Sensex scales 20,000-mark before Big Ben begins to toll

Sep 19 2013, 01:50 IST
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SummaryThe benchmark BSE Sensex rose nearly 1% on Wednesday ahead of the comments of the US Federal Reserve on the tapering of bond purchases, sustaining the momentum built up since last week.

The benchmark BSE Sensex rose nearly 1% on Wednesday ahead of the comments of the US Federal Reserve on the tapering of bond purchases, sustaining the momentum built up since last week. The bellwether nudged past the psychological 20,000-mark in intra-day trades for the second time in a week.

The Sensex was the second-best performer in Asia on Wednesday after Japan’s Nikkei 225. The BSE Sensex rose 158 points or 0.8% to end at 19,962 on Wednesday, while the 50-share Nifty was up 49.25 points or 0.84% to 5899. Last week, Indian equities had posted their third successive weekly gain on the back of a recovery in the rupee and easing of geopolitical concerns arising out of Syria.

All eyes are now on the outcome of the Federal Open Market Committee (FOMC) meet, which will set the tone for Indian shares on Thursday. The meeting will determine the quantum of the pullback on the Fed’s $85 billion of monthly bond purchases, which could have significant repercussions for emerging markets such as India.

The Sensex has now risen 5.2%, or nearly 1,000 points, since Raghuram Rajan took over as the Reserve Bank of India (RBI) governor on September 4 and is up 2.7% in the year to date. The rupee, on the other hand, has appreciated 5.8% against the greenback since the governor announced measures to shore up the rupee. However, the currency has depreciated 14.2% versus the dollar since May 22.

Despite the recent uptrend, India remains the worst performer in Asia in the year to date. The BSE Sensex has shed 11% in dollar terms in the current calendar year. In contrast, most Asian peers have fared far better — China’s benchmark index Shanghai Composite has fallen just 1.6%, while South Korea’s Kospi is down 0.96%.

Hong Kong’s Hang Seng (up 1.9%), Taiwan’s Taiex (up 4.45%) and Japan’s Nikkei 225 (up 22.3%) have held up quite well.

Foreign institutional investors (FIIs) net bought about $91 million of Indian equities on Wednesday, according to provisional data from stock exchanges, taking their month-to-date tally to about $1.18 billion. FIIs have net bought shares in the last eight of the nine sessions since Rajan took over as governor. Notably, FIIs had sold stocks worth $2.6 billion between May 22 and August 31 after buying stocks worth $14.2 billion between January 1 and May 21.

The renewed buying augurs well for India which is

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