Q3 Easing And Diesel Price Hike Will Boost The Market
DSIJ Intelligence / 14 Sep 2012
The Indian markets may open on a strong positive note ahead in line with the positive global and domestic cues. The SGX Nifty is up by 106 points at 5,552, indicating a strong positive opening to the markets today. There is a lot of positive news today.
The Indian markets may open on a strong positive note ahead in line with the positive global and domestic cues. The SGX Nifty is up by 106 points at 5,552, indicating a strong positive opening to the markets today. There is a lot of positive news today. The government to curb rising fiscal deficit has hiked the diesel price by Rs 5 per litre on the back of the rising crude oil price and the increasing under-recoveries of the oil marketing companies. Also, yesterday evening the Federal Reserve finally unveiled the third round of quantitative easing to boost economic growth.
| Benchmark Indices | ||
|---|---|---|
| Index | Closing | % Change |
| SENSEX | 18021.63 | 0.12 |
| NIFTY | 5435.35 | 0.08 |
| Dow Jones | 13539.06 | 1.53 |
| S&P 500 | 1459.99 | 1.6 |
| NASDAQ | 2828 | 0.25 |
| Bovespa | 61958 | 3.4 |
| FTSE | 5,819 | 0.65 |
| DAX | 7310.22 | -0.45 |
| CAC | 3502.09 | -1.19 |
| .. | ||
| Hang Seng | 20555.99 | 2.55 |
| Nikkei | 9133 | 1.51 |
| Shanghai | 2116.11 | 0.27 |
The Indian markets witnessed a subdued trading session yesterday as the broader indices closed higher by 0.12 per cent. Nifty closed above the key resistance level of 5,430 while the Sensex closed marginally above the 18,000 level mark. The markets were trading cautiously ahead of the Federal Reserve’s policy decision which came through on Thursday evening. The oil & gas and FMCG sectors were major gainers and closed with gains of nearly 1.12 per cent and 0.65 per cent respectively. With the finance ministry getting the approval to hike the diesel price, most of the oil & gas stocks rallied with 2 per cent gains on the bourses.
The Asian markets closed on a mixed note too. The major Asian markets viz. Hang Seng and Shanghai closed lower by 0.14 per cent and 0.77 per cent respectively while Nikkei closed higher by 0.39 per cent. There were no other positive triggers and the markets were waiting for the Federal Reserve’s policy decision.
Overnight, the U.S. stock markets rallied to this year’s high and closed higher with strong gains after the Federal Reserve opted for a third round of quantitative easing to boost economic growth. This time the Federal Reserve has come with a big bang of quantitative easing under which the U.S. central bank will purchase USD 40 billion of mortgage-backed securities every month until the labour market improves. Ben Bernanke of Federal Reserve added that the asset purchases would not last until the labour market was back to full employment. If the outlook for the labour market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities and undertake additional asset purchases as well as employ other policy tools as appropriate until such improvement is achieved in the context of price stability. Further, in a move to keep the liquidity intact, the Federal Reserve may keep the federal fund rate near zero through at least the middle of 2015. The European markets closed on a mixed note as the trading hours were over before the announcement was made.
Taking cues from the overnight closing of the global markets, especially of the U.S., optimism carried through to Asia in early trading and the indexes notched broad-based gains. At present the Asian markets are trading with strong gains. The major Asian markets viz. Hang Seng, Nikkei and Shanghai are trading higher with gains of 2.27 per cent, 1.55 per cent and 0.45 per cent respectively.
On the Indian turf, the rupee continues to hover between the USD 55 and 56 levels and yesterday closed at Rs 55.30 per USD. It is still hovering above the comfort zone and this is a worrisome factor for those companies and government agencies with huge dependency on imports, especially in a situation where fiscal deficit is at its all-time high. The Brent crude price has further inched northwards to USD 116.44 per barrel after the Federal Reserve’s announcement of QE3. However, with the move of increasing the diesel price by Rs 5 per litre we believe that there will be some relief on the fiscal front as the government will now have to shelve out fewer funds to pay for the under-recoveries of the oil companies.
| Key Global Indicators | ||
|---|---|---|
|
| Gold (Rs/10gm) | Crude ($/bbl) |
| Spot | 31953 | 116.44 |
| % change | - | 0.77 |
| Future | 32330 | 98.97 |
| % change | -0.02 | 0.67 |
| Currency Rates | ||||
|---|---|---|---|---|
|
| Rs/$ | Rs/Euro | Rs/GBP | Rs100/JYP |
| RBI Rate | 55.44 | 71.61 | 89.3 | 71.33 |
| Future | 55.46 | 71.51 | 89.27 | 71.34 |
In conclusion, for today we expect the markets to operate on a strong positive note on the back of positive domestic and global cues. Further, it seems that the government is in a reformist mood. Following the crucial diesel price hike, it will today decide on the disinvestment possibility of selected state PSU companies. There also will a discussion on allowing FDI in the aviation sector. However, the WPI numbers will also be keenly watched as they will provide vital clues to the Indian markets with regard to a possible rate cut.
| FII DERIVATIVES STATISTICS FOR 13-Sep-2012 | |||||
|---|---|---|---|---|---|
| BUY | SELL | OI (END OF THE DAY) | Net Position | ||
| Rs (crore) | Rs (crore) | No. of contracts | Rs (crore) | Rs (crore) | |
| INDEX FUTURES | 846.58 | 748.38 | 403826 | 10662.20 | 98.21 |
| INDEX OPTIONS | 6938.53 | 7291.35 | 1673496 | 45403.74 | -352.83 |
| STOCK FUTURES | 913.33 | 1073.93 | 965996 | 25601.89 | -160.60 |
| STOCK OPTIONS | 810.90 | 799.87 | 60506 | 1625.69 | 11.02 |
| Total | 9509.34 | 9913.53 | 3103824.00 | 83293.51 | -404.20 |
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