Sensex closes at highest level in over two weeks

Investors didn't show much enthusiasm in the broader markets as BSE Midcap and Smallcap indices closed 0.17 % and 0.44% down respectively.

 

Benchmark share indices closed higher, amid upbeat global cues, helped by a rebound in financials ahead of the two-day US FOMC meet which begins later today.  

 

The barometer BSE Sensex closed at 25,964 levels, higher by 258 points or 1% while the CNX Nifty closed at 7,899 levels, higher 70 points or 0.9%  

 

Investors didn’t show much enthusiasm in the broader markets as BSE Midcap and Smallcap indices closed 0.17 % and 0.44% down respectively. The health of the market was weak with 1,411 declines against 1,260 advances on the BSE.  

 

Meanwhile, the market participants are hopeful that the Reserve Bank of India (RBI) would go ahead with a rate cut in its next monetary policy meeting on the back of favourable macro-economic data.  

 

On the macro-economic front, India's exports fell sharply and trade deficit widened last month, as per the latest data released by the Ministry of Commerce & Industry. Merchandise exports fell 20.66% to $21.26 billion in August 2015 over August 2014.  

 

Further, Foreign institutional investors were net sellers in Indian equities to the tune of Rs 911 crore on Tuesday, as per provisional stock exchange data.  

 

Rupee  

 

The Indian rupee is trading stronger at 66.39, up by 3 paise,against the US dollar tracking strength in the local equities.  

 

Market outlook  

 

According to Ranak Merchant, Technical Analyst - Strategies of Sushil Financial Services, “The week so far has been well balanced with hues of red and green in alternate succession.

With three truncated weeks in consecutive order, a Central Bank policy decision and an F&O expiry, markets have held onto their nerves quite well, so far.

The upmove that had precipitated from the previous week's double bottom near 7540 levels was well played out with a gap up opening as well. However resistance continues to cap the upside between the zone of 7880 - 7930 (being 61.80% Fibonacci Retracement Resistance and a Double top).”  

 

She further added, “ With the intensity of the fall of the last few weeks, it would be too early to judge the current upmove as a reversal and with events such as the FOMC meet that kicks off from today, treading with caution would be the advised approach.

It is hereby re-iterated for traders to step into the event on a lighter stance and maintain adequate hedge against long positions. Watch Nifty levels of 7880-7930 for the upmove to gain strength while first support is seen near 7750 levels.”

 

Kunal Bothra, Head-Advisory of LKP Securities said, " Expectations, looking at the surge in US treasury yield, could be that the markets are factoring in a 25 bps hike. However, what is more important is the approach of Fed going forward regarding further interest rate hikes and the path taken. "

 

On Nifty's levels he said, " Technically, Nifty was still unable to close the down gap of 7920-7950 which was created on start of the month. However, the options data and the technical resistances indicate that 8050-8150 would be a zone of stiff resistance. Supports are placed at 7550 levels. "

 

 Global markets  

 

Global markets are in green across the globe. A late 5 percent surge in Chinese stocks had helped Asia's bourses finish more than 2 percent higher as early gains of 0.7 to 1.3 percent for London's FTSE, Frankfurt's DAX and Paris's CAC 40 got Europe of to a solid day too.  

 

Sectors and stocks  

 

9 out of 12 sectoral indices closed higher with BSE BAnkex leading the rally, up by 1.4%. However, BSE Consumer Durables and Capital Goods indices displayed divergent trend by closing down 1.4% and 0.4% respectively.  

 

Banking and financial shares closed higher ahead of the Fed FOMC meet. Axis Bank, HDFC twins, ICICI Bank, SBI all ended with 1-2.5% gains on the Sensex.  

 

Bharti Airtel announced its high speed 4G services in Thiruvananthapuram. The stock rose 2.4%  

 

Sun Pharmaceutical was up 2.3% after it signed an agreement with InSite Vision to acquire the US-based eyecare firm for approx $48 million plus related debt and other transaction costs to enhance its branded ophthalmic portfolio in the US.  

 

Export oriented sectors such as IT and pharma rallied on healthy consumer spending data in the US. Wipro, Infosys, TCS gained between 0.2-1.4% each while Lupin gained nearly 1%.  

 

On the back of easing of inflation numbers, FMCG firms rallied 0.3%. ITC gained 1.5% while HUL ended flat.  

 

Maruti Suzuki extended gains and ended 0.7% higher after the Reserve Bank of India (RBI) has allowed foreign investors to invest up to 40% of the paid up capital of the company under the portfolio investment scheme.

 

Image: The Bombay Stock Exchange.

Photograph: Hitesh Harisinghani/For Rediff.com