After a gap up start tracking positive global cues, markets did not look back. The much awaited launch of third quantitative easing (QE3) measures by the Federal Reserve yesterday helped the sentiments to remain buoyant. Additionally the hike in diesel price also supported local markets to an extent. On the other end, higher than anticipated August inflation data shocked the market players as it severely restricts RBI from slashing interest rates.

1. QE3, diesel hike pushes markets skyward despite inflation shock
Market Summary
14-Sep-2012
After a gap up start tracking positive global cues, markets did not look back. The much awaited launch of third quantitative easing
(QE3) measures by the Federal Reserve yesterday helped the sentiments to remain buoyant. Additionally the hike in diesel price also
supported local markets to an extent. On the other end, higher than anticipated August inflation data shocked the market players as it
severely restricts RBI from slashing interest rates.
Both the key benchmarks skyrocketed with Nifty rallying 2.6% and Sensex rising about 2.5%. Overnight, U.S. markets and all Asian
markets ended up in green with smart gains. European markets were also trading in positive territory.
The Federal Reserve announced the much awaited launch of third quantitative easing to boost economic growth. Accordingly it would
purchase $40 billion of mortgage-backed securities every month until the labor market improves. The Fed announced to keep the
funds rate at 0.0%-0.25% at least until mid-2015. Markets worldwide reaced positively as the liquidity injection is expected to help
global markets as well.
India’s headline inflation, as measured by the wholesale price index (WPI) shockingly increased by 7.55% in the month of August,
as compared to 6.87% (Provisional) for the previous month and 9.78% during the corresponding month of the previous year. It has
comfortably beaten the consensus estimates of 7.06%. Inflation staying above the 7% mark for almost two-and-half-years by now, has
limited RBI’s abilities of easing monetary policy too aggressively despite the slide in economic growth to a three year low in June
quarter. (News)
The Cabinet Committee on Political Affairs (CCPA) at a meeting on 13/09/2012 gave a nod to diesel price hike by Rs. 5 a liter and
supply of subsidized LPG Cylinders restricted to 6 in a year. (What’s Hot)
Reflecting global economic gloom, India’s exports declined 9.7% in August to USD 22.3 billion. Imports too shrank 5.08% to USD
38 billion reflecting deteriorating domestic economy.
Enthused by QE3 gold prices hit a fresh all time high of Rs. 32900 per 10 grams. Silver gained Rs 800 to Rs 62,000 per kg. Rupee
too, had hit a two and a half month high against dollar. As per RBI reference rates INR closed at 54.73/USD.
Back to markets, the market breadth on the BSE closed in positive. Advances and declining stocks were in a ratio of 1503:1417 while
142 scrips remained unmoved.
The BSE Sensex ended at 18464.27, up 443.11 points or 2.46%. The 30 share index touched a high and a low of 18498.54 and
18284.75 respectively. 24 stocks advanced against 6 declining ones on the benchmark index.
The S&P CNX Nifty gained 142.30 points or 2.62% to settle at 5577.65. The index touched high and low of 5586.65 and 5526.95
respectively. 40 stocks advanced against 10 declining ones on the index.
Sensex Nifty
The BSE Mid-cap index moved up to 6244.90 and gained 0.88% while Small-cap index jumped up by 0.45% to 6623.12.
The broader BSE 500 index increased to 6961.31 (up 2.02%) and S&P CNX 500 index rose to 4348.80 (up 2.08%).
The volatility as denoted by INDIA VIX lost 1.85% at 15.38 from its previous close of 15.67 on Thursday.
Sectors in action
On the BSE Sectorial front, Real Estate (up 4.78%), Metals (up 4.25%) and Banks (up 4.15%) were the top gainers.
Healthcare (down 1.24%) and FMCG (down 0.49%) were the top losers.
The Angels and the Devils
Jindal Steel and Power Limited (up 8.83%), Hindalco Industries Ltd. (up 8.00%), State Bank of India (up 5.52%), Reliance Industries
Limited (up 5.35%) and ICICI Bank (up 4.97%) were the top gainers on the Sensex.
NTPC Limited (down 1.61%), Dr. Reddys Laboratories Ltd. (down 1.59%), ITC Limited (down 0.59%), Oil and Natural Gas Corporation
Limited (down 0.37%) and Tata Consultancy Services Limited (down 0.24%) were the top losers on the Sensex.
Benchmark Drivers
Reliance Industries Limited (90.62 points), ICICI Bank (65.36 points), Infosys Limited (46.96 points), Larsen And Toubro Limited
(45.35 points) and State Bank of India (37.05 points) were the major Sensex drivers today.
On the other end Reliance Industries Limited (23.55 points), ICICI Bank (17.35 points), Larsen And T oubro Limited (12.26 points),
Infosys Limited (11.66 points) and State Bank of India (9.73 points) were the major Nifty movers today.
Going Forward

2. S&P CNX Nifty is now pivoted at 5563 levels for next session. The next resistance is at 5600 levels. On the downside it has support at
5540 levels.
S3 S2 S1 PIVOT R1 R2 R3
5480 5503 5540 5563 5600 5623 5660
Similarly, Sensex has a pivot at 18415 with first level of support and resistance at 18332 and 18546 respectively.
S3 S2 S1 PIVOT R1 R2 R3
18118 18201 18332 18415 18546 18629 18760
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