The Indian markets returned to their gloom path after a day of rally and major indices lost around a percent in last session. Today, the start is likely to remain soft-to-cautious and traders will keep gauzing the impact of US Federal Reserve’s tapering of $10 billion in bond purchases starting January 2014. However, finance minister P Chidambaram has said that India is better prepared than in May to deal with any consequences of the US Federal Reserve’s move to wind down its economic stimulus. He also said that “Government is of the view that the markets had already factored in the US Federal Reserve's decisions and, therefore, is not likely to be surprised by these moderate changes.” On the other hand there will be some cautiousness as the United Nations has lowered India’s economic growth forecast for 2013 to 4.8 percent while warning that emerging markets should be prepared to deal with the impact of US Federal Reserve's quantitative easing programme. The sugar stocks will be in limelight as the Cabinet Committee on Economic Affairs (CCEA) approved an interest-free loan of Rs 6,600 crore for the ailing sugar industry to pay off cane arrears.
The US markets made a flat closing in last session with major indices giving up their gains in latter part of the trade. Traders were a bit cautious digesting the Fed's decision to scale back its stimulus program, while there was unexpected increase in initial jobless claims. The Asian markets have made a mixed start and the Japanese market was trading lower by over half a percent ahead of a Bank of Japan’s policy decision.
Back home, benchmarks resumed their southward journey after a day of pause and snapped the session below their crucial 6,200 (Nifty) and 20,750 (Sensex) levels, with a cut of around 3/ 4 of a percent. Although, markets made a gap-up opening supported by firm global cues, but soon the sentiments turned cautious and frontline gauges slipped into red amid fears that foreign institutional investor would reduce their allocations to emerging markets including India’s, thereby hurting incremental inflows after the US Federal Reserve Bank announced gradual reduction in its bond-buying program. Depreciation in rupee too weighed-down sentiments. On the currency front, the partially convertible rupee was at 62.16 to the dollar at the time of equity markets closing as against its close of 62.09 on Wednesday. However, markets witnessed some sort of recovery in afternoon trade on the back of optimistic statements made by Finance Minister, who in an attempt to shore-up investors’ confidence after US Federal Reserve announced to trim down its aggressive bond-buying program by $10 billion a month, reiterated that the government was committed to take all necessary steps to revive growth, boost investments and create conducive business environment. Some support also was rendered by positive global set-up. Both, Asian pacific shares and European shares were upbeat after the US Fed signaled that low interest rates would prevail even as tapers its $85 billion bond-buying program by $10 billion a month starting from January 2014, that too if US economy continues to show strength. Back home, the recovery proved short-lived as markets once again lost momentum in the dying hours of the trade. Selling in public sector undertaking viz. BPCL, HPCL and IOC too dampened the sentiments as crude oil futures moved higher on Wednesday closing near their one month high on getting a bullish inventory data from the Energy Information Administration (EIA) that showed US crude oil stockpiles to have dropped last week, albeit less than expected. Moreover, banking counter remained the biggest loser on hopes that Reserve Bank of India (RBI) would act in next policy meeting in January, if the expected softening of food inflation does not materialises and translates into a significant reduction in headline inflation in the next round of data. Finally, the BSE Sensex plunged by 151.24 points or 0.73%, to settle at 20708.62, while the CNX Nifty declined by 50.50 points or 0.81% to settle at 6,166.65.
The US markets made a flat closing in last session with major indices giving up their gains in latter part of the trade. Traders were a bit cautious digesting the Fed's decision to scale back its stimulus program, while there was unexpected increase in initial jobless claims. The Asian markets have made a mixed start and the Japanese market was trading lower by over half a percent ahead of a Bank of Japan’s policy decision.
Back home, benchmarks resumed their southward journey after a day of pause and snapped the session below their crucial 6,200 (Nifty) and 20,750 (Sensex) levels, with a cut of around 3/ 4 of a percent. Although, markets made a gap-up opening supported by firm global cues, but soon the sentiments turned cautious and frontline gauges slipped into red amid fears that foreign institutional investor would reduce their allocations to emerging markets including India’s, thereby hurting incremental inflows after the US Federal Reserve Bank announced gradual reduction in its bond-buying program. Depreciation in rupee too weighed-down sentiments. On the currency front, the partially convertible rupee was at 62.16 to the dollar at the time of equity markets closing as against its close of 62.09 on Wednesday. However, markets witnessed some sort of recovery in afternoon trade on the back of optimistic statements made by Finance Minister, who in an attempt to shore-up investors’ confidence after US Federal Reserve announced to trim down its aggressive bond-buying program by $10 billion a month, reiterated that the government was committed to take all necessary steps to revive growth, boost investments and create conducive business environment. Some support also was rendered by positive global set-up. Both, Asian pacific shares and European shares were upbeat after the US Fed signaled that low interest rates would prevail even as tapers its $85 billion bond-buying program by $10 billion a month starting from January 2014, that too if US economy continues to show strength. Back home, the recovery proved short-lived as markets once again lost momentum in the dying hours of the trade. Selling in public sector undertaking viz. BPCL, HPCL and IOC too dampened the sentiments as crude oil futures moved higher on Wednesday closing near their one month high on getting a bullish inventory data from the Energy Information Administration (EIA) that showed US crude oil stockpiles to have dropped last week, albeit less than expected. Moreover, banking counter remained the biggest loser on hopes that Reserve Bank of India (RBI) would act in next policy meeting in January, if the expected softening of food inflation does not materialises and translates into a significant reduction in headline inflation in the next round of data. Finally, the BSE Sensex plunged by 151.24 points or 0.73%, to settle at 20708.62, while the CNX Nifty declined by 50.50 points or 0.81% to settle at 6,166.65.
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