The Indian stock market rebounded on Wednesday, with the Sensex and Nifty rising around 0.5% each after Tuesday’s crash wiped out more than Rs 9 lakh crore from Dalal Street.
The Sensex rose over 400 points to above 74,400, while the Nifty 50 gained around 128 points to 23,247 as of 10:45 am. Broader markets remained weak, with the Nifty Smallcap 100 and Nifty Midcap 100 falling up to 0.8%.
Also read | Why Sensex crashed over 1,400 pts from day’s high, Nifty closed below 23,150 on Tuesday
Axis Bank, M&M, ITC and SBI shares rose around 2% to lead gains on Sensex; Reliance Industries, BEL, Adani Ports, HCL Technologies and Sun Pharma shares gained over 1% each. Bucking the trend, TCS, Eternal, NTPC and Tata Steel shares fell around 1% each.
Among the sectors, Nifty FMCG and Nifty PSU Bank indices gained more than 1% each, while Nifty IT, Nifty Metal, Nifty Pharma and few other indices slipped into the red. The overall market breadth remained negative, with NSE seeing 2,082 declines against 1,170 advances, while 108 stocks remained unchanged.
What lies ahead for Dalal Street?
The Federal Reserve is all set to announce the outcome of their FOMC meeting on Wednesday. The American central bank will likely raise its interest rate today, and deliver at least one more hike by the end of March, according to a majority of economists polled by Reuters.
Meanwhile, the weak market construct continues with elevated US bond yields and high crude prices contributing significantly to the weakness, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. So long as these two crucial macros remain high it would be unrealistic to expect a strong rebound in the market, according to the analyst.
He noted that FIIs have been sellers in the market during the last 5 days, and with the US 10-year yield at 5%, they are likely to sell at every small rally in the market. In today’s meeting, the Fed is most likely to raise interest rates by 25 bps. However, this is unlikely to impact the market since it is already discounted by the market, Vijayakumar said, adding that more market-moving factors will be the Fed commentary on the evolving macro-outlook and the likely rate action going forward.
“Even though the market is weak there are stock-specific opportunities in this market. Appointment of a new MD and CEO for HDFC Bank expected soon and the new MDR norms for digital transactions introduced by the NPCI are significant events that can influence the markets,” he added.
Technical view on Nifty
As feared, Nifty’s inability to float above 23515 has invalidated the upside attempt, said Anand James, Chief Market Strategist at Geojit Investments. He noted that the consequent days of closing below the lower Bollinger Band as well as yesterday’s bearish engulfing candle reflect strong bearishness but also point to peaking fear.
“We are still within the support band of 23,260-23,000, lending hopes of a revival, but a close below the same will bring 22,600-21,800 into the radar,” the analyst said, explaining the technical charts for the benchmark index.
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Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
