zero growth in the month a year earlier. During April-July, the sector saw a decline of 0.2 percent compared with a contraction of 0.6 percent in the period last year.
Power generation increased by 5.2 percent in July as against a growth of 2.8 percent in same month in 2012. Power generation in the April-July grew 3.9 percent compared with an expansion of 5.5 percent in same period last year.
Stocks and the rupee today fell forthe first time in the six trading sessions since RaghuramRajan took over as RBI Governor as markets adopted a cautiousstance ahead of factory output and retail inflation data.
The S&P BSE benchmark Sensex fell 216 points to end at19,781.88, while the rupee slid by 12 paise to 63.50 versus
the dollar, snapping a five-day upmove that came on the backof hopes of big-bang financial sector reforms by Rajan.
After the former IMF economist assumed charge at thecountry's central bank, the Sensex galloped nearly 10 per cent
or 1,762.9 points in the previous five sessions, in step withthe rupee, which strengthened by 425 paise, or 6.28 per cent.
Today's fall may be a temporary blip as government datalater in the day showed industrial production in July grew at
2.6 per cent. Factory output had contracted in the previoustwo months.
Inflation appeared to be easing as data showed prices atthe retail level increased 9.52 per cent in August compared
with a 9.64 per cent jump in July."Beyond this, the FOMC meeting scheduled on September17-18 would be important. If the Fed tapering is on thelighter side than what was previously expected, markets couldlook at consolidating the recent gains," said Sanjeev Zarbade,Vice President - Private Client Group Research, KotakSecurities.
5:30 pm India's consumer price inflation came in better than expected at 9.5 percent, while July's factory output data also beat estimates at 2.6 percent against a contraction of 2.2 percent in Junedue to strength in manufacturing and electricity.
The rapidly falling rupee has aggravated price pressures since rising crude oil and gold prices, two of India's most imported items, have swollen the country's already huge import bill.
C Rangarahan, chairman of the Prime Minister's Economic Advisory Council, expects CPI too come down due to a fall in food inflation in the near future.
"Food inflation is heading downward and that should have a positive impact on CPI," said Rangarajan in an interview with CNBC-TV18.
Rangarajan also expects growth to pick up in the second half of the year.
Meanwhile, after declining for two consecutive months, India's Index of Industrial Production, a measure of factory output, grew at 2.6 percent in July.Infrastructure sector output rose 3.1 percent year-on-year in July from 0.01 percent in the previous month.
The government also revised June factory data to -1.8 percent from -2.2 percent earlier.
RBI is likely to keep rates high unless US Fed delays tapering.
Rupee snaps 5 days of gains to close at 63.50
5:10 pm Not only equity markets but the rupee too snapped a five-day winning streak to end at 63.50 against the USD after closing at 63.80 against the dollar.
The rupee fell after five days of gains, even as the Reserve Bank of India (RBI) likely sold dollars via state-run banks starting at around 63.95 levels to prevent further weakness in the currency.
Caution prevailed ahead of factory output and CPI data, scheduled for release later today.
Dealers told Reuters wholesale price inflation data and tempered expectations over the pace at which the U.S. Federal Reserve would withdraw its stimulus after its meeting next week was also seen weighing on the market.
"Macro data, Fed meet hold importance, but I see RBI policy on September 20 to be a silver lining amid the dark clouds," said Deven Choksey, managing director of KR Choksey Securities.
The Indian currency has fallen 17% in the past six months, raising fears about inflation, and about economic growth.
Things are only getting worse from now and the Rajan effect may not last long on the markets.
First, Moody's today warned that some Indian companies could see the quality of their debt decline as higher global borrowing costs and a sharply weaker rupee take their toll Companies such as Indian Oil Corp , Tata Steel and Tata Power Company will remain highly leveraged over the next 12 months because of weak industry dynamics and resulting constraints on cash flows, it said.
Second, India is also facing the threat of becoming the first of the Brics nations to lose its investment credit status.
Third, and most important,India's government debt has reached about 66% of its GDP.
Most market experts have pointed out that this is a mere bear rally as India is definitely not out of the woods. What it needs is structural reforms for once the hot money flows out, the economy's weak fundamentals will be exposed to all.
Suresh Ganapathy, CFA, analyst at Macquarie in a note said that FIIs are not expecting any reversal of stance from the RBI and remain sceptical of Rajan's ability to revive the economy.
"We've had a Rajan (new RBI governor) relief rally over the past few days, with the panic thankfully subsiding. But sustaining and building on it will be difficult. And, with so many macro risks around, volatility is here to stay. The markets have so many macro issues to navigate," Nick Paulson-Ellis, country head (India), Esprito Santo Securities, was quoted as saying bythe Business Standard today.
JP Morgan to spells out all that is not well with India.
"Recent sharp depreciation in the INR is likely to further complicate fiscal and inflation outlook. The government little option but to pass on the increased cost of crude oil import, which will add to upward pressures on inflation. Global crude oil price has increased meaningfully over the past two months..the expectation on the non-monetary policy front is muted. There has been some development in the ongoing monsoon session of parliament but not enough to boost investor confidence. Food security, land acquisition and company bills have been approved. The next two months are critical for this government given the election schedule. Any meaningful positive surprise on policy front may stem the pace of correction in equity markets and the INR," it said in a report.
Reality check on 'Rajan effect' as Sensex ends 216 points down
4:00 pm:The Indian markets today snapped a five day winning streak on profit taking. While the BSE Sensex ended 216 points lower at 19781, the Nifty ended at 5850, down 62 points after the recent upmove.
BSE metals index was down 2.5 percent, oil & gas index was down 2 percent, auto index ended down 1.9 percent while the banking index was down 1.8 percent.
The rupee also weakened further to 63.71 against the USD.
"Although the global cues were mixed, Indian equities started the day on a weak note. The selling pressure intensified as the day progressed. Tata Steel, BHEL, Hero MotoCorp, Hindalco and Coal India were the top losers in the Sensex. Going ahead, we have the IIP data and CPI reading coming up today (post market hours). Beyond this, the FOMC meeting scheduled on Sep 17-18 would be important. If the Fed tapering is on the lighter side than what was previously expected, Sensex could look at consolidating the recent gains," said Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities.
Market at day's low as Sensex falls by more than 300 points, rupee nears 64
2:40 PM: The Sensex fell more than 300 points in afternoon trade, led by losses in IT and banking stocks - Infosys was down 2.4 percent, TCS was down 2 percent, ICICI was down 1.9 percent and HDFC Bank lost almost 2 percent.
Sensex was down 300 points at 19696, Nifty was at 58288, down 92 points.
Barring realty, all indices were trading in the red.
The Bank Nifty is down 245 points.
The fall is due to profit-booking by investors after the markets gained nearly 10 percent in a five-day wining streak on the back of strong foreign flows.
However, Tushar Mahajan, head of listed Futures & Options (India), Nomura expects Nifty to be around 6,000 on the upside over the next 15-20 days. He believes the 50-stock index will find support at around 5500 on the downside. "We might just move around 6,000-6,020 levels. At an index level, we are largely done with the move," he said in an interview to CNBC-TV18.
Going ahead, he believes there may not be much upside in largecap stocks but one might see more action in midcaps. According to him, if rupee stablises at 63 against the dollar, there may be some profit booking in the IT sector.
The foreign institutional investors bought shares worth Rs 586.5 crore while domestic institutional investors were net sellers worth Rs 386.12 crore on Wednesday as per the provisional data from the National Stock Exchange.
Jaiprakash Associates fell 6.9 percent after earlier rising as much as 2.1 percent on profit-taking after announcing a cement unit sale to UltraTech Cement Ltd on Wednesday.
Housing Development Finance Corp is off lows, up 0.65 percent after falling as much as 2.3 percent as FTSE increased its "investability weight" to 100 percent from 74 percent in its global equity index series.
