Nifty reclaims 8,000 level

With the Reserve Bank of India (RBI) keeping its main lending rate unchanged after a monetary policy review, key benchmark indices extended gains and hit fresh intraday high in afternoon trade. The 50-unit CNX Nifty regained the psychological 8,000 level. The Nifty hit its highest level in nearly a week. The barometer index, the S&P BSE Sensex, was currently up 207.81 points or 0.78% at 26,804.92. TheSensex hit one-week high. The market breadth indicating the overall health of the market was strong. Eruoepan stocks rose in early trade there. Shares of auto-part makers were in demand. Tyre stocks rose across the board on persistent fall in rubber prices.

Earlier, key indices had swung alternately between positive and negative terrain soon after the RBI’s policy announcement at 11:00 IST. Before that, key indices had moved into positive zone in morning trade after languishing in negative terrain earlier during the day.

Meanwhile, a Vision Statement for the US-India Strategic Partnership released ahead of Prime Minister Narendra Modi’s talks with US President Barack Obama later today, 30 September 2014, stated that the United States and India are committed to expand and deepen their strategic partnership in order to harness the inherent potential of the two democracies and the burgeoning ties between people, economies, and businesses of the two nations. Modi’s five-day visit to the US concludes today.

In overseas markets, European stocks rose in early trade as investors awaited data on US consumer confidence to gauge the strength of the world’s largest economy. Asian stocks declined amid concern over tensions in Hong Kong and as a Chinese manufacturing gauge missed estimates. US stocks ended lower yesterday, 29 September 2014, following protests in Hong Kong that added to worries about Chinese growth and after a disappointing forecast from Ford Motor Co.

Brent crude oil prices edged higher as Ukraine’s army suffered its highest casualties since signing a truce early this month in new clashes with pro-Russian fighters that are threatening to shatter a cease-fire that brought calm to the six-month old conflict.

In the foreign exchange market, the rupee edged lower against the dollar as a potential increase in US interest rates and geopolitical tensions in the Middle East damped demand for emerging-market assets.

At 13:15 IST, the S&P BSE Sensex was up 207.81 points or 0.78% at 26,804.92. The index jumped 254.22 points at the day’s high of 26,851.33 in afternoon trade, its highest level since 23 September 2014. The index lost 49.67 points at the day’s low of 26,547.44 in early trade.

The CNX Nifty was up 57.35 points or 0.72% at 8,016.25. The index hit a high of 8,030.90 in intraday trade, its highest level since 24 September 2014. The index hit a low of 7,943.75 in intraday trade.

The market breadth indicating the overall health of the market was strong. On BSE, 1,621 shares rose and 989 shares fell. A total of 101 shares were unchanged.

The BSE Mid-Cap index was up 78.91 points or 0.83% at 9,595.69. The BSE Small-Cap index was up 105.72 points or 0.99% at 10,773.39. Both these indices outperformed the Sensex.

Among the 30 Sensex shares, 26 rose and the remaining shares fell. HDFC (up 2.82%), Sun Pharmaceutical Industries (up 2.66%), Sesa Sterlite (up 1.92%), Hindalco Industries (up 1.91%), Larsen & Toubro (up 1.84%), Maruti Suzuki India (up 1.77%), Bajaj Auto (up 1.58%), Cipla (up 1.58%), Coal India (up 1.50%), Tata Power (up 1.43%) and ONGC (up 1.31%) edged higher from the Sensex pack.

Axis Bank (down 0.40%), TCS (down 0.36%), Infosys (down 0.28%) and Mahindra & Mahindra (down 0.23%), edged lower from the Sensex pack.

Shares of auto-part makers were in demand. Subros (up 4.93%), Amtek Auto (up 3.19%), Ahmednagar Forgings (up 2.03%), Banco Products (up 1.93%), Munjal Showa (up 1.50%), Sona Koyo Steering Systems (up 1.50%), Automotive Axles (up 1.48%), Clutch Auto (up 1.43%), Bharat Seats (up 1.22%), Steel Strips Wheels (up 1.09%), Exide Industries (up 0.77%), Gabriel India (up 0.69%), Ramkrishna Forgings (up 0.65%) and Bharat Forge (up 0.56%) edged higher.

Tyre stocks rose across the board on persistent fall in rubber prices. CEAT (up 8.84%), Apollo Tyres (up 7.09%), JK Tyre & Industries (up 6.91%), Dunlop India (up 4.97%), MRF (up 4.75%) and Falcon Tyres (up 2.22%), edged higher.

As per reports, rubber price, which ruled around Rs 220 per kg in January 2011, has now touched a low of Rs 123 per kg in the domestic market due to lower demand for the commodity in the wake of general economic slowdown and lower price in international market.

