India : Sensex, Nifty flat after consolidation; outcome of Fed meet eyed
Wed Sep 21 2016
Rajesh Sharma (2003 articles)

India : Sensex, Nifty flat after consolidation; outcome of Fed meet eyed

The market closed rangebound session on a flat note Wednesday as investors remained cautious ahead of outcome of the Federal Reserve meeting later today. The Sensex jumped 166 points intraday and the Nifty climbed over 8800 level after the Bank of Japan’s (BoJ) action but wiped out those gains in late trade.The 30-share BSE Sensex was down 15.78 points at 28507.42 and the 50-share NSE Nifty rose 1.25 points to 8777.15.

The Fed rate hike hopes already diminished after recent data points. Now the commentary will be closely watched by investors globally, experts said.

Once the Federal Reserve event gets priced in, the market may gain strength and start moving towards its record high, they feel. FIIs selling Rs 1,150 crore worth of Indian equities on Tuesday was one-off, which may be due to profit booking or investors cashed in for investment in ICICI Prudential Life’s Rs 6,057-crore IPO that ended today.

“The world is awash with liquidity and it is not evident that any central bank, neither the Fed nor the BoJ is in a position to reverse the tide of easy money that has been set afoot over the last eight-nine months specially,” Saurabh Mukherjea of Ambit Capital said.

The Japanese economy doesn’t seem to be going anywhere in particular and the Fed is unlikely to tighten for the US presidential elections, he feels.

Surendra Goyal of Citi said the mood on emerging markets overall was generally cautious post the rally of 20 percent since February but he remained constructive and raised Sensex target to 30,000.

On the global front, Asian markets ended higher with Japanese shares rising nearly 2 percent after the Bank of Japan announced it would modify its monetary policy framework. The central bank kept its deposit rate unchanged at negative 0.1 percent, but introduced a new policy of targeting the yield curve.

European stocks were higher after BoJ’s new monetary policy measures and ahead of outcome of the Federal Reserve meeting. France’s CAC and Germany’s DAX climbed over a percent, at the time of writing this article.

Meanwhile, the Cabinet has approved merger of Rail Budget with the Union Budget and also given nod for advance Budget date. The date for Union Budget will be announced later. It has finalised to remove plan and non-plan expenditure from the Budget.

Hindalco Industries gained 2.7 percent on a media report that the company is planning to reduce debt by selling non-core assets.

Bajaj Auto was up 0.5 percent after Rajiv Bajaj, MD of the company, in an interview to CNBC-TV18, said four significant launches lined up in October & November. “We will launch a new brand in November to challenge Royal Enfield in middle weight motorcycle market.”

Shares of ITC, ICICI Bank, SBI, Reliance Industries, ONGC and L&T were down 0.2-1.3 percent. Bharti Infratel (up 4.7 percent) and Eicher Motors (up 3.3 percent) were top gainers on the Nifty. Infosys, HDFC Bank, Axis Bank, HUL, Tata Motors, HDFC and Tata Steel gained 0.2-1 percent.


Rajesh Sharma

Rajesh Sharma

Rajesh Sharma is Correspondent for Stock Market of South East Asia based in Mumbai. He has been covering Asian markets for more than 5 years.