Financial Technologies stock in up 16 percent on the BSE.Sebi warned MCX-SX that it's license will be withdrawn if it fails to comply with guidelines and granted renewal of recognition for one year starting the September. It has also issued directions to strengthen governance.
The Rupee too weakened to 63.81 against the US dollar.
Volatile Sensex again down 100 points ahead of IIP, inflation data
11 am: The market again is taking a breather after a spectacular rally in the last couple of days.
After a gap up opening, the Sensex is down 100 points or 0.51 percent at 19990, and the Nifty is down 40.90 points or 0.69 percent at 5872.25.
Experts believemarket is likely to consolidate with positive bias in the near term on the back of rupee depreciation. IIP and inflation data will be in focus for cues.
But despite the run up in Indian equities, Ambareesh Baliga of Edelweiss Financial Services feels given the level of volatility in the market, this is not a good time to invest.
He cautioned that volatility is here to stay and suggested investors to hold some cash in their portfolio to buy at better levels, which may come up in a couple of months.
""We never really expected a 600-700 points rally from those lower levels. It has caught a number of market players on the wrong foot. Because of that there was short covering, which actually added to the momentum and the momentum is still there," he told CNBC-TV18 in an interview.
Tata Power , GAIL , Cipla , Dr Reddy's Labs and NTPC are major gainers in the Sensex and Hero MotoCorp, ICICI Bank , HDFC Bank , Sesa Goa and M&M were the losers.
Shares in IDFC surged 7 percent after the Reserve Bank of India on Wednesday lifted restrictions placed on foreign investors purchasing shares of the company as their shareholding in IDFC fell below the prescribed limit.
Rupee strong, Nifty flat, JP Associates top loser post Gujarat Cement deal
9:30: am Markets opened in the green this morning but soon cooled off and oscillated into the red as investors eye data on industrial Production for July and CPI for Combined, Rural, and Urban for August which will be released today.Globally, investors globally would be watching the Fed policy meeting next week. The US Federal Reserve is set to make public its further plans on $85-billion monthly bond-buying programme.
The Sensex opened up54.60 points or 0.27 percent at 20052.05, and the Nifty opened at 5931.15, up 18.00 points or 0.30 percent. About 299 shares have advanced, 64 shares declined, and 23 shares are unchanged.
However withing minutes of opening, the Sensex fell about 100 points while the Nifty was down about 28 points.
JP Associates is the top Nifty loser, down 3 percent. Yesterday the company announced it will sell its Gujarat cement plant to UltraTech, India's largest cement maker by production capacity.
The Board of Directors of UltraTech Cement Limited approved the acquisition of the Gujarat Cement Unit of Jaypee Cement Corporation Limited (JCCL), by way of a demerger, comprising of an integrated cement unit at Sewagram and Grinding Unit at Wanakbori. The enterprise value is Rs. 3,800 crore besides the actual net working capital at closing.
Banking stocks, meanwhile, are the top Sensex losers - ICICI Bank is down 2.4 percent while HDFC Bank is down 1.8 percent.
On Wednesday the Indian stock market regained the trillion-dollar level after remaining out of this elite league for about a month.At the end of Wednesday's trade, the total valuation of all listed companies in the country rose to $1.017 trillion (Rs 6,451,910.07 crore) on the back of continuous recover in the rupee as well as stock market.
The rupee on the other hand was trading strong at 63.05 against the US dollar this morning.
Himanshu Arora, Religare believes the dollar will weaken against rupee in the coming session as investors seek high-yielding assets. "Further positive sentiment generated after recent steps taken by India's new RBI governor may underpin rupee. Moreover strong FII inflows may continue and may strengthen rupee against a dollar. The range for the day is seen between 62.80-63.70/USD," he said in an interview with CNBC-TV18.
12 September 9:00 am: The Indian rupee today opened stronger at 63.19 against the USD after closing at 63.38 on Wednesday.
The partially convertible rupee soon traded at 62.94 per dollar, up 0.7 percent as against Wednesday's close of 63.38.
New RBI governor's action has been appreciated by rupee, and thereby equities, and now there are expectations that the government may try and match his efforts," Dipak Acharya, fund manager at Baroda Pioneer Asset Management told Reuters.
The Nifty also edged higher on Wednesday, posting a fifth consecutive session of gains, as continued foreign investor buying lifted some recently under-performing blue chips such as State Bank of India, though others were hit by profit-taking.
Foreign institutional investors (FIIs) bought Rs 2700 crore of shares on Tuesday, bringing their total to nearly Rs 5050 crore over the previous four sessions.
Indexes have rallied over the past five sessions, with the broader Nifty up nearly 11 percent, on hopes that the government will announce steps to boost the economy.
The Sensex rose 0.35 points, to end at 19,997.45, almost unchanged from Tuesday's close. However, the gains were limited as a week of rise for world stocks petered out on Wednesday and a sell-off in oil and core government debt eased, after talks began on trying to avert a U.S. military strike on Syria against a broadly calm market backdrop
End of updates on 11 September
6. 20 pm: Shares extend gains to a fifth day on FII inflows
Foreign institutional investors (FIIs) bought Rs 2,700 crores ($422.16 million) of shares on Tuesday, bringing their total to nearly 50.5 billion rupees over the previous four sessions.
Indian indexes have rallied over the past five sessions, with the broader NSE index up nearly 11 percent, on hopes that the government will announce steps to boost the economy.
Speculation has centred around measures to attract foreign inflows and curb non-essential imports, as well as on a potential hike in diesel prices that would help improve confidence about the government's finances.
"New RBI governor's action has been appreciated by rupee, and thereby equities, and now there are expectations that the government may try and match his efforts," said Dipak Acharya, fund manager at Baroda Pioneer Asset Management Co.
The broader NSE index rose 0.28 percent, or 16.40 points, to 5,913.15, closing above the psychologically important 5,900 level and marking its highest close since July 24.
The benchmark BSE index rose 0.35 points, to end at 19,997.45, almost unchanged from Tuesday's close.
However, the gains were limited as a week of rise for world stocks petered out on Wednesday and a sell-off in oil and core government debt eased, after talks began on trying to avert a U.S. military strike on Syria against a broadly calm market backdrop.
Dealers also await the July factory data and the wholesale and CPI inflation data for August before the monetary policy review next week.
5:01 pm The Indian rupee hit a three week high today to end at 63.38 against the USD oncorporate inflow related dollar selling.
Even Indian markets ended positive, with the Nifty crossing the 5900 mark forthe first time since July 25 amid volatility, continuing its upward journey for the fifth consecutive session. The Sensex ended just a tad below the 20,000 mark asas foreign institutional investors bought frontline stocks at lower levels.
Overall it was a consolidation day for the market after it rallied more than 1700 points in previous four sessions on the Sensex.
The broader markets outperformed equity benchmarks with the BSE Midcap and Smallcap indices rising over 1 percent.
Deven Choksey, MD of KR Choksey Securities believes that the appetite for the depreciated rupee is the reason for the kind of FII buying over the past few days.
Foreign institutional investors bought more than Rs 4,500 crore worth of shares in previous four sessions.
Volatile Sensex ends flat below 20000, rupee weakens to 63.50
3:30 pm Indian stock markets held on to their yesterday's gains in session which saw the benchmark indexes oscillating between red and green territories more once.
The markets yo-yoed as investors sold shares at higher levels to make the most of the rally and also bought at the lower levels.
While Sensex endedat 19997.45 , Nifty ended at 5913.
BSE FMCG index ended down 1.2 percent, consumer durables index was down 1 percent, IT index was down 0.5 percent. The metals index gained 3 pecent while realty index ended up 2.9 percent.
Top Sensex movers were ITC, Tata Motors, Infosys and HUL.
