India : Market cheers Fed move; Nifty ends above 8850, Sensex up 266 pts
Thu Sep 22 2016
Rajesh Sharma (2002 articles)

India : Market cheers Fed move; Nifty ends above 8850, Sensex up 266 pts

As global markets rallied, Indian markets followed foot steps after the Federal Reserve left US rates unchanged and plotted a lower trajectory for future hikes. The Nifty remained above the 8550 throughout the day and ended above the psychological level as the market gained most in last two weeks.The 50-share index was up 90.30 points or 1 percent at 8867.45. The Sensex was up 265.71 points or 0.9 percent at 28773.13. About 1669 shares advanced, 1067 shares declined, and 236 shares were unchanged.

India VIX slipped 10 percent in trade ending at 2-week closing low. All sectoral indices closed in the green with BSE small cap index ending at record closing high.

Auto and bank stocks led the bulls with the PSU Bank index gaining the most in today’s trade.

The central bank strongly signaled it could still tighten monetary policy by the end of this year as the labour market improved further. This is 6th consecutive time the world’s most powerful central bank has decided to stay put on interest rates. The Fed has kept its rate unchanged between 0.25 and 0.5 per-cent and see a rate hike in 2016 and two rate hikes in 2017. The Fed believes that there are risks in waiting too long for further rate hikes.

Earlier on Wednesday, global markets reacted to the Bank of Japan’s abrupt shift to targeting interest rates on government bonds to achieve its elusive inflation target

However, analysts say the real test will be US elections now but till then the uptrend is likely to continue in near term.  Vikas Khemani of Edelweiss Financial Services believes valuations are reasonable right now and investors would be positively surprised with the earnings growth in coming quarters.

Vibhav Kapoor of IL&FS said that markets are going up and they will keep going up for some more time. “Liquidity is gushing everywhere. The US Fed has indicated that even next year, rates won’t go up. They have reduced their targets.”

Good news is monsoon this year is likely to continue till the end of September.

The deficiency in rainfall till now stands at 5 percent, which is expected to go down to 2-3 percent by the end of the monsoon, says BP Yadav, director at the India Meteorological Department. Most of the areas in the country are experiencing heavy rainfall which is expected to continue.

While the southern monsoon is expected to spill into October, central and western parts might see withdrawal by end of the current month.

Stock-wise, auto, banks, infra and Oil & gas stocks rallied most while IT stocks were in red. SBI, ICICI Bank, Hero MotoCorp, Adani Ports and Asian Paints were top gainers while TCS, Lupin, Coal India, Axis Bank and Dr Reddy’s Labs were losers in the Sensex.

Among the midcaps were Bajaj Finance, Torrent Power, Sun TV Network, Amara Raja Battery and Oriental Bank were top gainers.

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.

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