Indian equities rose by a percent on Tuesday amid uncertainty over the quantum of a rate hike by the US Federal Reserve this week.
The Sensex rose 579 points to 59,720, while the Nifty50 settled at 17,816, up 194 points. Bank Nifty gained 1.4% to close at 41,468 and is likely to oscillate between 40,500-42,000 before beginning a trending move on either side, according to experts. Among peers, Hang Seng (1.2%) and Taiwan Weighted (0.9%) rose the most.
All indices ended in the green, with pharma and automobile shares, leading the gains. The advance-decline ratio stood at 1.55. The cash market volumes on NSE were lower by 10% compared to an average of the last ten days.
The Fed is likely to raise interest rates by 75 basis points (bps) on September 21 but the markets seem to have discounted this hike. The People’s Bank of China kept its one-year and five-year loan prime rates (LPR) unchanged, in line with predictions.
“Relief rally continued for the second straight session, which is indicative that investors are finding local stocks attractive after every short-term correction. Even as there are talks of the global recession at some point, the Indian economy is holding up really well in times of uncertainty, which is prompting investors to bet on our growth story,” said Shrikant Chouhan, head of equity research — retail, Kotak Securities.
FPIs bought shares worth $1.1 billion in September, paring the year-to-date sales to $20.2 billion. On Tuesday, the investors bought shares worth `1,196 crore, provisional data shows.
“The correction in the Indian benchmark indices and INR has been quite low compared to the other emerging market peers. On a closer look at the selling by overseas investors, it can be seen that much of it is in the large-cap space and not in the mid-cap or small-cap space. The market cap preferences may be viewed or modified accordingly. Any corrective downward movements should be utilized as opportunities to invest for the long-term portfolio,” said a report titled Navigator by Emkay Wealth Management.
The immediate support for the Nifty is 17,580 and 17,430 and if these levels are breached, the Nifty may correct towards 17,250 in the near term, according to experts. The bearish view will negate if the index manages to surpass the resistance zone of 18,000-18,100.
“The risk continues to remain high and until we do not surpass the 18,100 level, we are not out of the woods. The chart structure does not depict a rosy picture for the Nifty index as of now and hence we advise traders to stay cautious and lighten up long positions in this pullback until the index breaks the major barrier,” said Ruchit Jain, lead research of 5paisa.com.
Investors will continue to monitor global cues and crude and currency movement this week.