The rupee meanwhile is up 0.56 percent at 63.50, off the day's high of 63.06 against the USD.
Volatile Sensex hits 20,000 once again, rupee off highs at 63.22
3:00 pm: It's half an hour left for the markets to close and the volatile Sensex has once again crossed the 2000 mark. In the last one hour, banks have surged.
Axis Bank has gained 4.6 percent, while SBI gained 2 percent. Bank of Baroda also shot up 4 percent, while PNB gained 3 percent.
While the BSE Sensex was up 11 points at 20000, Nifty was up 19 points at 5916.
The Indian rupee was trading off the day's high at 63.22 against the US dollar.
The rupee has been the weakest currency, falling by 18 percent, ever since the US Fed hinted that it could start tapering its bond-buying programme. But according to a Credit Suisse report, the reason for INR weakness is not so much trade flowsbut capital flows . And those too not from institutions, but corporates.
"With confidence starting to return, as the INR stabilises, we continue to expect a strong appreciation in the currency in the coming months," the brokerage said in a note.
Rupee gallops to 63.06 but Sensex still in red
2:39 pm The rupee eased further to 63.06 against the dollar, its lowest since 23 August.
The rupee rose to near three-week high as dealers cited corporate inflow related dollar selling. India's trade deficit also fell to a five-month low of $10.9 billion on a rise in exports and decline in imports.
But according to Moody's, India's rising exports will not resolve structural deficiencies such as high government debt that the Indian economy faces. The currency depreciation has raised the cost of foreign-denominated debt obligations and higher bond yields have lifted government borrowing costs.
Moreover, the markets continued to trade in red with the Sensex down 33 points at 19961 and the Nifty down 4 points at 5893.
According to a Reuters report,several dealers cited selling by a large private petrochemical company as the reason for rupee's gain
Some dealers also cited selling related to possible front-running due to inflows towards Mylan Inc's $1.6 billion deal to acquire a unit of Strides Arcolab Ltd.
Meanwhile, Securities and Exchange Board of India (SEBI) said it will announce some important measures to improve liquidity and trading mechanism for the corporate bond market in "a couple of days".
SEBI plans to come out with notifications to minimise the know your customer (KYC) requirement for FIIs (foreign institutional investors) that have established a strong track record of compliance with Indian rules.
The Reserve Bank of India on Tuesday said corporate investments are likely to remain subdued this fiscal and may even fall below the level seen last year.
"The envisaged investment by the private corporate sector this fiscal is expected to be lower than that in the previous year," the RBI said.
1:27 pm: Sensex edges lower but rupee at day's high
The Sensex edged lower as blue chips fall on profit-taking after both the benchmark index and the Nifty gained nearly 10 percent over the previous four sessions.
The Nifty and the Sensex are down around 1 percent each.
Top Sensex losers include Tata Motors, HUL and ONGC
However, the Indian rupee was trading at the day's high at 63.33 against the US dollar after hitting 64 in mid-morning trade.
HSBC, however, believes the rupee will gradually slide towards 65/USD again by this year-end.
In the short-term, the rupee may settle around 62/USD mark, but won't gain to 60/USD as the dollar could strengthen in the medium-term if the Fed starts its tapeing in September.
And despite the stellar recovery seen in equities over the last four trading sessions, Steve Brice of Standard Chartered Bank in an interview with CNBC-TV18 said FIIs continue to approach the Indian market with caution.
He said there is much more optimism domestically with the change of guard at the Reserve Bank of India (RBI).
"The fundamentals are much better in comparison to the 1991 crisis. The environment just needed that circuit break to lead it to a very sharp rally from oversold levels," he said.
Sensex below 2000o, book profits and sit tight
12. 35 pm: 'Book profits and sit tight'
Sudarshan Sukhani, s2analytics.com says it's time to book profits and step aside.
"It's been a nice rally; we have got most of it. We are close to the 6000, the final target for this rally and targets are numbers; they may sometimes be exceeded and they may sometimes fall short, we do not know," he told CNBC-TV18 in an interview.
Sukhani said that short-term traders had a nice time in the rally. And it's time to take the money and sit aside, focus on individual stocks but keep volumes as low as possible because we are entering a choppy market.
Don't cheer the market rally just yet
11:53 am Arindam Ghosh, MD and CEO, Blackridge Capital Advisors feels the actual recovery in the market will take much longer and cautions investors not to get euphoric at this stage as any reversal of flows in the Indian market can make Nifty retest 5,200. However, he believes the positive factors globally and domestically have given confidence to investors and they may start buying with a two year perspective.
In an interview with CNBC-TV18, Ghosh saysthat investor confidence will build up in India if investment climate improves and growth revives. Conviction- buying, key barometer of investor confidence, is yet to happen.
Moreover, the US central bank is expected to begin trimming its massive $85 billion bond-buying programme as early as next week.
That will mean fewer Fed-created dollars sloshing around the global financial system. Markets like India, which must import capital to finance spending, will feel the squeeze .
In fact,Jeffrey Gundlach, chief executive of DoubleLine Capital LP, said the Indian stock market is very reliant on foreign capital and recommended markets that are "insulated" from volatility associated with global monetary stimulus programmes.
Foreign investors buy Rs 5000 crore worth shares in just four days
11:12 am: Sensex again fell more than 100 points n profit-taking after both the BSE and NSE indexes gained nearly 10 percent over the previous four sessions.
At 11:14 am, the BSE Sensex and the Nifty were trading at the lowest point of trade.
Sensex was down 126 points at19887, while Nifty was down 28 points at 5868.50.
Meanwhile, foreign institutional investors (FIIs) were net buyers of Indian shares for a fourth consecutive session on Tuesday.
FIIs provisionally bought Rs 2560 crore worth of Indian shares on Tuesday, exchange data shows, and a total of RS 5050 crore worth over the previous four sessions.
Indexes have rallied over the past four sessions, with the broader Nifty up nearly 10 percent in that period, on hopes government will announce steps to boost the economy.
Speculation has centered on measures to attract foreign inflows, curb non-essential imports, and a potential hike in diesel prices that would help improve confidence about the government's finances.
Fast and furious Sensex turns volatile as investors sell at higher levels
10:28 am Gold slipped to a three-week low on Wednesday before recovering on bargain hunting, but the precious metal was losing its safe-haven appeal for investors on hopes a U.S. military strike against Syria could be averted, Reuters reported today.
Syria has accepted a Russian proposal to give up chemical weapons but US President Barack Obama said it was too early to tell if the initiative would succeed, vowing to keep military forces at the ready to strike if diplomacy fails.
Gold, which has fallen more than 18 percent this year, is also being hurt by expectations the U.S. Federal Reserve will opt to taper its monetary stimulus programme after the Fed's Open Market Committee meeting on September 17-18.
Meanwhile, the markets continued to remain volatile with the Sensex down 19points at 19977 and the Nift down 6 points at 5890.
Sensex witnessed some selling pressure as investors preferred to book profits after a 1700 point rally in the past five sessions.
Several analysts expect the Nifty to touch 6000 in the near term but cautioned of profit booking sessions before that.
"The run up has been fast and furious and a lot of shorts are being forced to run for cover. The stability in the rupee has been adding to the positive sentiment on the bourses," said IIFL in a report.
The rupee was trading at 64.09 against the USD.HSBC today said that the rupee may settle at 62 against the US dollar in the near term but ruled out the 60 level.
Bulls charge in, Sensex touches 20,000 but rupee weakens to 64
9:45 am The BSE Sensex erased morning losses and is now down up 43 points at 20030,while the Nifty is up 10 points at 5906. However, the rupee has weakened to 64 against the dollar after hitting 63.79 in morning trade.
Maruti is the top gainer in the BSE auto index, up 2.6 percent;after it more than doubled its export volume to 11305 cars last month.
