A bullish market will witness short coverings causing sudden sharp upturns. There are reasons to believe that this happened yesterday when shorts created in anticipation of a negative fallout from the Evergrande crisis were forced to cover, said an analyst.
“Even though the jury is still out on the final outcome of the woes of the Chinese realty major, the possibility is that the issue will be confined to China with no contagion on global markets. Today the market is likely to focus on the Fed message which is likely to give a timeline for tapering,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
How are bluechips doing
After opening in the green, benchmark indices hovered near the flatline. At 9.22 am, BSE flagship Sensex was up 25 points, or 0.04 per cent, to 59,030. NSE benchmark Nifty was unchanged.
“Market in the near term is likely to continue the positive momentum and dips like the ones seen recently are good opportunities to buy quality stocks,” said Mohit Nigam, Head – PMS, Hem Securities.
In the 50-share pack Nifty, Tata Motors was the biggest gainer, up 1.80 per cent. NTPC, Tech Mahindra, Bharat Petroleum, HCL Tech, Titan, SBI Life Insurance and IndusInd Bank were among other gainers.
HDFC was the top loser in the pack, down 1.15 per cent. Axis Bank, Nestle India, HDFC Bank, Hero MotoCorp, Tata Steel, Shree Cement and Divi’s Labs were among those that traded in the red.
FACTORS DRIVING MARKETS
Good news
Fed meet: Fed’s two-day meet is due to conclude on Wednesday as investors focus on any new signals on when a taper may begin. The US central bank is also likely to provide an outlook on interest rate hikes.
Inflation transitory?: European Central Bank policy makers still see the recent inflation surge as temporary but a growing number appear to be acknowledging the risk that price growth may exceed their relatively benign projections.
Bad news
Evergrande misses payments: Evergrande – as expected – missed interest payments due Monday to at least two of its largest bank creditors, Bloomberg reported on Tuesday. However, its main unit said on Wednesday it would make a coupon payment on its domestic bonds on Sept. 23, offering some relief to jittery markets.
Broader markets
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.67 per cent while Nifty Midcap advanced 0.71 per cent. Broadest index on NSE, Nifty 500 was up 0.24 per cent.
TV18 Broadcast, KEC International, Ceat, Zee Entertainment, Sun TV and Apollo Tyres were gainers from the space while Voda Idea, Ramco Cements, Adani Total Gas, Alkyl Amines, Midhani and Thyrocare Tech were under selling pressure.
Global markets
Japan’s Nikkei fell 0.5 per cent. Equity, bond and currency markets in China open for the first time on Wednesday since concern over Evergrande’s predicament triggered a wave of selling and contagion worries around the world.
Singapore-traded FTSE China futures are about 2 per cent below Friday’s closing level. Safe-haven assets such as the yen and US Treasuries rose slightly in morning trade. S&P 500 futures fell 0.4 per cent in early Asia trade.
