VantageTrade Eagle Eye: Markets trade lower on Fed’s disappointing stimulus plan

After another day of volatile trading session, the markets ended marginally higher on investors' hopes that the Fed will announce new measures to stimulate the economy. Due to lack of any triggers the indices were range-bound till the noon session and pulled in the negative after the cautious opening on European bourses. The markets hit their intraday lows at around 1.30pm. The needed boost was given later by buying pressure in heavyweight stocks which let Nifty and Sensex reach the intraday highs in the last hour of yesterday's trading session. The profit booking sent the markets lower but still they managed to close positive. The Sensex closed at 16,896.63, up 36.83 points, or 0.22%. It touched an intraday high of 16,962.49 and a low of 16,840.10 today. The Nifty ended at 5,120.55, up 16.70 points, or 0.33%. It touched an intraday high of 5,141.70 and a low of 5,100.70 today.

U.S. markets ended mostly lower yesterday after the Federal Reserve cut its growth forecasts and Chairman Ben Bernanke said the labor market had lost some steam. Federal Reserve took the decision to extend the "Operation Twist” which involves replacing short-term securities in the Fed's bond portfolio with longer-term securities in an effort to push already low long-term interest rates even lower. Fed said it would expand its program to replace short-term bonds with longer-term debt by US$267bn through the end of 2012. The Dow Jones industrial average was down 12.94 points, or 0.10%, at 12,824.39. The Standard & Poor's 500 Index was down 2.29 points, or 0.17%, at 1,355.69. The Nasdaq Composite Index was up 0.69 point, or 0.02%, at 2,930.45.

Most of the Asian bourses opened negative today as investors hoping for major new Federal Reserve stimulus were disappointed. Federal Reserve continued its monetary stimulus by expanding " Operation Twist", but did not signal a third round of quantitative easing. Japan 's Nikkei 225 index was trading 0.9% higher at 8,835.75 and Hong Kong 's Hang Seng index was trading lower at 19,448.12, down 0.3%. South Korea 's Kospi index was trading 0.3% lower at 1,897.45. China 's Shanghai index was trading at 2,269, down 1.02%.

Nifty and Sensex dropped today following downward journey in Asian markets. The Sensex fell 24.72 points to 16871.91 and the Nifty was down 11 points to 5,109.80.

The rupee also depreciated against the dollar along with other basket of currencies. The partially convertible rupee was 56.38 down 23 paise against its previous close. Dealers are expecting Reserve Bank of India to intervene as the rupee is nearing all time low of 56.52.

Shares of telecom companies were in action ahead of a meeting of the Empowered Group of Ministers, headed by Finance Minister Pranab Mukherjee, to discuss the spectrum price, payment terms and network rollout obligations for the auction of airwaves due before August 31.

Other Economic and Political News:

• FDI in aviation may take long as differences with TMC persist
• Government likely to slap 21% duty on imported power gear
• Government to exempt 14 more services from tax
• Pranab Mukherjee to preside over EGoM to discuss spectrum price today
• Alstom T&D India receives orders worth `176cr
• Educomp ties up `850cr to repay FCCBs
• Fitch cuts outlook to negative for 8 banks, including SBI, ICICI
• Ranbaxy ties up with Daiichi to sell drugs in Venezuela

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