According to brokerage IIFL sentiment has improved for the Indian market in the last ten days.
Jeffrey Gundlach, chief executive of DoubleLine Capital LP, however, believes the Indian markets will be hit hard by outflows of funds from emerging markets on expected changes in monetary policy by major central banks.
Gundlach, head of the roughly $37 billion DoubleLine Total Return Bond Fund, said in an investor webcast that the Indian stock market looks "very scary."
He said the Indian stock market is very reliant on foreign capital and recommended markets that are "insulated" from volatility associated with global monetary stimulus programs.
According to Nilesh Shah of Axis Bank, markets are due for a correction after rallying for the last five days. "This correction could come in the form of higher crude prices due to the geopolitical situation or lack of clarity from the US Fed regarding tapering of quantative easing," Shah said in an interview with CNBC-TV18.
9:30 am Sensex falls more than 100 points in opening, rupee gains further to 63.74
The Indian equity markets opened in the red this morning after recording the biggest single-day gain since 2009 on Tuesday.
At 9:20 am, the BSE Sensex was down 104 points at 19891 while the Nifty was down 38 points at 5857.
Out of 675 stocks traded, 334 stocks advanced while 315 stocks declined on the BSE.
Clearly, the market has run-up too fast in very less time and it was expected that traders would book partial profits and cautiously ride the upside.
According to experts, once the short positions are covered, the market may lose momentum.
FIIs were net buyers of Rs 2563 crore in the cash segment on Tuesday, while the domestic institutional investors (DIIs) were net sellers of Rs 1398 crore, as per the provisional figures released by the NSE. Ironically, FIIs had bought shares worth Rs 2,162.10 crore in September, not including Tuesday's data.
Axis Direct believes markets needs to consolidate at current levels.
Globally, thesentiment has improved as data from China is upbeat. The global situation on the war front appears to be less tense. Syria appears to be calmer than expected even as US President Barack Obama said targeted military strikes against Syria would serve several purposes, including deterring Syria's government from using chemical weapons, making it more difficult for them to do so and making clear to the world that the use of chemical weapons won't be tolerated.
Global oil prices fell to about $113 a barrel after a Russian proposal to avert a US strike on Syria appeared to gather steam, easing investor concerns that another conflict might further disrupt fuel supplies.
Meanwhile, the Reserve Bank of India (RBI) said that banks can raise funds overseas above 50% of their Tier I capital with a minimum maturity of three years and swap these borrowings with the central bank at a concessional rate for one to three years.
9:00 am Rupee strengthens to 63.74, pre-open suggests steady run for equities
The Indian rupee opened steady at 63.85 while the Nifty opened 1 percent higher in pre-open after as the threat of a war between US and Syria ebbed, resulting in the Indian currency firming up and foreign investors extending purchase of shares.
India's trade deficit narrowed to a five-month low in August despite high oil prices as exports surged on the back of a depreciating rupee.
The rupee further strengthened to 63.74 after closing at a 2-week high on Tuesday.
The Nifty index jumped nearly 4 per cent on Tuesday, to mark its biggest single-day gain since May 2009, as receding fears on Syria and sharp appreciation in rupee sparked hopes about foreign investor flows.
8:45 am Asian markets up, but SGX Nifty futures down 0.2 percent
The Indian equity markets are likely to open steady with a negative bias today as Asian stocks have risen in the morning trade, while SGX Nifty futures on the Singapore Stock Exchange was marginally down.
The SGX Nifty was down 0.25 percent at 5895.
Asian stocks rose on Wednesday, on track to post their 10th straight day of gains, while investors gave the safe-haven yen a wide berth as optimism for the Chinese economy grew and worries about US military strikes on Syria receded.
The yen was soft while the euro and risk currencies held firm on Wednesday on hopes a US military strike against Syria may be averted, as well as signs of strength in the Chinese economy.
Oil stayed under pressure with Brent crude languishing near a 2-1/2-week trough of $110.59. It last traded at $111.30, having shed 4 percent in the past two sessions, its largest two-day drop since June.
Gold climbed on Wednesday as investors looked for bargains, but it stayed near its lowest level in almost three weeks as hopes that a US military strike against Syria could be averted sapped its safe-haven appeal.
End of updates for September 10
4:16 PMRupee today gained around 2 percent to 63.98. The Rupee hit below 64 per dollar for the first time since August 26.The Sensex closed at 19,997, after earlier hitting 20,000 levels for the first time in over six weeks as the rupee pulled back, posting its biggest single day gains since May 2009.
In fact the Sensex has gained around 1800 points ever since Raghuram Rajan was appointed as the new RBI governor.
"Measures that were announced last week by Raghuram Rajan are certainly adding to medium-term support for the exchange rate and the central bank is expected to more closely supervise the market overall," said Richard Gibbs, Global HD ,Macquarie in an interview with CNBC-TV18.
The Indian currency has gained 4.7 percent in the last four trading sessions.
Experts believe the rupee will continue its rise for some more days but will likely start its downward spiral once the US starts unwinding its accommodative policy.
Now with the concerns of a war waning in Syria and hopes rising that the Indian government efforts at controlling the damage on its fiscal health may bear fruit, FIIs are likely to stay put in India.
US non-farm payrolls data for August came in lower than expected, thus giving rise to expectation that the US Federal Reserve may be prompted to at least decrease the quantum of its QE taper, limiting the foreign capital outflow from emerging markets including India. This is boosting the sentiment for the rupee, a currency which was the worst performing globally last month due to these fears.
Sensex closes 700 pts up, Nifty posts biggest single-day gain since May 2009
15:30 PMThe markets had an excellent day today, rallying for the fourth consecutive session with the BSE Sensex briefly breaching the 20,000 mark and the Nifty breaching the 5900 level as August trade feicit narrowed to 10.9 billion and on reports that the US may not strike Syria, while the rupee strengthened to 64 against the USD.
While the BSE Sensex closed up727 points ay 19997, the Nifty closed up 216 points at 5896.
Nifty provisionally gained 3.69 percent, biggest single-day gain since May 2009.
Bank Nifty closes at highest level since 30 July.
Nifty has gained 10.4 percent in the last four trading sessions, while BSE Sensex has gained 9.6 percent. The biggest gainers, however, are the banks since the Bank Nifty is up 17.6 percent in the same period.
The rupee traded off the day's high at 64.46, gaining 1.2 percent against Friday's close at 65.24 per dollar. The partially convertible rupee is on track for its fourth straight day of gains after snapping a three-week losing streak.
Auto stocks jumped around 6 per cent led by Tata Motors, which traded with around 10 per cent gains. Telecom stocks gained on regulators recommendations to cut spectrum prices.
Meanwhile, trade deficit narrowed in August. Trade deficit in August dropped to $10.91 billion from $12.27 billion in previous month. Imports declined to $37.05 billion from $38.10 billion while exports increased to $26.14 billion from $25.83 billion during the same period. Gold imports fell to $0.65 billion in August from $2.20 billion in July.
Barclays said that the gold imports for the year should be lower by $10 billion.
Sensex hits 20,000 after Aug trade deficit narrows to $10.9 bn
15:12: The BSE Sensex just hit the 20,000 mark, up 730 points while the Nifty hit 5900 level for the first time since July 26 after the August trade deficit narrowed to $10.9 billion in August.
Reports that US may not strike Syria and a strengthening rupee also boosted sentiment. The rupee continued to strengthen against the US dollar, as has been the case since Raghuram Rajan took over as the new governor of the Reserve Bank.
"There is a relief rally happening in the Indian markets, said Jagannadham Thunuguntla, head of research for SMC Global Securities Ltd. in New Delhi.
"But having said that, it may take considerable amount of time to call it a permanent turnaround," he was quoted as saying by AP.
