Sensex up 36 points, Nifty opens at 18,127; IT, auto stocks rally

Domestic benchmark equity indices opened with mild gains on Tuesday tracking Asian peers that were trading steady after a choppy U.S. session that saw Treasury yields and the dollar climb amid concern that inflation will force a quicker withdrawal of central bank stimulus. In opening trades, Sensex jumped 36 points or 0.06% at 60,755 while the Nifty was trading at 18,127 higher by 17 points or 0.10%.

“Market direction is likely to be influenced largely by global developments, particularly market’s response to rising inflation. US and European markets shrugging off the high US inflation rate of 6.2 % is very significant and this is likely to impart resilience to global equity markets in the short-term even while there is concern about elevated valuations in stock prices,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Even though the uptick in retail inflation (4.48% in October) and wholesale inflation (12.54% in October) are concerns, sustained rise in exports (43% in October), robust GST collections, record Khariff crop, and steadily improving business confidence are positives, Vijayakumar added.

Gainers & losers

Top gainers & losers on the Sensex.

Sectoral indices

Most sectoral indices on the NSE were trading in the green. Nifty IT & Nifty Media indices rose 0.39% each. While Nifty Auto & Nifty Realty indices were up 0.32% and 0.27%, respectively. Whereas Nifty FMCG and Nifty Pharma indices were trading flat with a positive bias of around 0.05%.

On the downside, Nifty Bank slipped 0.31%. Even the volatility gauge index India VIX cooled off further by 3.37% to sub 15 levels at 14.94.

Broader markets

Unlike benchmark indices, broader markets were trading with strong gains. BSE MidCap index advanced 118 points or 0.45% to 26,594 while the BSE SmallCap index was quoting at 29,290 up by 115 points or 0.39%.

Bulls had a strong grip of the markets as 1,623 shares advanced compared to 922 declined and 123 remained unchanged.

Global markets

Overseas, Asian stocks are trading mixed on Tuesday as the Reserve Bank of Australia released minutes from its recent monetary policy meeting.

Australia’s central bank is expected to keep the interest rate steady until 2024, according to minutes from its November monetary policy meeting released Tuesday. Given the latest data and forecasts, the central scenario for the economy continued to be consistent with the cash rate remaining at its current level until 2024, the minutes said.

U.S. equities were flat on Monday, as U.S. Treasury yields reversed and climbed higher, and investors awaited quarterly reports from big retailers later in the week.

Meanwhile, U.S. President Joe Biden and Chinese President Xi Jinping kicked off a virtual meeting on Tuesday with a positive tone and cordial remarks. The video call is the closest communication between the countries’ two leaders since Biden took office in January.