Sensex soars 600 pts, Nifty breaches 6050 on Fed outcome

Moneycontrol Bureau
Live Market Commentary

10:00 am Market opinion: Ambareesh Baliga, Edelweiss Financial Services feels that it is a great opportunity for those who had missed selling out earlier and got stuck. "The Fed has given them the opportunity to book out at those higher levels because I do not know as to how long the market will hold on at 6,100-6,150 levels," he said in an interview to CNBC-TV18.

9:50 am Banking stocks on fire: Bank Nifty is up around 6 percent from the previous close. YES Bank is leading the pack with a gain of 16 percent followed by IndusInd Bank (up 10 percent), ICICI Bank (up 8 percent), Axis Bank (up 8 percent) and SBI (up 6 percent) among the lead gainers.

9:45 am FII View: Jonathan Garner of Morgan Stanley says that India will remain exposed to the trend of the US dollar and real interest rates as long as India's current account deficit remains higher than a more sustainable level of 2.5 percent of GDP and CPI inflation remains higher than 7 percent. In the near-term, the rupee and interest rate environment in India is likely to remain highly dependent on Fed's monetary policy action.

9:40 am Buzzer: NMDC falls further 3 percent on the BSE on concerns that naxals set on fire a conveyor belt of the state-run company in Chhattisgarh's Dantewada district on September 18. However, the management has said that the restoration work has already started and it will be over in three days.

9:35 am Market outlook: Rajeev Malik, CLSA said, "Indian financial assets will react positively to the FOMC's unexpected decision of no taper. The increased global risk-on will be unequivocally positive for rupee, equities and bonds. However, beyond the near-term reaction, the headwinds for the rupee from the anticipated global liquidity tightening in 2014 remain unchanged."

"The RBI will still signal a hawkish tone and may partly reverse minimum daily CRR balance requirement for banks," he added.

9:26 am Market check: The Sensex is up 481.34 points or 2.41 percent at 20443.50, and the Nifty up 155.30 points or 2.63 percent at 6054.75. About 655 shares have advanced, 139 shares declined, and 31 shares are unchanged.

9:20 am Winner and losers: Banking stocks have become investors favourite with the Bank Nifty up 6 percent from the previous close. ICICI Bank, Maruti Suzuki, Bharti Airtel, SBI and HDFC bank are top gainers in the Sensex. Technology stocks are under selling pressure on strong rupee. On the losing side are Wipro, TCS and Infosys.

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The market is riding high on the US Federal Reserve's decision to continue buying bonds at the current rate of USD 85 billion a month for now. Strategists and traders were expecting the central bank to announce a USD 10- USD 15 billion reduction to its asset purchase programme. The Fed statement cited insufficient evidence of improvement in economic data to warrant a reduction in monetary stimulus. The Fed also downgraded its outlook for the economy.

The Sensex opens up 385.14 points or 1.93 percent at 20347.30, and the Nifty up 144.70 points or 2.45 percent at 6044.15. About 319 shares have advanced, 28 shares declined, and 13 shares are unchanged.

Indian rupee appreciated by 139 paise to 61.69 per dollar in early trade Thursday as against Wednesday's closing of 63.38 after the US Federal Reserve said it would continue buying bonds at the current rate of USD 85 billion a month for now.

Ashutosh Raina of HDFC Bank said, "All currencies, particularly emerging market currencies are already rallying against the dollar. On the back of Fed's announcements, we could expect RBI to announce mild positives on rate control measures. Rupee may touch 60/USD in the medium term as well. The range for the day is seen between 61-63/USD".

The dollar index slid 1.2 percent overnight, its biggest one-day slide in more than 2 months to levels of 80 and the euro dollar has run away to 1.35.

On the global market front, US markets saw record highs and the Dow rallied 150 points to shutting shop at record highs.

Emerging markets are leading the gains in Asian markets that are enjoying a risk-on rally post Bernanke’s move on tapering the QE3. Japan's Nikkei hit a 2-month high, while Australian equities rose to a new 5-year high. Volumes, however, were light due to Shanghai and South Korean markets being shut for public holidays.

Crude prices gained with Nymex spiking to USD 108.5 per barrel levels. Gold rallied 3 percent to 1360 per ounce levels - jumping the most since 2009. The dollar though languishes near 7-month lows and the euro trades at an unbelievable 1.35 against the dollar.

(Posted by Nasrin Sultana)