The unexpected decision by the US Federal Reserve to keep its monetary stimulus unchanged jolted financial markets, sending stocks and commodities sharply higher. Markets cheered the US Federal Reserve’s decision on continuing bond purchases, lifting the benchmark indices, Sensex and Nifty approx. 3.5% higher. The 50-share index Nifty posted its highest close since May 30 and hit a 3.5-month high and closed above the 6100 mark at 6115.55 up by 216.10 points. Sensex also rallied over 700 points to touch its highest level in 34-months and ended at 20,646.64, up 684.48 points for the first time since November 10.
The US Federal Reserve said that it would continue buying bonds at an $85 billion monthly pace for now, surprising financial markets that were braced for a reduction in the central bank's economic stimulus. Market analysts cautioned that the rally would not sustain because of the fragile macro-economic environment, but admitted that liquidity, and not fundamentals, would be the driving factor in the short term.
Bank stocks were the star performers of the day, on hopes that the RBI would ease some of the liquidity curbs it had placed in July to protect the rupee. The market is now keenly awaiting the RBI’s monetary policy on Friday.
Shares of Reliance Communications and Adani Enterprises also gained 10-12% as these companies have huge un-hedged forex debt. As a result, the recent appreciation in the rupee will undo much of the marked-to-market losses these companies had suffered in August when the rupee came close to touching 69 to the dollar.
All the sectoral indices today took part in the ceremonial march-past cheering up the US Fed decision except CNX IT (-0.03%) which plunged in the last half an hour of the trading session. CNX PSU Bank (8.25%) led the rally and followed by Bank Nifty (6.71%), CNX Realty (5.86%), CNX Finance (5.85%) and CNX Infra (4.61%).
Market breadth remained all day positive on the NSE and at closing hours 837 stocks advanced against 335 declined and 65 remain unchanged.
While out of 50 stocks of Nifty index, 47 registered growth against 3 declined.
Top Five Nifty Gainers: Banking stocks led the Nifty Gainers chart and PNB topped the list excelling by 9.20% followed by Bank of Baroda (9.12%), J P Associate (8.86%), Kotak Bank (8.08%) and SBIN (8.05%).
Top Five Nifty Losers: There were only three stocks on the Nifty to end up at losing side with HCL Technologies disappointing the most and losing -0.66% and accompanied by Infosys (-0.24%) and Coal India (-0.13%).
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