Auto stocks are the star performers today; Tata Motors is up 10.3 percent, Hero MotoCorp rose 8.3 percent while M&M is up 5.6 percent.
According to Deven Choksey, MD of KR Choksey, participation in the market is being seen across the board which is a positive sentiment.
Globally, in early trading in Europe, most indices were also up. The FTSE 100 of leading British shares rose 0.8 percent at 6,582.48. The CAC-40 in France was trading 1.1 percent higher at 4,084.22 while Germany's DAX gained 1.5 percent at 8,397.97,buoyed by positive data from Japan and China and some relief that concerns over Syria have receded with Russia's offer to press Damascus to put its chemical weapons under international control.
Wall Street also looked set for gains, with Dow Jones industrial futures rising 0.5 percent to 15,110. S&P 500 futures rose 0.5 percent to 1,676.70, AP reported.
Sensex zooms 700 points, nears 20k after Aug trade deficit narrows to $10.9 bn
2:27 pm:The market remained in bull grip for the fourth consecutive session with the equity benchmarks rising nearly 3.5 percent, driven by capital goods, auto and FMCG stocks after August trade deficit came in at $10.91 billion against $12.27 billion in the previous month.
Analysts expected the August trade deficit to come in lower at $9 billion.
Exports grew to $26.14 billion against $25.83 billion in the previous month while imports fell to $37.05 against $38.10 billion.
Commerce Minister Anand Sharma said only jewelry sector did not report growth in exports in August.
August gold imports came in at $0.65 billion against $2.20 billion a month ago. Sharma said he expects gold imports to fall further.
However, oil imports rose to 15.1 billion in August against $12.7 billion a month ago
Sharma also said that rupee depreciation has not helped exports, but rather the export figures are up due to stability in the US and European markets.
The BSE Sensex gained 715 points at 19983, while Nifty gained 216 points at 5895.
Foreign investors have bought nearly Rs 1800 crore worth of Indian cash shares in the previous two sessions.
Ratnesh Kumar, MD and CEO, Standard Chartered Securities believes that worst for India is over atleast in certain aspects like the current account deficit (CAD). According to him, the market is on steadier ground after the better-than-expected July CAD figure and is likely to remain so until the September 17 Fed meet.
In an interview to CNBC-TV18 he says increase in investments will act as an antibiotic for the market in the long-term. "The Cabinet Committee on Infrastructure (CCI) has been approving some projects and the market would need to see more of that along with some of those investments actually translating into dollars on the ground," he adds.
Sensex soars almost 600 points but mkt not out of the wood yet
1:51 pm: The Indian markets are trading at the high point of the day with the BSE Sensex up almost 600 points as the rupee pulls back near 64 levels.
The BSE Sensex was up 600 points at588 points at 19860 while the Nifty was up 173 points ay 5854. The rupee was trading at 64.29 against the USD.
However, brokerage Anand Rathi cautioned that the markets are not out of the woods yet and traders should invest cautiously.
In an interview with CNBC-TV18, Sandeep Shenoy of Anand Rathi Financial Services said,"We are not seeing any positive triggers for the market from short to medium-term. We will have to wait for Q2 results, which are 45 days away. From hereon, we could be seeing sideways movement."
Sensex above 19800 on strong rupee, August trade data key to rally
11:55 am The Indian markets continued to rally ahead of the August trade data.
Planning Commission said today that it expects the August trade data to be better than July. Last month, trade deficit came in at $12.3 billion, with exports up 11.6 percent . Expectations are that the August trade deficit may fall to around $9 billion.
Trade secretary S R Rao told Reuters the country's merchandise exports had posted double-digit growth in August, while imports were contained.
The government's steps to curb gold imports has already helped to contain the trade deficit over June and July to a shade over $12 billion, down from a recent monthly average of $17 billion in the earlier six months.According to this report in the Indian Express, the country's gold imports in August fell 95 percent on year to just a trickle of 2.5 tonnes. This will help narrow the trade deficit significantly.
The rupee meanwhile was trading at the highest level today at 64.2 against the US dollar, while the BSE Sensex was at 19802, 530 points higher.
The NSE Nifty was up 162 points at 5842 Bank Nifty has gained 1591 pointsin last 4 trading sessions, while 23 Nifty stocks have gained more than 10 percent in the last 4 days
Tata Motors was the biggest Nifty gainer, up 8 percent after JLR August sales rose 28 percent year on year.
BSE Sensex has gained 6.3 percent in September so far; in August the index lost 3.8 percent.
The markets have been rallying ever since Raghuram Rajan took over as the new RBI governor.Rajan unveiled a slew of proposals to support the rupee. The biggest among them was a swap window to banks for new foreign currency nonresident dollar funds, which is expected to lead to an estimated $10 billion of inflows.
The government is also set to announce more steps over the next few days to curb non-essential imports, with expectations growing for a hike in subsidised diesel prices that would ease concerns about the government's finances.
Nifty gains 700 points in just 4 days on FII buy, is worst over for India?
10:55 am A series of measures by new RBI governor Raghuram Rajan has somewhat cheered markets.Add to that an enhanced bilateral swap arrangement with Japan to $50bn from $15bn at present and the BRIC countries agreeing to set up a $100 billion fund to restore stability in currency markets.
No wonder equity markets soared this morning, while the rupee strengthened to 64.32 in early trade.
Gains were also spurred by the Rs 1800 crore worth of buying in Indian cash shares by foreign investors in the previous two sessions.
This year'sbetter-than-expected monsoon may also bring much-needed relief to slowdown-ravaged auto and consumer companies as rural incomes appear set to rise, promising boost to rural consumption.
But does this mean the worst is over for India?
As Firstpost said earlier, Raghuram Rajan may be best suited as the RBI governor but he cannot fix in weeks and months what the UPA was busy ruining over nine-and-a-half years.
"Both Manmohan Singh and P Chidambaram will be in election mode, and this means the support that Rajan needs in terms of policy action will be lukewarm or altogether missing. This means that the two men most pivotal to India getting its act together probably won't be doing anything bold or creative between now and May 2014)." Read more here.
In fact even long-term India bull Stephen Roach told CNBC on Tuesday that he was turning bearish on Asia`s third-largest economy, and warned that the country`s currency crisis should prove a "wake-up call" for investors.
"I`ve been a big fan and very optimistic on India for a number of years but I`m really having serious second thoughts right now," Roach told CNBC.
Roach said he has grown frustrated with the Indian government's seeming inability to push through much-needed structural reforms, tackle its burgeoning budget deficit and fully open up its market to foreign direct investment, problems that have long put off international investors.
"This government [India`s] has done very little in the way of meaningful economic reforms... it`s still a rigid, bureaucratic society with inadequate infrastructure, insufficient savings and I think this crisis is a real wake up call for India optimists like myself," he added.
Sensex soars 530 points , Bharti, Idea gain on Trai proposals
10:20 am: The markets are soaring even further with the BSE Sensex now up530 points at 19797 and the Nifty up 147 points at 5828. The Nifty has gained nearly 500 points in the last four trading sessions while the Sensex has gained nearly 1550 points.
The markets are trading at their highest level since 31 July.
Bank Nifty has gained more than 2.7 percent
Gold, meanwhile is down Rs 315 at Rs 31,225/10gm.
At 10 am, shares of country's largest telecom operator Bharti Airtel gained more than 5 percent to Rs 327.05 followed by Idea Cellular with 4.17 percent gains at Rs 164.70 on the BSE. MTNL rose 2.33 percent while Reliance Communications and Tata Teleservices advanced over 1 percent.
Trai slashed the combined spectrum auction reserve price in the premium 900 MHz band in the circles of Delhi, Mumbai and Kolkata by about 79 percent to Rs 650 crore per MHz against Rs 3,074.18 crore per MHz earlier.
