Strong market breadth

Key benchmark indices regained strength in early afternoon trade as firmness in Asian stocks and higher US index futures supported domestic bourses. The S&P BSE Sensex was up 99.06 points or 0.53%, off about 110 points from the day's low and up close to 80 points from the day's high. The market breadth, indicating the overall health of the market, was strong. Bank stocks were mixed. IDFC declined after the infra lender said that the ceiling limit in respect of all the FIIs, FDI, NRIs, OCBs and foreign nationals have now been reduced from 74% to 54%.

The market edged higher in early trade triggered by firm Asian stocks. It extended initial gains to hit fresh intraday high in morning trade with the S&P BSE Sensex and the 50-unit CNX Nifty, both, hitting their highest level in over one week. However, it trimmed gains to hit fresh intraday low in mid-morning trade.

Asian stocks rose for a second day on Monday after a slump in US home sales eased speculation the Federal Reserve will reduce economic stimulus next month.

Meanwhile, the rupee weakened against the dollar today, 26 August 2013. The partially convertible rupee was trading at 64.15 per dollar sharply lower than its Friday's close of 63.20/21. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.

The market is expected to remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month August 2013 series to September 2013 series. The near month August 2013 derivatives contract expire on Thursday, 29 August 2013. It regained strength in early afternoon trade.

At 12:20 IST, the S&P BSE Sensex was up 99.06 points or 0.53% to 18.618.50. The index rose 208.75 points at the day's high of 18,728.19 in morning trade, its highest level since 16 August 2013. The index gained 21.54 points at the day's low of 18,540.98 in mid-morning trade.

The CNX Nifty was up 19.70 points or 0.36% to 5,491.45. The index hit a high of 5,528.70 in intraday trade, its highest level since 16 August 2013. The index hit a low of 5,469.85 in intraday trade.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,110 shares rose and 734 shares fell. A total of 129 shares were unchanged.

Among the 30-share Sensex pack, 21 stocks rose and rest of them fell. Sterlite Industries (up 4.27%), Bhel (up 3.14%) and Dr Reddy's Laboratories (up 2.34%), edged higher.

Bank stocks were mixed. HDFC Bank rose 0.9%. Axis Bank dropped 3.12%.

Private sector banking giant ICICI Bank shed 2.73%. The bank on 22 August 2013, said it has increased base rate by 0.25% to 10% per annum with effect from 23 August 2013. With effect from 1 July 2010, interest rates on new loans and advances, including consumer loans, are determined with reference to base rate. ICICI Bank has also announced an increase of 0.25% in its benchmark prime-lending rate and in its Floating Reference Rate (FRR) for consumer loans (including home loans) with effect from 23 August 2013. These benchmark rates are used for determining interest rates on loans and advances sanctioned upto 30 June 2010. The fixed rate customers will not be impacted by the above revision and their contracted rates will remain unchanged, ICICI Bank said.

State Bank of India rose 0.1%.

Punjab National Bank declined 0.01%, with the stock reversing intraday gains. The bank has decided to increase the interest rate on single domestic term deposit of Rs 1 crore and above up to Rs 10 crore, from 7.00% to 7.25% for maturity period of 46 days to 90 days with effect from 26 August 2013. Further, for senior citizens the additional rate of interest has been increased to 50 bps as against existing rate of 25 bps.

IDFC declined 2.42%. The infra lender said during market hours today, 26 August 2013 that the ceiling limit in respect of all the FIIs, FDI, NRIs, OCBs and foreign nationals have now been reduced from 74% to 54% sighting RBIs press release dated 23 August 2013 on decrease in foreign investment limit / ceiling in an Indian company under PIS addressed to all the custodian banks. Further the lender has informed that, the current foreign shareholding in IDFC is 53.71%, hence the company has advised all the custodian banks vide its email dated 26 August 2013 to not make any further purchases through secondary markets on behalf of their Fll & NRI clients with immediate effect.

McNally Bharat Engineering Company gained 3.3% after the company said it has bagged an order worth Rs 309 crore. The company announced the new order win during trading hours today, 26 August 2013. McNally Bharat Engineering Company said the company has received an order for design, engineering, manufacturing, erection, commissioning and supply on turnkey basis for in-pit conveyor system for a value of Rs 309 crore.

Asian stocks rose for a second day on Monday after a slump in US home sales eased speculation the Federal Reserve will reduce economic stimulus next month. Key benchmark indices in Singapore, Hong Kong, China, Taiwan and South Korea were up by 0.27% to 1.74%. Key benchmark indices in Indonesia and Japan fell by 0.18% to 0.2%.

Trading in US index futures indicated that the Dow could gain 23 points at the opening bell on Monday, 26 August 2013. US stocks rose on Friday, 23 August 2013 as investors watched Federal Reserve officials for signals on stimulus cuts after data showed home sales plunged. Data from the Commerce Department showed purchases of new US homes plunged in July by the most in more than three years and previous months were revised down, a sign that growth in the industry may be taking a pause as mortgage rates rise.

Federal Reserve officials rebuffed international calls to take the threat of fallout in emerging markets into account when tapering US monetary stimulus. The risk that the Fed's trimming of bond buying will hurt economies from India to Turkey by sparking an exodus of cash and higher borrowing costs was a dominant theme at the annual meeting of central bankers and economists in Jackson Hole, Wyoming, that ended 24 August 2013.

The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.

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