Markets jittery; Fed's decision on QE3 awaited

Markets traded range-bound with a positive bias this Wednesday as anxious investors awaited the outcome of the US Federal Open Market Committee meeting that concludes later today.

At 2:20PM, the 30-share Sensex rose 7 points at 19,230 and the 50-share Nifty gained 1 point at 5,814 levels.

The Federal Open Market Committee will end its two-day policy meeting today, with the outcome expected at around mid-night.

Market participants are waiting for any cues on tapering of third-round of bond-buying programme popularly known as ‘quantitative easing’ after Fed Chairman Ben S. Bernanke said asset purchases could be scaled back should the U.S. employment outlook show “sustainable improvement.”

“While the Fed Chairman may attempt to give more clarity about tapering off QE3, it will be difficult to reduce market uncertainty because there does not seem to be a consensus in the FOMC on an explicit criterion for stopping or tapering QE3,” a note from Rabobank Financial Markets Research showed.

Asian stocks traded mixed amid looming uncertainty over the Federal Reserve’s bond-buying plans.

Globally, the Nikkei rose 2% to 13,245, Singapore Straits Times declined 0.4% to 3,216, Hong Kong’s Hang Seng declined 1% to 20,986 while China’s Shanghai Composite index was down 0.7% at 2,143.

The European markets traded lower today. France’s CAC declined 0.6% to 3,837, Germany’s DAX fell 0.4% to 8,196 while UK’s FTSE was down 0.5% to 6,341.

Back home, the key sectoral gainers included counters such as metal, realty, banks while PSU, IT, autos and power indices dropped on the BSE.

The gainers included counters such as Tata Steel and Jindal Steel rose nearly 2.5%, Bharti Airtel gained 2%, Hindalco and Sterlite Industries added over 2%, HDFC and HDFC Bank were up 0.7% each on the BSE.

The laggards included names like NTPC falling 1.8%, ONGC declined 1.6%, Tata Motors dropped 1.5%, Dr Reddy’s was down 1.2% while TCS and Infosys shed 1% each on the BSE.

The key notable movers included counters such Tata Teleservices (Maharashtra) or TTML is locked in upper circuit of 10% at Rs 6.64 after the company said its board propose to issue bonus shares to public shareholders to meet the minimum public shareholding requirement.

Shares of frontline non-banking finance companies (NBFC’s) like Mahindra and Mahindra Financial Services, Bajaj Finserv, Reliance Capital, L&T Finance Holdings have rallied up to 8% in anticipation of getting banking licenses.

The broader markets traded positively with mid-caps and small-caps rising 0.3 per cent each on the BSE.

The market breadth was positive. Out of 2,323 stocks traded so far, 1,117 stocks advanced while 1,064 declined on the BSE.