There was a sell-off in US markets in response to Fed chief’s observation on accelerating tapering. Now it is likely that the Fed may start to hike rates earlier than expected, analysts said.
“The market direction is likely to be determined, in the short run, by news regarding the Omicron variant. If it proves to be less worrisome as generally feared, the market may stage a strong comeback, since the risk appetite of retail investors and DIIs appear to be strong and valuations are becoming attractive in many segments like financials,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Equity investors’ wealth, reflected by the total market cap of BSE-listed companies, jumped by Rs 2.17 lakh crore to Rs 259.34 lakh crore.
How are bluechips doing
After opening in the green, benchmark indices rose further. At 9.29 am, BSE flagship Sensex was up 598 points or 1.05 per cent to 57,662. NSE benchmark Nifty added 175 points or 1.03 per cent to 17,159.
“On the technical front, the key resistance levels for Nifty50 are 17,230 followed by 17,480. On the downside, 16,840 followed by 16,680 can act as strong support. Key resistance and support levels for Bank Nifty are 36,470 and 35,230, respectively,” said Mohit Nigam, Head – PMS, Hem Securities.
In the 50-share pack Nifty, IndusInd Bank was the biggest gainer, up 3.74 per cent. Eicher Motors, Hindalco Industries, HDFC, Tech Mahindra, JSW Steel and Tata Steel were among other gainers.
Dr Reddy’s Labs was the top loser in the pack, down 0.16 per cent. Power Grid was another stock that traded in the red.
FACTORS DRIVING MARKETS
Fed may accelerate tapering: Powell said the Fed will discuss whether to end their bond purchases a few months earlier than previously anticipated in December and the word “transitory” is no longer the most accurate term for describing the nature of current inflation.
Yields, dollar strengthen: US Treasury yields rose, supporting the dollar after US Fed chair Powell’s comments. Benchmark 10-year notes also sold off, last yielding 1.4919 per cent, up from Tuesday’s two-and-a-half month low of 1.4443 per cent.
Omicron impact: Bank of England policymaker Catherine Mann said on Tuesday that the new Omicron coronavirus variant could hurt consumer confidence, which would weaken economic recovery.
Broader markets
Broader market indices were trading higher, but underperforming their headline peers in morning trade. Nifty Smallcap was up 0.94 per cent while Nifty Midcap advanced 0.98 per cent. Broadest index on NSE, Nifty 500, was up 1.08 per cent.
SRF, Hindustan Copper, JSW Energy, Gujarat Narmada Fertilisers, Chambal Fertilisers and NBCC were gainers from the space while Trident, Sonata Software, Bajaj Electricals, Varun Beverages, Emami and Polycab India were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 per cent, as traders felt Tuesday’s declines, which sent the benchmark to its lowest since November 2020, had gone a little far. Gains were largely shared across the region.
Japan’s Nikkei rose 0.7 per cent, also helped by a pick-up in factory activity, while US S&P 500 futures rose 0.6 per cent and Nasdaq futures rose 0.7 per cent as sentiment turned after Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite had all closed down over 1.5 per cent.
