Markets ignore hawkish Fed hike; Sensex jumps over 1000 pts, Nifty ends over 17,200

Benchmark indices extended rally for the second consecutive session, closing nearly 2 per cent higher on Thursday amid broad-based buying.

The market opened on a positive note amid a rally in the Asian markets with Nifty breaching the 17,000-mark at the opening. The indices extended gains during the day and closed higher, tracking gains in heavyweights such as HDFC and Reliance. 

The BSE Sensex closed at 57,863.93, up 1,047.28 points or 1.84 per cent. It recorded an intraday high of 58,095.84 and a low of 57,518.0. The Nifty 50 closed at 17,287.05, up 311.70 points or 1.84 per cent. It recorded an intraday high of 17,344.60 and a low of 17,175.75.

Breadth remains positive

The market breadth remained positive with 2,099 stocks advancing on the BSE as against 1,303 that declined while 127 remained unchanged. Furthermore, 22 stocks hit the upper circuit compared to the eight stocks that were locked in the lower circuit. Besides, 123 stocks touched a 52-week high level and 19 touched a 52-week low.

The volatility index softened 6.25 per cent to 22.61.

Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares & Stock  said,“Indian markets opened on a positive note tracking upbeat Asian market cues as investors react to Fed hike. During the afternoon session the markets traded firm on account of buying in front line counters.”

“Also, FPIs turning buyers after a long time and softness in crude also supported the markets. Adding to the optimism, traders cheered Minister of State for Commerce and Industry’s statement that the bilateral trade in goods is projected to increase from the current $60 billion to $100 billion annually within five years of the implementation of the India-UAE free trade agreement,” added Rathi. 

Fed rate hike on expected lines

Cool off in crude oil prices and some signs of progress in the Russia-Ukraine crisis have positively impacted investor sentiments. Separately, the US Federal Reserve on Wednesday hiked interest rates from 0.25 per cent to 0.50 per cent, in line with street expectations. Its Chief, Jerome Powell, said that the central bank sees six more rate hikes this year. Powell said the US economy is well-positioned to deal with interest rates and FOMC (Federal Open Market Committee) expects to reduce the size of the balance sheet.

Shivam Bajaj, Founder & CEO at Avener Capital said, “The rate hike by Fed was on expected lines due to high inflation risk coupled with geopolitical tensions. The US treasury yields had shown an immediate spike after the FOMC announcement but stabilized thereafter. The current rate hike along with anticipated monetary tightening indicates the Fed’s stance of controlling the high inflation prevalent in the US.”

“Asian markets have reacted positively on account of the Russia-Ukraine situation entering the resolution phase which was further supported by crude price stabilization. Taking this into account, the RBI may reassess its accommodative stance in the next month’s policy meeting,” said Bajaj.

Nishit Master, Portfolio Manager, Axis Securities said, “Yesterday, the US Fed increased rates by 25 bps and signaled another six rate hikes of 25bps each for the year. This announcement was on expected lines for the market, and thus the US and Indian markets rallied in relief.”

“We believe that more than the rate hike trajectory indicated by the Fed, it is crucial to keep an eye on the proposed reduction in the Balance sheet by the US Fed (QT), which is expected to start from the next meeting. This tightening of liquidity can add volatility to the markets and lower PE multiples. We, thus, believe that despite the recent rally, the markets will continue to remain volatile in the near future on the back of tightening of liquidity conditions globally. One should use this volatility to increase equity allocation for the long term,” said Master.

HDFC, Titan, JSW Steel, SBI Life and Reliance were the top gainers on the Nifty 50 while only four scrips- Infosys, Cipla, IOC and HCL Tech closed in the red.

IT under pressure

On the sectoral front, all indices except Nifty IT closed in the green with consumer durables, realty auto, metals, oil & gas and financials recording higher gains.

Nifty IT closed 0.24 per cent lower. 

Meanwhile, Nifty Realty closed over 3 per cent higher. Nifty Finanical Services was up nearly 3 per cent  Nifty Consumer Durables and Nifty Auto were up over 2 per cent each. Nifty Bank, Nifty Private Bank, Nifty Metal and Nifty Oil & Gas were up nearly 2 per cent each at closing.

Broader indices

Broader indices were also in the green.

Nifty Midcap 50 was up 1.42 per cent while the Nifty Smallcap 50 was up 1.13 per cent. The S&P BSE Midcap was up 1.07 per cent while the S&P BSE Smallcap was up 1.18 per cent.

COMMENT NOW