Sensex rises 101 points, Nifty at 17,581; ZEEL jumps 10%
In opening trades Sensex rose 101 points or 0.17% to 59,107 while the Nifty 50 was trading at 17,581 higher by 19 points or 0.11%.
Domestic benchmark equity indices opened higher on Wednesday after China Evergrande Group’s onshore property unit said it negotiated a plan with bondholders to repay interest due September 23. Market participants will look forward to the outcome of the Federal Reserve meeting that is expected to signal a reduction in stimulus later this year. In opening trades Sensex rose 101 points or 0.17% to 59,107 while the Nifty 50 was trading at 17,581 higher by 19 points or 0.11%.
“A bullish market will witness short coverings causing sudden sharp upturns. There are reasons to believe that this happened yesterday when shorts created in anticipation of negative fallout from the Evergrande crisis were forced to cover. The sharp surge in Nifty by 235 points from lows yesterday is indicative of this. Even though the jury is still out on the final outcome of the woes of the Chinese realty major, the possibility is that the issue will be confined to China with no contagion on global markets. Today the market is likely to focus on the Fed message which is likely to give a timeline for taper. It is unlikely to be a market-moving message since markets have already discounted taper,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Gainers & losers
Top gainers & losers on the Sensex.
Sectoral strand
Nifty Media index led the sectoral pack as it climbed 5.70% after Zee Entertainment announced a merger with Sony Pictures India. Nifty Realty index gained 1.06% and the Nifty IT index advanced 0.81%. Nifty Metal, Nifty FMCG, Nifty Auto and Nifty Pharma indices rose up to 0.62%.
Broader markets
Broader markets outperformed benchmark indices as the BSE MidCap index advanced 187 points or 0.76% to 24,979. While the BSE SmallCap index was gained 231 points or 0.84% at 27,529.
The market breadth was positive as 1,738 shares advanced compared to 596 declined and 99 remained unchanged.
Global markets
Overseas, Asian stocks are trading lower Wednesday as traders assess the debt crisis at China Evergrande Group and gird for a Federal Reserve meeting that is expected to signal a reduction in stimulus later this year. Markets in Hong Kong are closed for a holiday.
Property company Evergrande, which has more than $300 billion of liabilities, missed some interest payments due Monday and investors are seeking clues about how Beijing plans to deal with the cash crunch.
U.S. stocks on Tuesday fought to rebound from Monday’s rout but failed as the Dow Jones Industrial average trended lower for most of the session and closed in the red. Worries over troubles at developer China Evergrande kept a lid on the market.
Investors were cautious ahead of the Federal Reserve’s decision on interest rates and release of economic forecasts on Wednesday. Investors are looking for more information from Fed Chairman Jerome Powell on Wednesday about the central bank’s plans to taper its bond-buying, specifically when that will happen. Powell said last month that he sees the Fed slowing its $120 billion in monthly purchases at some point this year.
The US current account deficit increased to a 14-year high in the second quarter as businesses boosted imports to replenish depleted inventories amid robust consumer spending. The Commerce Department said on Tuesday the current account deficit rose 0.5% to $190.3 billion last quarter.