The News International Team
The bulls regained lost ground on Dalal Street digesting the FOMC meet outcome. The market staged a stunning broad-based rally and went raging boosted by China’s fund pledge.
The Sensex ended 480.92 points or 1.81 percent higher at 27112.21 and the Nifty was up 139.25 points or 1.75 percent at 8114.75. The Nifty is now within 1 percent of its record high level. Both the benchmark indices gained most since June 2, 2014. About 2233 shares advanced, 827 shares declined and 93 shares were unchanged.
Deven Choksey, MD, KR Choksey Shares and Securities feels the market upmove may be due to short covering-led buying. He says buying from long only funds could have led to the short covering-led rally. However, there is a possibility of some moderate correction in case the buying is subsided.
For positional traders, Choksey advices against selling in hurry till the market completes its count.
All indices ended in the green with five Sensex and Nifty stocks hitting intra-day record highs. Out of the total, 46 of 50 Nifty stocks and 27 of 30 Sensex closed in the green.
Hero MotoCorp was up 6 percent while L&T, HDFC, Dr Reddy’s and BHEL gained 4 percent each. Among the losers were Infosys, HUL and Sesa Sterlite.
Midcaps were not far behind as 80 percent of all stocks ended in the green today. Among the midcaps, Hatsun Agro, Unitech, NBCC, Blue Dart and Chennai Petroleum soared 10-15 percent each.
Rail stocks like Texmaco, Kernex, Kaindee Rail and Hind Rectifiers rallied 5-7 percent intraday on China’s committment to work with the Indian railways to modernise and upgrade it. Both the countries have signed memorandum of understanding (MoU) on extending co-operation in rail, including agreement for new Mansarovar route.
After soft diplomacy yesterday in Ahmadabad, both India and China got down to business today.
In a meeting that lasted 150 minutes, Prime Minister Modi raised the border dispute and called on for faster settlement of the issue. China has agreed to invest USD 20 billion in India in the next five years. India and China have signed 13 key agreements during talks between China President Xi Jinping and Modi. This include a 5-year trade and commerce agreement and deals on cooperation in railways, pharmaceutical and space technology. Modi has urged China to give greater market access to Indian companies.
Meanwhile, as Modi wraps up hosting the Chinese delegates ground work has already begun for his US visit. The PM will launch his dream “Make in India” project on the September 25 amid much fanfare and will invite US companies to manufacture in India during his visit.
The US Federal Reserve has reiterated that it will raise interest rates a “considerable time” after the bond-buying programme ends in October. The central bank says that the labor market has yet to fully recover and inflation continues to run below the committee’s 2 percent objective. As widely expected the monthly asset purchases programme was trimmed by another USD 10 billion dollars bringing it down to USD 15 billion.
The announcement came at the end of a two-day meeting of the central bank’s policy committee. In a press conference that follows the statement, Fed Chair Janet Yellen said there was no calendar date for a rate rise and the decision will be data dependent.
Most analysts feel, Fed will now increase rates only in 2015.According to Nomura, most participants believe that short-term interest rates will be at or near the “longer run” in 2017.
It states that signal from the Fed is dollar supportive, although it may not be sufficient to see a step jump in rates or market volatility. As a strategy, it advises to stick with core long dollar positions in G10, but book gains on short-dated USD calls versus emerging market and commodity currencies.
Other global news which may have an impact on Indian market is Scotland referendum where people have begun voting on whether the country should stay in the UK or become an independent nation. With over 42 lakh voters or 97 percent of the electorate registered to vote, a historically high turnout is expected. The voting will carry on till 2:30 am Indian time and the result will only be known by 6:30 a-m tomorrow morning. The result certainly is too close to call. A poll last night put the ‘no’ vote at 51 percent and ‘yes’ at 49 percent.