Markets pare opening gains; FOMC weighs

Markets pared gains after a gap-up opening this Wednesday, however, sentiments improved after the central bank announced steps to support the beaten-down bond market and to prop up the battered rupee.

Investors are keenly awaiting the release of the Federal Open Market Committee’s July meeting minutes today for hints as to when the stimulus withdrawal will begin.

At 10:20AM, 30-share Sensex was up 158 points to trade at 18,395 and the 50-share Nifty gained 52 points at 5,453 levels.

Banking shares surged after the Reserve Bank of India (RBI) on Tuesday signalled a partial relaxation in its tight money policy, adopted a month ago. The move is aimed at cooling the domestic bond yields, which have risen about 190 basis points since the liquidity-tightening measures were announced on July 15.

Foreign institutional investors sold Rs 14.2 billion of cash shares on Tuesday, exchange data showed, while domestic institutions were net buyers of Rs 10.66 billion of shares.

The broader markets gained with mid-caps and small-caps rising 1.3-1.5 per cent on the BSE.

The market breadth was positive. Out of 1,252 stocks traded, 946 stocks advanced while 261 stocks declined on the BSE.


RUPEE

Despite recent measures from the central bank and the government to defend it, the rupee on Wednesday opened lower against the dollar. The partially convertible currency traded at 63.31 from previous close of 63.23 against the dollar in early trades on the Interbank Foreign Exchange market.

GLOBAL MARKETS

Asia’s benchmark stock index fell for a fifth day to trade at the lowest level in six weeks before the release of minutes of the Federal Reserve’s July meeting.

Japan’s Nikkei was down 0.7% to 13,295, Singapore’s Straits Times fell 0.3% to 3,118, China’s Shanghai Composite index dropped 0.2%  at 2,069 while Hong Kong’s Hang Seng shed 1% to 21,739 today.


STOCK MOVERS

Domestically, barring IT, FMCG, healthcare indices, all the key sectoral indices gained with banks, consumer durables, FMCG, capital goods, realty, power lead rise on the BSE.

The gainers included bank shares such as SBI and ICICI Bank gaining 5%  and 3% respectively, HDFC Bank rose 5%, HDFC was up 3.3% on the BSE.

The laggards were Sun Pharma falling 1.3%, NTPC declined 0.4%, Coal India was down 2% while Infosys fell 1.7% on the BSE.

The key notable movers included counters such as Larsen and Toubro (L&T) that has rallied nearly 5% to Rs 768 after the company said it has won order valued around at Rs 1,500 crore from exploration and production company Petroleum Development Oman LLC (PDO).

Banking shares are in focus in early morning deals, after the Reserve Bank of India (RBI) decided to allow banks to transfer SLR (statutory liquidity ratio) securities to HTM  (Held to Maturity) category from available for sale (AFS) / held for trading (HFT) categories up to the limit of 24.5% as a one-time measure.

Such transfer of securities from AFS/HFT category to HTM category is to be made at the lower of the book value or market value (calculated as of July 15, 2013).

The move is positive for public sector banks like Canara Bank, Punjab National Bank, Bank of Baroda, Bank of India, Corporation Bank and many others, analysts say.