Sensex jumps 333 points, Nifty above 17,650; metals & broader market rally

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Domestic benchmark equity indices opened with a gap up on Thursday as investors took in an optimistic policy announcement from the Federal Reserve and encouraging news from a Chinese mega-developer on the verge of collapse. In opening trades, Sensex rallied 333 points or 0.57% to 59,290 while the Nifty 50 was trading at 17,656 higher by 110 points or 0.63%.

“The ferocity of the ongoing bull run is evident from the response of the US market to the Fed announcement. The Dow, Nasdaq and S&P 500 spiked around 1% when the Fed indicated that ” moderation in the pace of asset purchases may soon be warranted. This bullish response to a mildly hawkish Fed is surprising but indicative of the strong bullish undercurrent. The Fed has not given any timeline for tapering but it can be expected to begin as soon as November this year and a rate hike in 2022 looks a clear possibility,”  said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The confusion even among smart money is evident in the off and on nature of FII and DII investment with FIIs turning sellers ( Rs 1943 cr) and DIIs turning buyers (Rs 1850 cr) in the cash market yesterday – a reversal of their position a day ago. Meanwhile, the Evergrande crisis appears to be receding as of now. This bull market has been easily climbing all walls of worries surprising even diehard bulls. Now, we don’t know how long the party will go on, Vijayakumar added. 

Gainers & losers

Sectoral strand

All sectoral indices opened in the green on the NSE. The Nifty Metal index was shining brightly as it rallied 1.48% in early trades, followed by the Nifty Realty index that rose by 1.15%. Nifty Auto, Nifty Bank, Nifty FMCG, Nifty IT and Nifty Pharma gained up to 0.90%

Broader markets

Broader markets outperformed the benchmark indices as the BSE MidCap advanced 229 points or 0.91% to 25,395 while the BSE SmallCap index was quoting at 28,134 up by 287 points or 1%.

Bulls were in charge of the markets as 1,913 shares advanced compared to 425 declined and 89 remained unchanged.

Global markets

Overseas, Asian stocks are trading mostly higher on Thursday as investors continue monitoring the situation surrounding China Evergrande Group. Markets in Japan are closed on Thursday. As per reports, China Evergrande Group’s chairman said the firm’s top priority is to help wealth investors redeem their products, though questions remain over whether the embattled Chinese developer will pay the interest due on a dollar-denominated bond on Thursday.

U.S. stocks rallied on Wednesday after the Federal Reserve indicated it doesn’t see an imminent rollback of the monetary stimulus that has been supporting the economy throughout the pandemic.

The Fed did not give a specific timeline on when it may begin moderating its purchases. “If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the Fed’s post-meeting statement said.

The central bank has been buying $120 billion a month of Treasurys and mortgage-backed securities since the start of the Covid crisis. The Federal Open Market Committee voted unanimously to keep short-term rates anchored near zero on Wednesday.

The Fed is split on the timing of the first interest rate hike. Wednesday’s so-called dot plot of projections showed nine of the 18 FOMC members expect a rate increase in 2022. That’s up from seven in June’s Fed projections.