The Reserve Bank of India (RBI) after its fourth bi-monthly monetary policy review today, 30 September 2014, kept its main lending rate viz. the repo rate unchanged at 8%, as it waited for more signs that inflation is retreating. The RBI also kept the cash reserve ratio unchanged at 4% of net demand and time liabilities (NDTL). It has reduced the liquidity provided under the export credit refinance (ECR) facility from 32% of eligible export credit outstanding to 15% with effect from 10 October 2014.

RBI Governor Dr. Raghuram Rajan said in monetary policy statement that future food prices and the timing and magnitude of held back administered price revisions impart some uncertainty to an otherwise improving inflation outlook, where lower oil prices, a relatively stable currency, and a negative output gap continue to put downward pressure. Base effects will also temper inflation in the next few months only to reverse towards the end of the year, the RBI said. The Reserve Bank of India will look through base effects. The central bank said that the full impact of the skewed rainfall distribution carries risks to the future path of food inflation, though vegetable prices have fallen recently after the recent spike.

Meanwhile, the RBI has eased norms for importers for hedging foreign exchange risk. The central bank has raised the eligible limit for importers under the past performance route to 100% from the existing 50% i.e., importers can hedge up to 100% of the average of past three years’ import turnover or the preceding year’s import turnover, whichever is higher, subject to compliance with other conditions applicable for hedging under this route.

In the foreign exchange market, the rupee edged lower against the dollar as a potential increase in US interest rates and geopolitical tensions in the Middle East damped demand for emerging-market assets. The partially convertible rupee was hovering at 61.61, compared with its close of 61.53 during the previous trading session. Reports showing an acceleration in US economic growth and signs of improvement in the labor market boosted odds that the Federal Reserve will raise borrowing costs next year.

Brent crude oil prices edged higher as Ukraine’s army suffered its highest casualties since signing a truce early this month in new clashes with pro-Russian fighters that are threatening to shatter a cease-fire that brought calm to the six-month old conflict. Brent for November settlement was up 15 cents at $97.35 a barrel. The contract had risen 51 cents to settle at $97.20 a barrel yesterday, 29 September 2014.

Finance Secretary Dr Arvind Mayaram said at a function in Chennai yesterday, 29 September 2014, that that the government is committed to an early roll-out of the goods and services tax (GST), providing gainful employment to its youth through its skill development programme, fast tracking work on industrial corridors and bringing in the requisite amendments in the Land Acquisition Act to expedite project clearances.

Most European stocks rose in early trade Tuesday, 30 September 2014, as investors awaited data on US consumer confidence to gauge the strength of the world’s largest economy. Key benchmark indices in France and Germany were up 0.07% to 0.46%. UK’s FTSE 100 was off 0.08%.

Asian stocks declined today, 30 September 2014, amid concern over tensions in Hong Kong and as a Chinese manufacturing gauge missed estimates. Key benchmark indices in South Korea, Hong Kong, Japan, and Singapore were off 0.32% to 0.93%. Key benchmark indices in China, Indonesia and Taiwan rose 0.02% to 0.26%.

Activity in China’s vast factory sector showed signs of steadying in September as export orders climbed, a private survey showed today, 29 September 2014, easing fears of a hard landing but pointing to a still-sluggish economy facing considerable risks. The final HSBC/Markit Manufacturing Purchasing Managers’ Index (PMI) hovered at 50.2 in September, unchanged from the August reading which was a three-month low, but lower than a preliminary reading of 50.5. A sub-index measuring new export orders, a gauge of external demand, expanded to a 4-1/2-year-high of 54.5, though domestic demand appeared soft. The 50 mark separates expansion from contraction in activity on a monthly basis.

China will release its official factory PMI tomorrow, 1 October 2014.

Small numbers of protesters reportedly continued to block roads in central Hong Kong in the fifth day of pro-democracy demonstrations today, 30 September 2014, as leaders warned the standoff would escalate if their demands are not met. Protest organizers are insisting that the city’s top political figure, Chief Executive Leung Chun-ying, resign and that the government in Beijing drops plans to control who gets to run as Leung’s successor in 2017.

Trading in US index futures indicated that the Dow could gain 24 points at the opening bell on Tuesday, 30 September 2014. US stocks ended lower on Monday, 29 September 2014, following protests in Hong Kong that added to worries about Chinese growth and after a disappointing forecast from Ford Motor Co.

Data on Tuesday showed US consumer spending rose by 0.5% last month, after being little changed in July, adding to signs the world’s largest economy is on a stronger footing.