The market has to break past 5,640 for today’s up move to continue

The fresh steps taken to stabilize the currency and the measures to reassure investors by the new governor of Reserve Bank of India (RBI) Raghuram Rajan were welcomed by the market. In response to the measures, the Nifty surged on a higher volume of 75.55 crore shares making the highest percentage gain since 28 June 2013.

Sensex and Nifty immediately hit the day’s high and throughout the session moved in a narrow range. The Sensex opened at 18,858 and moved in the range of 18,847 and 19,118. The Sensex closed at 18,980 (up 412 points or 2.22%). The Nifty opened at 5,554 and moved in the range of 5,553 and 5,626. The Nifty closed at 5,593 (up 145 points or 2.66%).

Except for IT (down 2.97%) and Pharma (down 0.32%), all the other indices closed in the green. The top five gainers were Bank Nifty (9.46%), PSU Bank (8.66%), Finance (7.82%), Realty (5.90%) and PSE (3.06%).

Of the 50 stocks on the Nifty, 33 ended in the green. The top five gainers were Axis Bank (15.91%); Kotak Mahindra Bank (9.43%); State Bank of India (9.36%); ICICI Bank (8.84%) and Bank of Baroda (8.72%). The losers were Sesa Goa (6.77%); TCS (3.63%); Infosys (3.53%); Lupin (2.63%) and HCL Technologies (1.96%).

Global credit rating agency Moody's Investors Service said that India's inflation and fiscal metrics remain weaker than peers. The ratings agency, however, said the country's current reserves can finance the current account and external debt payment needs. Moody's has an investment grade rating on India with a stable outlook.

India is among five emerging market countries, which could face significant funding risks as the dollar strengthens against their home currencies according to a report from Morgan Stanley. The report dated 4^th September noted that external funding remains crucial for many countries in the Asian and emerging market pack, and that a strengthening dollar can ‘can create a significant challenge, which is already weighing on both earnings power and multiples.’

The International Monetary Fund (IMF) has said scope of easing monetary stance in India is very limited and it might have to be tightened due to high inflation. Also, IMF said emerging market economies should allow exchange rates to adjust to the fundamentals of their economies, and should curb only volatility, a key advice, given the fall in the rupee in recent times.

Except for Shanghai Composite (down 0.24%), Jakarta Composite (down 0.55%), NZSE 50 (down 0.13%) all the other Asian indices ended in the green. Hang Seng, top gainer, up 1.22%.

It has become clear that the two missiles that landed in the Mediterranean region on Tuesday, 3 September 2013, weren't part of a US led military strike in Syria.

US indices closed in the positive on Wednesday. US auto sales pointed to robustness in the manufacturing sector. The report showed consumer spending and manufacturing has risen in most of the 12 regions in the US and said job creation was steady or improving. Federal Reserve data released overnight showed that the US economy grew at a "modest to moderate" pace in July and August, according to the central bank’s "beige book".

One top Federal Reserve official said on Wednesday he was open-minded about reducing stimulus this month, as investors largely expect the central bank to do, while another policymaker said the U.S. central bank should actually do more for the economy. The comments reflect the uncertainty that lingers over financial markets two weeks before the Fed's 19 policymakers meet to decide whether to adjust the $85-billion monthly bond-buying program.

European indices were trading in the positive while US Futures were trading in the negative.