Mumbai: Despite investors’ concerns over a likely US rate hike, value buying and increase in investors’ participation propelled a barometer index of the Indian equity markets to gain 205 points during the late-afternoon trade session on Wednesday.
Initially, both the bellwether indices of the Indian equity markets opened on a positive note in sync with their Asian peers.
In addition, investors seem to have priced-in the possibility of a 25 basis points hike in key US interest rates. The hike is expected to be announced by the US Fed’s Federal Open Market Committee (FOMC) early Thursday, India time.
A hike in US interest rates, which have been at near-zero levels since the last decade, will lead to a massive pull-back of foreign funds from emerging economies like India.
It is also expected to dent business margins as access to capital from the US will become expensive.
However, foreign institutional investors (FIIs) were net buyers on Tuesday.
According to data with stock exchanges, FIIs bought stocks worth Rs 48.67 crore.
Apart from factoring-in a US rate hike, markets rose on the back of value buying and increase in investor participation.
The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) rose by 205 points during the late-afternoon trade session.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) gained during the late-afternoon session. It was higher by 57.50 points or 0.75 percent at 7,758.40 points.
The Sensex of the S&P Bombay Stock Exchange (BSE), which opened at 25,402.47 points, was trading at 25,525.72 points (at 3.00 p.m.) — up 205.28 points or 0.81 percent from the previous day’s close at 25,320.44 points.
The Sensex has so far touched a high of 25,572.90 points and a low of 25,372.47 points during the intra-day trade.
On Tuesday, the Sensex gained by 170.09 points or 0.68 percent, while the Nifty rose by 50.85 points or 0.66 percent.
“Thinner volumes are moving the markets. The recent relief rally has encouraged investors to take risk and chase prices. We are observing value buying at lower levels,” co-head, technical research desk with Geojit BNP Paribas Financial Services, Anand James said.
Nitasha Shankar, vice president for research with YES Securities, said that market breadth continued to remain healthy with 1,600 stocks advancing against 750 declining.
“Banking stocks have reversed in trend after a sustained downtrend led by short covering,” said Shankar.
Sector-wise, healthy buying was witnessed in banking, information technology (IT) and healthcare sectors.
On the other hand, automobile, consumer durables and FMCG (fast moving consumer goods) scrips were trading in the red.
The S&P BSE banking index augmented by 241.67 points, IT index gained by 129.92 points and healthcare index was higher by 102.03 points.
The S&P BSE automobile index was receded by 71.39 points, consumer durables declined by 45.28 points and FMCG index was lower by 39.14 points.