"Trai has also recommended that a flat spectrum usage charges (SUC) of 3 percent of the gross revenue should be levied, instead of the existing range of 2-8% per cent. Based on normal revenue growth, this would mean a benefit of Rs 60,000 to Rs 80,000cr for telecom companies over a 20 year period," Angel Broking said in a report.
The maximum reduction of 81.38 percent is in the Mumbai circle, where the floor price has been reduced to Rs 262 crore per MHz compared with Rs 1,404.28 crore per MHz of spectrum, as per the regulator's previous recommendation.
It recommended an about 60 percent cut in the pan-India reserve price for the third round of 2G spectrum (1800 MHz) auction.
Global brokerage Macquarie said the cut in reserve price is a significant positive for incumbents, while Goldman Sachs said the recommendations will lead to 44 per cent and 36 per cent reduction in Bharti and Idea's regulatory fees respectively.
Goldman Sachs believes TRAI recommendations are mixed bag for larger telecom companies like Bharti Airtel and Idea Cellular. Cut in 2G spectrum price, spectrum trading, flat spectrum usage charge is positive for telecom operators, the global investment bank said in a note.
" The operators can use their existing 1800MHz 2G spectrum for 3G or 4G (for the balance of validity period on
payment of the auction determined amount, prorated). Given the high 4G spectrum/ auction prices we have seen elsewhere, this could be a positive outcome for the Indian operators," said Nomura in a research report today.
Sensex gains 400 points, rupee pulls back to 64.38
10 Sep 9:15 am Indian markets surges in morning trade with the Sensex jumping more than 350 points and the Nifty touching 5800 levels for the first time since 1 August on expectations that the government will introduce more reforms.
Media reports had earlier suggested that the government is likely to increase diesel prices by nearly 10 percent after the monsoon session of the Parliament ends.
Even easing worries of an American strike against Syria seems to be helping sentiment.
At 9:20 am, The BSE Sensex was up 400 points at 19650, and the Nifty gained120 points at 5801.
Telecom stocks were the clear winners with Bharti Airtel soaring 5 percent after the Telecom Regulatory Authority of Indiaproposed a cut of up to 60 percent in minimum auction prices for mobile phone spectrum in a response to lukewarm interest from telecom companies in two previous sales.
Even the Indian rupee strengthened to 64.24 against the USD after closing at 65.02 on Fridayas receding geopolitical risks from Syria and strong exports in August helped lift the currency.
India's exports posted double-digit growth in the month of August, while imports were "contained", Trade Secretary S. R. Rao said on Monday, offering some respite for the troubled rupee.
Market participants see the rupee rising to 63 against the dollar this week and trading in the 63-65.50 range on the Rajan effect.
Raghuram Rajan's first few measures as RBI governor include swap window facility for banks to lure in NRI funds, and reversal of some of the controls that his predecessor Governor D Subbarao had introduced. Also, the August 31 meeting that economic affairs secretary Arvind Mayaram and banking secretary Rajiv Takru held with foreign banks who control the domestic forex market had a positive impact on the rupee, say analysts.
On the political front, the BJP is likely to endorse Gujarat Chief Minister Narendra Modi as its prime ministerial candidate on September 13 at a meeting of its parliamentary board in Delhi, a senior leader has told the Economic Times.
Globally, Barack Obama said a proposal allowing Syria to give up its chemical weapons was a 'potentially positive development.'
Syria too rushed to welcome a call from its ally Russia to place Syrian chemical arsenals under international control, then destroy them to avert a US strike. No time frame has been discussed but looks like the prospects of a way has ebbed.
The US market gained on Monday after Secretary of State John Kerry's comments prompting a diplomatic alternative in Syria instead of a dreaded outright war.
Markets are also debating what the Fed will do at its meeting Sept. 17 and 18, after Friday`s mediocre August report of 169,000 nonfarm payrolls.
Mark Zandi, chief economist at Moody`s Analytics told CNBC that Syria is a wild card and could also be a factor for the Fed.
The Dow was up 140 points while the S&P 500 and Nasdaq added around a percent each.
Asian stocks are trading higher. Japan's Nikkei is up over a percent while Hong Kong's Hang Seng index and South Korea's Kospi index have gained around half a percent. China's Shanghai index is marginally higher.
End of updates on 6 Sep
15:30The markets have rallied this week with the BSE Sensex gaining 3.5 percent and the Nifty up 3.8 percent this week.
While the BSE Sensex closed up 250 points at 19232, Nifty closed up 80 points at 5673.
The benchmark Sensex has now gained over 1,000 points in the last three days as the rupee has rose from a low of 68.60 on Wednesday to a high of 65.02 on Friday.
BSE bankex ended the day with gains of 2.7 percent - top sectoral performer.
ICICI Bank was the star performer of the day, as it ended up nearly 8 percent as the top Sensex gainer.
Even the rupee managed to pull back to the 65 level against the USD. This is a 100 paise gain against Thursday's closing of 66.1
The gains in the bank Nifty, up 9.2 percent, are the biggest takeaway after new RBI governor after the RBI raised overseas borrowing limits for lenders.
Rajan's unveiling of measures to support the rupeeraised hopes that the RBI will now adopt a new approach to defending the rupee, as the extent to which it's defence strategy has worked so far is hotly debated.
According to a Reuters report, the Fibonacci Retracement, a widely used technical tool that charts and predicts patterns in currency movements, signals an eventual move for the rupee to as high as 63 levels from current 66 levels.
Meanwhile, the number of open contracts in domestic rupee futures has slumped this month, which is a sign that traders are removing their short positions in the currency.
Neelkanth Mishra, India Equity Strategist, Credit Suisse expects the rupee to go back to 57-58 levels and the markets to stabilise once that happens.
In an interview with ET NOW, Mishra said, "When the rupee stabilises, it will appreciate strongly and that will bring a lot of positive sentiments. If the currency starts to appreciate, the sense of goodwill about the country will suddenly improve dramatically. A lot of people will jump in to buy some attractive stocks, who now are waiting on the fringes for the currency to stabilise."
Rupee at 65.4, gains almost 100 paise from day's low
1:44 pm: The rupee is currently trading at 65.42, up almost 100 paise from day's low of 66.29.
The BSE Sensex was too trading at the day's high, up 229 points atat 10298, while Nifty was up 65 points at 5658.
Private banks continue to gain for a second day after banking stocks saw their biggest single-day gains in over 4 years on Thursday after the Reserve Bank of India raised overseas borrowing limits for lenders as part of a slew of measures unveiled by new Governor Raghuram Rajan.
MCX gold futures are trading down Rs 397 at Rs 31,821 per 10 grams as markets and rupee strengthen.
11:42 amSensex at day's high but markets not out of the woods yet
The BSE Sensex gained around 180 points in mid-morning trade to19140 levels while the Nifty gained 45 points at 5637, led by gains in banks.
ICICI surged 5.2 percent, while HDFC rose more than 1 percent.
Even the rupee gained and was tradind at 65.90 levels.
However, the current rally does not imply that the markets are out of the woods.
Experts say the government will ultimately need to do its part by passing politically tough reforms that are seen needed to fix the economy, even with general elections due by next May.
"The Governor's action plan was well accepted by market participants but the key would be the government's intent in addressing the CAD (current account deficit) and subsidy burden at a faster pace amidst positive U.S data points that might lead to an early exit by Fed's from the stimulus measures," Shakti Satapathy, a fixed income strategist with AK Capital was quoted by saying by Reuters.
"If you look at the fuel subsidies, Rs 13 drop in rupee from 54 to 67, since the presentation of budget had led to roughly Rs 1.4 lakh crore of increase in fuel subsidies assuming 40 percent of that is dumped on to ONGC , OIL , we are looking at 0.6 percent of gross domestic product (GDP), Rs 60,000 crore of incremental subsidies on an annual basis that the government will have to budget for," said Ajay Bodke, Head - Investment Strategy & Advisory, Prabhudas Lilladher in an interview with CNBC-TV18.
