Key benchmark indices extended initial gains and hit fresh intraday high in morning trade as investors took solace from the government keeping its borrowing target for the fiscal year through March 2014 unchanged at Rs 5.79 lakh crore on Monday, 23 September 2013. The barometer index, the S&P BSE Sensex regained the psychological 20,000 mark. The Sensex was up 119.54 points or 0.6%, up close to 240 points from the day's low and off about 30 points from the day's high. The market breadth, indicating the overall health of the market, was strong.
IT stocks rose as rupee fell against the dollar, with HCL Technologies hitting record high. Capital goods pivotals gained on renewed buying. MTNL jumped on reports that the company is likely to sign a pact with BSNL today, 24 September 2013, that would allow the state-run companies to utilise each others network for providing pan-India mobile services.
A bout of volatility was witnessed in early trade as key benchmark indices reversed initial losses triggered by weak Asian stocks. Key benchmark indices extended initial gains and hit fresh intraday high in morning trade.
The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month September 2013 series to October 2013 series. The September 2013 F&O contracts expire on Thursday, 26 September 2013.
At 10:20 IST, the S&P BSE Sensex was up 119.54 points or 0.6% to 20,020.50. The index jumped 149.46 points at the day's high of 20,050.42 in morning trade. The index declined 118.18 points at the day's low of 19,782.78 in early trade, its lowest level since 18 September 2013.
The CNX Nifty was up 42.65 points or 0.72% to 5,932.40. The index hit a high of 5,938.40 in intraday trade. The index hit a low of 5,854.55 in intraday trade, its lowest level since 18 September 2013.
The market breadth, indicating the overall health of the market, was strong. On BSE, 862 shares rose and 551 shares dropped. A total of 100 shares were unchanged.
Among the 30-share Sensex pack, 19 stocks rose and rest of them fell. Tata Motors (up 2.13%), Maruti Suzuki India (up 1.92%) and ONGC (up 1.79%), edged higher.
Capital goods pivotals gained on renewed buying. L&T (up 1.69%) and Bhel (up 0.92%), edged higher.
IT stocks rose as rupee fell against the dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
HCL Technologies advanced 0.36% to Rs 1096.65 after hitting record high of Rs 1104.30 in intraday trade.
Wipro rose 0.77%. Wipro becomes a part of the 50-unit CNX Nifty with effect from Friday, 27 September 2013. The IT major replaces Reliance Infrastructure in Nifty.
TCS gained 0.74%. Infosys added 0.14%.
MTNL jumped 8.76% on reports that the company is likely to sign a pact with BSNL today, 24 September 2013 that would allow the state-run companies to utilise each others network for providing pan-India mobile services.
Bond prices rose after the government kept the borrowing target for the fiscal year through March 2014 unchanged at Rs 5.79 lakh crore ($92.49 billion). The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.819%, slightly lower than its close of 8.8505% on Monday, 23 September 2013. Bond prices and bond yields are inversely related.
Economic Affairs Secretary Arvind Mayaram said on Monday, 23 September 2013, that the government will raise Rs 3.44 lakh crore by the end of September. That will be Rs 5000-crore short of the target it had initially set for the first half of the fiscal year, Mr. Mayaram said. The shortfall will be made up in the October-March period, taking the total borrowing during the second half to Rs 2.35 lakh crore, he said.
Mr. Mayaram said that the government would cut spending if revenue falls short of the budget projections, but won't breach the full-year fiscal-deficit target which is 4.8% of gross domestic product for this year. The gap was 4.9% last fiscal year. Last week, the government announced austerity measures to slash nonessential spending, as it sought to reinforce its commitment to meeting the deficit target.
There had been concerns off late that the heavy spending on social-development programs at a time when the government's revenue growth has been hit by a slowdown in the economy would mean that the government may have to increase its borrowing this year. Data late August showed the government's fiscal deficit between April and July reached about 63% of the target it had set for the full fiscal year.
In the foreign exchange market, the rupee dropped against the dollar on the back of lower Asian currencies. The partially convertible rupee was hovering at 62.68, weaker than its close of 62.60/61 on Monday, 23 September 2013. 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.
Asian stocks dropped on Tuesday, 24 September 2013, following overnight decline in the US stocks. Key benchmark indices in China, Indonesia, Japan, Hong Kong, Singapore, Taiwan and South Korea were off 0.03% to 0.96%.
Trading in US index futures indicated that the Dow could fall 14 points at the opening bell on Tuesday, 24 September 2013. US stocks fell on Monday after notching three weeks of gains, as investors heard from Federal Reserve officials and worried about another standoff in Washington. Addressing business leaders in New York Monday morning, Fed Bank of Atlanta President Dennis Lockhart said the economy is losing some steam. Fed Bank of New York President William Dudley told an audience at the Fordham University Graduate School of Business that an accommodative monetary policy is still needed. In a speech about US banking in San Antonio, Federal Reserve Bank of Dallas President Richard Fisher said he advocated slowing down the pace of central-bank asset purchases at last week's policy session.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus.
Political showdown in Washington over the US budget also weighed on US stocks on Monday. House Speaker John Boehner and his Republican caucus are pushing the federal government closer to a shutdown in a fight over funding and the debt limit, Democrats Max Baucus and Patty Murray said in a letter to colleagues yesterday. Investors are considering these political disagreements one week after the Fed unexpectedly maintained $85 billion a month in bond purchases.
In Europe, German Chancellor Angela Merkel on Sunday, 22 September 2013, won re-election by the largest amount in more than 20 years.
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