22nd Sept 2011 USD/INR at 2 Year High

22nd Sept 2011 Closing Market Updates  16:02

Indian Equity market tumbled after the sharp rally in USD after the Federal Reserve moved to lower interest rates on consumer loans with a $400 billion debt-swap program that was widely expected, and noted “significant downside risks” to the economic forecast.Fed decision hit the precious yellow metal hard as it boosted the dollar because the action will not require printing of new dollars.

Dollar Index climbed 1% during the day to a seven-month high of 77.80. Dollar was up 20 basis points versus Euro at 1.357

Fed plans to buy $400 billion of bonds with maturities of six to 30 years through June, while selling an equal amount of Treasuries with remaining maturities of three years or less, by the end of June 2012.

The purchases would be completed by the end of June 2012.investors should expect very low or even negative real interest rates for both long and short maturities for some time, “which will keep the opportunity costs for holding gold extremely low.The Fed also announced a new plan to purchase agency mortgage-backed securities with proceeds of maturing securities. It resulted into fall in Gold prices. 
Nifty opened with a gap down and traveled into negative territory for the whole day and ended at 4918.85 with a slide of 214.4 points whereas Sensex lost 722.73 points and ended at 16342.42. USD against INR crossed 49 benchmark first time after 2nd Sept 2009 and made a new high of 49.18.

All BSE sectoral indices ended into red.Ralty index fell the most by 5.96%.

In Nifty50 stocks, ACC was the only gainer by just 0.03% and ended at 1072 and JPAssociates was the top loser by 9.81% and ended at 66.65

SBIN was the turnover topper by the traded value and KSOil was the most traded stock by the traded quantity on NSE today.

Advance Decline Ratio was negative by 8.97 : 1 as just 145 stocks gained and 1301 stocks declined today on NSE.

Major Global Indices :

HangSeng : -912.22

Nikkei : -180.90

FTSE : -214.15

CAC : -116.95

DAX : -191.16

Dow Futures : -176

Nasdaq Futures : -35.75

Food inflation :

Food inflation fell to 8.84% in the week ended September 10 from 9.47% in the previous week, but provided no relief to the common man as prices of key commodities continued to rule high.

Prices of most commodities, barring wheat, continued to remain firm on an annual basis, as per Wholesale Price Index (WPI) data released by the government today.wheat prices during the week were down 2.72% year-on-year.

However, onions became more expensive by 29% and potatoes 13.78%. Overall, vegetables became 12.13% dearer.

Milk prices, too, were up by 10.38%, while fruits grew dearer by 17.67% and eggs, meat and fish prices rose by 9.28% year-on-year.

Prices of cereals also went up, by 4.13%, during the week under review. Even the prices of pulses, which had exhibited a declining trend during recent months, rose by 1.49% during the week ended September 10.

Overall, inflation in primary articles stood at 12.17% for the week ending September 10, compared to 13.04% in the previous week. Primary articles constitute over 20% of the WPI basket.

Non-food articles, which include fibres, oil seeds and minerals, recorded 17.42% inflation during the week ended September 10, up from 18.49% in the previous week, ended September 3.

Meanwhile, inflation in the fuel and power segment went up to 13.96% during the week ended September 10 from 13.01% in the previous seven-day period.