by Andrew L Dcunha
Mumbai, Sep 16: BSE Sensex gained 57 points in volatile trading today but closed below its psychological 17k mark at 16934. Nifty advanced 9 points at 5084. Markets opened on a positive note after central banks around the world pledged to pump in liquidity into the system. The Nifty touched a high of 5,143 around noon and gave up all the gains, touching a low of 5,068 after the Rate hike announcement. BSE Realty Index gained 1.42%, BSE Power Index up by 1.30 % and BSE Auto Index managed 0.79 %. FMCG Index was down 1.16%t and BSE IT Index fell by 0.98%. Tata Motors (7.02%), ONGC (5.61%), NTPC (4.75%), Sterlite Industries (3.66%) and Tata Power (2.69%) were amongst the top Sensex gainers.
As expected, the Reserve Bank (RBI) today raised key interest rates by 25 basis points, its 12th such hike since March, 2010, making auto, home and other loans more expensive. Following the increase, the short-term lending (repo) rate stands at 8.25% and the short-term borrowing rate (reverse repo) is 7.25%. The tone of central bank indicates the anti-inflationary stance will remain as priorityConcerned over high inflation. Market is worried about further rate hikes in the next monitory review.
Asian indices closed in the positive territory with the exporter and financial shares leading the gains. The South Korea’s Seoul Composite and Taiwan Weighted index leading the gains, up 3-4% each. The Hang Seng and the Nikkei Stock Average advanced 1-2% respectively. However, the Shanghai Composite index closed flat, up 0.1%.
The European markets also extended Thursday’s gains ahead of Euro-zone finance ministers meet in Poland to discuss the debt crisis. The DAX and the FTSE were up 0.4-0.7% each, while the CAC gave up all the gains and was down 0.3%.
Gold and Silver extending losses
Gold tumbled by Rs 550 and silver lost Rs 900 in the national capital today on sustained sell-offs by stockists triggered by weak global cues. While gold tumbled by Rs 550 to Rs 27,740 per 10 grams, silver lost Rs 900 to Rs 63,300 per kg on reduced offtake by industrial units amid a weak trend overseas. Gold declined in global markets after the European Central Bank and policymakers coordinated to lend dollars to Eurozone financial institutions, curbing the demand for gold and silver as alternate investment options. Gold in global markets, which normally sets the price trend on the domestic front, fell by 1.5% to $1,762.68 an ounce, the lowest level since August 26. Silver also fell by 0.8% to $39.54 an ounce.
Andrew L D Cunha, Managing Director, WinWin Fin Advisory Pvt. Ltd. Mangalore. Email: finadvisoryltd@yahoo.com
