Bulls were in command as key indices retained strong intraday gains in mid-afternoon trade. The barometer index, the S&P BSE Sensex, was currently up 424.36 points or 1.59% at 27,055.65. All the twelve sectoral indices on BSE were in the green. The market breadth indicating the overall health of the market was strong, with more than two gainers for every loser on BSE. The BSE Small-Cap index was up 2.46%, outperforming the Sensex. The BSE Mid-Cap index was up 1.48%, underperforming the Sensex. Indian stocks surged today, 18 September 2014, after the US Federal Reserve at the end of a two-day policy meeting on Wednesday, 17 September 2014, maintained a commitment to keep US interest rates near zero for a "considerable time". Meanwhile, the Indian and Chinese governments have reportedly signed a five-year trade and economic co-operation pact and a railway co-operation pact. Chinese President Xi Jinping is on a three-day visit to India. IT stocks edged higher.
The US Federal Reserve at the end of a two-day policy meeting on Wednesday, 17 September 2014, maintained a commitment to keep US interest rates near zero for a "considerable time" after the bond-buying program ends even as its rate projections suggested some officials might have in mind a slightly more aggressive path of rate increases next year and in 2016 than previously thought. Low interest rates in the US have triggered large inflow of dollars into emerging markets as investors seek higher yields and India has been one of the major beneficiaries. The Fed has kept its short-term interest rate near-zero since December 2008.
In overseas markets, European stocks edged higher as US Federal Reserve Chair Janet Yellen indicated that interest rates won't increase anytime soon. Asian stocks extended previous day's gains triggered by reports that China's central bank is providing liquidity to support the economy and after the US Federal Reserve after a two-day policy meet on Wednesday, 17 September 2014, renewed a pledge to keep interest rates near zero for a considerable time. Overnight, US markets closed slightly higher after the Fed statement and Fed Chairwoman Janet Yellen's news conference, with the Dow Jones Industrial Average reaching a record high.
A sustained rise in intraday trade took the Sensex past the psychological 27,000 level and the 50-unit CNX Nifty past the psychological 8,000 level in afternoon trade. Earlier, key indices had seen a sudden surge after an initial slide.
In the foreign exchange market, the rupee edged lower against the dollar on dollar's broad strength after the Fed statement.
Brent crude oil prices extended overnight losses.
At 14:15 IST, the S&P BSE Sensex was up 424.36 points or 1.59% at 27,055.65. The index jumped 455.32 points at the day's high of 27,086.61 in mid-afternoon trade, its highest level since 12 September 2014. The index dropped 128.21 points at the day's low of 26,503.08 in early trade.
The CNX Nifty was up 158.95 points or 1.54% at 8,098.65. The index hit a high of 8,109.75 in intraday trade, its highest level since 12 September 2014. The index hit a low of 7,939.70 in intraday trade.
The market breadth indicating the overall health of the market was strong, with more than two gainers for every loser on BSE. 2,138 shares gained and 815 shares fell. A total of 81 shares were unchanged.
The BSE Mid-Cap index was up 143.29 points or 1.48% at 9,827.21, underperforming the Sensex. The BSE Small-Cap index was up 266.82 points or 2.46% at 11,096.66, outperforming the Sensex.
IT stocks edged higher. HCL Technologies (up 1.25%), Tech Mahindra (up 0.02%) and Tata Consultancy Services (TCS) (up 1.91%) gained.
Wipro rose 2.75%. Wipro early this week said that the company's subsidiary Wipro Arabia has entered into a strategic partnership with Saudi-based Saudi Electricity Company (SEC), the largest power utility company in the Middle East serving approximately 5 million customers in the Kingdom of Saudi Arabia (KSA). As part of this engagement, Wipro will implement and rollout the plant maintenance and project system functionality of the SAP ERP application for SEC's distribution business line across KSA.
But, Infosys fell 1.39%. Infosys today, 18 September 2014, announced a global partnership with Huawei, a leading global information and communication technology (ICT) solution provider. Through this partnership, the companies will jointly offer enterprise customers cloud, big data and communication solutions, along with other enterprise-oriented services which will combine Huawei's cloud infrastructure and global IT service expertise from Infosys. In addition, Infosys and Huawei will further strengthen their existing partnership in the Huawei business process and information technology space.
In the foreign exchange market, the rupee edged lower against the dollar on dollar's broad strength after the Fed statement. The partially convertible rupee was hovering at 60.945, compared with its close of 60.9175 during the previous trading session.
Brent crude oil prices dropped, pressured by a stronger dollar on fears about a looming US interest rate increase and a steep spike in US crude stocks. Brent for November settlement was down 42 cents at $98.55 a barrel. The contract had fallen 8 cents a barrel or 0.08% to settle at $98.97 a barrel on Wednesday, 17 September 2014.
Lower crude oil prices will help India in containing its fiscal deficit, current account deficit and fuel price inflation. India imports 80% of its crude oil requirement. However, a weak rupee will offset the benefit of falling crude oil prices to that extent. A weak rupee raises cost of imports.
Meanwhile, on the second day of a three day tour of Chinese President Xi Jinping the Indian and Chinese governments reportedly signed a five-year trade and economic co-operation pact and a railway co-operation pact.
European stocks advanced today, 18 September 2014, as US Federal Reserve Chair Janet Yellen indicated that interest rates won't increase anytime soon. Key benchmark indices in UK, France and Germany were up 0.11% to 0.84%.
In UK, a crucial vote on Scottish independence is underway today, 18 September 2014. Scotland is currently a part of United Kingdom.
Asian stocks today, 18 September 2014, extended previous day's gains triggered by reports that China's central bank is providing liquidity to support the economy and after the US Federal Reserve after a two-day policy meet on Wednesday, 17 September 2014, renewed a pledge to keep interest rates near zero for a considerable time. Key benchmark indices in China, South Korea, Indonesia, Singapore, Taiwan and Japan were up 0.09% to 1.13%. Hong Kong's Hang Seng fell 0.85%.
China's new-home prices fell in all but two cities monitored by the government last month as tight credit damped demand even as local home-purchase restrictions were eased. Prices dropped in 68 of the 70 cities in August from July, including in Beijing and Shanghai, the National Bureau of Statistics said in a statement today, the most since January 2011 when the government changed the way it compiles the data.
Trading in US index futures indicated that the Dow could gain 26 points at the opening bell on Thursday, 18 September 2014. US stocks edged higher in volatile trading on Wednesday, 17 September 2014, after the US Federal Reserve renewed its pledge to keep interest rates near zero for a "considerable time" and repeated concerns over slack in the labor market, standing firm against calls to overhaul its policy statement.
In a statement after a two-day meeting, it announced a further $10 billion reduction in its monthly purchases, leaving the program on course to be shuttered next month. While the Fed expects to keep rates low for a considerable time, Yellen in a news conference declined to say how much time that meant. She also repeatedly stressed the timing depends on how the economy performs.
While the Fed's policy statement emphasised rates would stay low for now, its rate projections suggested some officials might have in mind a slightly more aggressive path of rate increases next year and in 2016 than previously thought. In June, the median estimate among Fed officials for the Fed's target interest meaning half of estimates were above and half were below at the end of 2016 was 2.5%. The latest estimate for the end of 2016 was between 2.75% and 3%.
Meanwhile, the latest economic data showed that US consumer prices fell for the first time in nearly 1-1/2 years in August and underlying inflation pressures were muted, giving the Fed more ammunition in its argument to keep rates low.
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