10:40 amMarket pull back a sell rally as experts believe Rajan has no magic wand
Even as the BSE Sensex continues to trade in the green, hovering at the 19000 level.
Jagdish Malkani, member of the BSE and NSE feels that the current market pullback is a bear market rally as RBI Governor Raghuram Rajan still needs to address issues of rupee, inflation and growth and there are enough storm clouds above.
"The RBI Governor has set the ground running, tremendous announcements, moral boasting etc. Nothing has changed on the big picture front. He still has to bounce those three balls, of the rupee, inflation and growth," he said in an interview with CNBC-TV18.
Meanwhile, Morgan Stanley slashed its Sensex target for the next 12 months to 18,200, citing weakening macro fundamentals of the economy.
"We cut our Sensex earnings growth estimates from 10.5 per cent to 4.1 per cent for this fiscal and from 19 per cent to 12.7 per cent for the next. The new 12-month forward Sensex target is 18,200. Given the tail risks, we underscore our bear case -- a 14 per cent fall in the Sensex with a 35 per cent probability," Morgan Stanley India head Ridham Desai said in a note.
9:20 amMarkets pull back, Rupee strengthens to 65.80, Sensex crosses 19000
The Indian rupee opened stronger at 66 against the USD against yesterday's close of 66.12.
At 9:05 am, the Indian currency strengthened further to 65.92, gaining o.o2 percent against Thursday's close.
The BSE Sensex opened 0.51 percent at 19076. while the Nifty opened 0.30 percent higher at 5609.
However, according to IDFC Securities, passage of major bills may prove to be a challenge for the current government, which may again ahve a negative bearing on investor sentiment.
Globally, crude prices recovered some ground as the energy information agency reported that stockpiles fell by 1.8 million barrels, a rate far quicker than analysts' estimates.
End of updates for 5/09/2013
16:55 Gold prices suffered the steepest fall in a week today falling by Rs 1,250 to Rs 30,950 per ten grams on heavy sell-off by stockists as equity markets and rupee recovered after RBI's fresh measures.
Silver also plunged by Rs 1,800 to Rs 53,700 per following fast recovery in rupee against the dollar after the new RBI
chief announced measures to boost economic growth.
The rupee was trading higher by 84 paise at Rs 66.24 per dollar, while stock markets were up by over 2 percent, denting the appeal of gold considered as safe haven for investors during economic turbulences.
Weakening trend in overseas markets on expectations for reduced stimulus in the US and limited military strikes against Syria, further influenced sentiment. ( PTI)
Rajan fires market, Sensex, Nifty end at highest level since 14 Aug
15:30 pm The rupee rallied and Indian equity markets surged after the Reserve Bank of India (RBI) chief unveiled measures to support the ailing currency, providing a shot of confidence for investors unnerved by the country's worst economic crisis in two decades.
Nifty, BSE Sensex and the Bank Nifty ended at the highest level since 14 August.
While the BSE Sensex gained 2.10 percent or 390 points up at 18958, the Nifty ended 144 points up at 5592.
Rupee also gained 1.2 percent and was trading at 66.25 at 3:30 pm.
All banking stocks ended in the greenon RBI's move to offer concessional swap rates to banks to raise dollar deposits from non-resident Indians could raise up to $8-$10 billion, Bank of America-Merrill Lynch said in a report, as it removes the currency risk away from banks or citizens abroad.
1:33 pm Despite the initial euphoria in the markets on Raghuram Rajan's measures to support the ailing currency, market experts today warned Rajan cannot by himself repair an economy mired by slowing growth and a record high current account deficit that has helped fuel a drop in the rupee of as much as 20 percent this year.
"This is certainly not the bottom. Rajan means business, but most of his measures are just statements of intent, especially in the light of government finances being so precarious," s G. Chokkalingam, managing director and chief investment officer at Centrum Wealth Management, told Reuters.
"The continued deceleration of the industrial economy, the fiscal conditions, and the Fed tapering worries will continue to weigh," he added.
Rajan faces difficult decisions ahead, including navigating uncertain global conditions marked by rising military tension over Syria, which is pushing up India's oil import bill, and the prospect of an end to U.S. monetary stimulus.
"I will not give in to the personality and sentiment. I will look at data," said Phani Sekhar, a fund Manager at Angel Broking in Mumbai.
"The governor has no control on fiscal policy so what do you expect the RBI to do? If Rajan continues focusing on inflation, his newly found fan club will vanish sooner than later."
Sensex holds ground, banks shine as Rajan tries to win NRI deposits
12:29 pm Raghuram Rajan's new agenda for the RBI has renewed investor confidence and the BSE Sensex is holding momentum in afternoon trade.
Sensex is trading up more than 350 points with 21 components in green.
Stocks that are helping the Sensex retain its ground include ICICI Bank, ITC, HDFC Bank and HDFC.
Rajan's action plan sparked hopes of reforms that will help shore up the economy and a troubled rupee.
Banking stocks are the star performers this morning; the BSE bankex is trading up a good 6.7 percent.
The move by the Reserve Bank of India (RBI) to offer concessional swap rates to banks to raise dollar deposits from non-resident Indians could raise up to $8-$10 billion, Bank of America-Merrill Lynch said in a report, as it removes the currency risk away from banks or citizens abroad.
A swap enables banks to get back the same quantity of dollars to repay when the deposit matures even if rupee depreciates since then.
The RBI will swap FX-denominated foreign currency non-resident bond (FCNRB) deposits with tenures of 3 or more years at a fixed hedge cost of 3.5 percent a year until November 30.
Separately, Morgan Stanley estimates that the measure could raise an additional $5-$10 billion from NRIs. ( Reuters)
It's a bear rally as Rajan still has to weather several storms
11:08 AMWhile the Sensex continues to trade below 19,000,IT stocks were hit quite badly on profit booking and rupee appreciation. Infosys and TCS fell 2.6 percent each while Wipro lost 1 percent.
Bhanu Baweja, head of research and EM strategy at UBS, feels that the new RBI governor Raghuram Rajan may not be able to put a ceiling on the currency's fall. The overshooting rupee may see some stability in the near-term and reduce the panic in the market, but may falter again on strong US jobs data, he told CNBC-TV18.
He also said that while Rajan may be the best man as RBI governor but he may not be in a position to fix all the problems.
"Market expects him to come in and ease interest rates. He is not going to do that. In fact, one of the reasons he has postponed the RBI meeting is because he wants to see what the Fed does first and take it from there," said Baweja.
Jagdish Malkani, Member, BSE and NSE echoed the view and cautioned that this is a bear market rally
Rajan is the best man for the job but there are enough storms to be weathered, said Malkani.
Ambareesh Baliga, Managing Partner-Global Wealth Management, Edelweiss Financial Services, also has advised investors to use the current market rally to exit the market. He feels breaching 5,550-5,600 decisively would be tough for the Nifty.
"If there is a decent rally in banks look to exit that sector. It doesn't make sense getting into the market today," he toldCNBC-TV18.
Sensex sinks below 19,000 as investors cash in Rajan effect
10:44 am The Sensex and Nifty lost 1 percent from the day's high as investors used the Rajan effect to book profits at higher levels.
The BSE Sensex was up just 374 points at 18938, while the Nifty was up 122 points at 5570.
The Bank Nifty was 3 percent off the day's high.
Even the rupee weakened 1.3 percent to 66.33 against the USD.
