Sensex Rises Over 180 Points, Extending Gains For Second Straight Day

Indian equity benchmarks rose in early trade on Wednesday, extending gains for the second straight day, tracking a broader improvement in risk sentiment after data showed US inflation eased for the fifth straight month, driving expectations for a smaller Federal Reserve rate hike later in the day.

The 30-share BSE Sensex index rose 182.37 points to 62,715.67 in early trade, and the broader NSE NIfty-50 index opened in the green, reflecting broader positive moves in Asian markets.

“Markets are likely to be in a strong position in early trades Wednesday, as uptick in the US and Asian indices would help the mood stay bullish. All eyes will be on today’s US Fed meeting on interest rate later in the day, as the outcome would set the tone for the rest of the equity markets across the globe,” said Prashanth Tapse, Senior Vice President for Research at Mehta Equities.

“If the rate hike is on expected lines, the likely optimism could continue in the next few sessions, although other concerning factors like recessionary fears and slowdown in global growth could test markets in the long term,” he added.

Wall Street stocks rose overnight after US inflation for November showed further signs of moving down towards the Fed’s target.

Beyond the Fed’s rate decision later today, markets will eye the language and projections of US policymakers.

However, apprehension about the future steps of policymakers kept things in check ahead of a Federal Reserve meeting later in the day and central banks in Britain and Europe scheduled meetings on Thursday. Investors are also keeping a close eye on China’s reopening.

“Equities whittled their gains in the session,” Vishnu Varathan, Head of Economics at Mizuho Bank, in Singapore, told Reuters, as investors chewed over some of the details in the inflation data and turned their focus to the Fed decision.

“I suspect it was a bit of ‘hang on, guys,’ – next up is the (Fed) and maybe we want to take some profit and keep our positions trim,” he added.

The “dot plot” chart depicting committee members’ predictions of future rate moves and chairman Jerome Powell’s press conference tone become the main points of attention.

“There are now clear signs that inflation is softening, but it is still at elevated level,” Tareck Horchani, Head of Dealing, Prime Brokerage, at Maybank Securities in Singapore, told Reuters.

“The market wants to know if the Fed will change their stance on the dot plot,” he said, with the median projection in September being for a peak in the Fed funds rate of around 4.6 per cent next year.