"For the market to cross 5,550-5,600 decisively would be difficult. Because whatever said and done I do not think the sentiment will change immediately. He can talk of the market to a certain extent, but unless things change at the ground level, which I do not see changing at least in the immediate future, I do not see a sustained rally. My advice would still be the same; those who have missed out on the earlier pullbacks, utilise this and get into cash to a certain extent," said Ambareesh Baliga, Managing Partner-Global Wealth Management, Edelweiss Financial Services in an interview with CNBC-TV18.
Moreover, going forward, market would continue to be sensitive to movement in crude oil due to ongoing geopolitical developments in the Middle East.
Sensex, rupee give 21 gun salute to 'Rockstar' Rajan
9:45 am Experts today hailed Raghuram Rajan's measures to prop up the rupee and instill confidence in the markets.
"Overall, the way and kind of steps he has announced will instill confidence in the market, which was in short supply," A. Prasanna, economist at ICICI Securities Primary Dealership told Reuters.
"Expectations were quite high from him and he has gone far beyond expectations on day 1," Barclays economist Siddhartha Sanyal told Reuters. "The fact that he has come with such pointed steps in mind shows that we will see more concrete steps very soon."
Even Rajiv Takru, banking secretary told CNBC-TV18 that markets have reacted positively to Rajan's measures.
"To a certain extent, the recent rupee tumble and instability in the financial markets, has been a crisis of confidence. To that end, the path of action provided by the new governor and the stress on keeping communications predictable and consistent will be a welcome move," Radhika Rao, an economist at DBS in Singapore, said in a note.
Deutsche Bank thinks Rajan'sstatement is impressive and a must-read.
"India's myriad cyclical and structural impediments will continue to hold back the economy for the time being, and risks of a deeper crisis are non-trivial, but (Wednesday's) statement shows a fresh and cohesive vision of monetary and financial sector policy from a newly appointed central bank governor can shine a much-needed light on India's promise and potential," said the bank in a note, according to Reuters.
Ambareesh Baliga, Managing Partner-Global Wealth Management, Edelweiss Financial Services, however, has advised investors to use the current market rally to exit the market. He feels breaching 5,550-5,600 decisively would be tough for the Nifty.
"If there is a decent rally in banks look to exit that sector. It doesn't make sense getting into the market today," he told CNBC-TV18.
9:37 am: Nifty recovers 10% From August 28 low Of 5118, Sensex up 500 points
The rupee, stock markets and bonds rallied as measures announced by the Reserve Bank of India (RBI) chief Raghuram Rajan raised hopes of a new approach to the current crisis, while the move to start a discounted swap window for banks also aided.The partially convertible rupee was at 65.71 The benchmark 10-year bond yield dropped as much as 22 basis points to 8.17 percent, while the Nifty recovered around 10 percent from its 28 August low of 5118.
At 9:44 am, the Sensex was up 473 points at 19040, while Nifty was up 145 points at 5593.
"Measures taken by new RBI governor will help generate money and the swap foreign currency non-resident (FCNR) deposits and dollar funds will solve a lot of problems, " said Bank of America in an interview with CNBC-TV18.
ICICI Bank , HDFC Bank , HDFC, ITC and SBI were top gainers in the Sensexwhereas TCS, Infosys and Wipro were showing some weakness.
BSE Bankex jumped around 8 percent.
The gain in the bank index comes despite the fact that Moody's downgrade the subordinated debt (subdebt) and junior subordinated debt ratings of 11 Indian banks.
Of the 11 banks affected, eight are public sector banks (with a minimum 51% government shareholding) and three are private sector banks.
Moody's downgrade reflects the increasing international trend of imposing losses on holders of subdebt securities (creditor "bail-in") as a pre-condition for distressed banks to receive government support. As a consequence, Moody's assumes that Indian government support is less likely to be forthcoming for the holders of such securities.
Rajan boosts market, rupee up at 65.58, Sensex jumps 400 pts
9:15 amThe Indian financial markets zoomed in morning trade due to the Raghuram Rajan effect.
The Indian rupee opened at 66.10 against the US dollar and quickly rose to 66 reacting to new reform measures unveiled by new RBI govenor Raghuram Rajan.
The pull back in the currency had a positive impact on the Indian equity markets too.
While the Sensex jumped 385 points at18947, while Nifty jumped 123 points at 5570. All banking stocks were trading in the greenafter Rajan said the Reserve Bank of India will offer a swap window to banks for fresh dollar deposits mobilised from non-resident Indians, which will be available to lenders till November 30, 2013.
Measures disclosed to support the rupee include liberalisation of the financial market by enhancing the limits for exporters to re-book cancelled forward exchange contracts and opening a special concessional window for swapping foreign currency non-resident (FCNR) deposits and dollar funds.
Expectation that Rajan will usher in more reforms in the financial sector also added to the upbeat sentiment for the stocks.
On Wednesday Rajan said that the measures announced were just part of his short-term time table and that a broader road map will follow soon.
"Rajan has taken the initiative on structural reform of the financial system and that is very important signal at a time of macroeconomic volatility, because it clearly indicates to market participants that we are of a mindset to continue confidently along the lines of structural reform and since he has been given the mandate he will take that initiative to drive structural reform in the financial space," said Rajiv Lall, Executive Chairman, IDFC in an interview with CNBC-TV18.
Nirmal Jain of IIFL too agrees that Rajan has surprised the markets by being very specific and clear on what he wants to achieve in his new role.
"There is a clarity of thought as well as courage of conviction so he is moving in the right direction and market may positively react but market will have many more variables to reckon so I would not like to comment on that," he told CNBC-TV18.
However Sanjeev Peasad, analyst at Kotak Institutional Research said it is too soon to say that India has turned corned because QE tapering and elections will continue as uncertainties for the market.
The SGX Nifty futures on the Singapore exchange was higher by more than 2 percent, indicating a surge in Indian equities at the opening.
Adding to the bullish sentiment is the fall in Brent crude prices to $107 per barrel levels and upmove in the global markets.
Below are some highlights of the proposed action.
Postpones first monetary policy statement as Governor to September 20 from September 16
To set up a panel on how to strengthen monetary policy framework, which will submit report in three months
RUPEE, CAPITAL INFLOWS
To allow exporters to re-book cancelled forward currency contracts up to 50 pct of the value of cancelled contracts and up to 25 percent for importers
Will push for more trade settlements in rupees, open up financial markets for those who receive rupees to invest back in
Will offer a special window for swapping foreign currency non-resident (FCNR) deposits with a minimum tenor three of years and more, at a fixed rate of 3.5 percent per year
Will raise overseas borrowing limit of 50 percent of unimpaired Tier I capital to 100 per cent for banks
Borrowings mobilized under this provision can be swapped with RBI at a concessional rate of 100 basis points below the ongoing swap rate prevailing in the market
Above schemes will be open till November 30, 2013
DEBT / BROADER MARKETS
Will introduce cash-settled 10-year interest rate future contracts
Will examine introduction of interest rate futures on overnight interest rates
Will steadily but surely liberalise markets, restrictions on investments and position-taking
To issue inflation-indexed savings certificates tied to CPI to retail investors by end November
Need to reduce requirement for banks to invest in government securities in a calibrated way
To set up external committee to screen bank license applicants
Hopes to announce licenses within, or soon after, January 2014
Will push foreign banks to set up wholly-owned subsidiaries
Will look at continuous or on-tap bank licensing system for applicants
Will issue guidelines to free rules on setting up bank branches for domestic commercial banks
To look at rising non-performing assets and restructuring/recovery process
Need to accelerate the working of debt recovery tribunals and asset resconstruction companies
Proposes to collect credit data, examine large common exposures among banks
Will encourage banks to clean up their balance sheets.
Will encourage banks to commit to raising capital when necessary
Bad loan problem is not alarming yet, but will fester if unaddressed
To set up committee that will access every aspect to financial inclusion
With inputs from Reuters
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