Sensex, Nifty Extend Gains For 6 Days In A Row, Tracking Asian Peers

Equity benchmarks started Wednesday on a positive note, extending their gains for the sixth day in a row, tracking Asian peers in the green, despite the slide on Wall Street overnight.

The 30 stock S&P BSE Sensex gained over 80 points to 58,221.68, and the broader Nifty 50 of the National Stock Exchange was up at 17,377.50, marking a positive run for the sixth straight session, after marginal gains on Tuesday.

The Nifty’s metal index, energy index and IT index rose between 0.4 per cent and 0.5 per cent.

Early session trade moves on Wednesday indicate another see-saw day between gains and losses for the Indian benchmarks.

“Strong Asian market cues are expected to help key benchmarks advance further in early trade Wednesday, despite a fall in the US markets in overnight trades. Nifty is likely to trade on the front foot amidst renewed optimism in the backdrop of the return of foreign investors in Indian equities, with FIIs (foreign institutional investors) buying equities to the tune of ₹ 825 crore on Tuesday,” said Prashanth Tapse, Senior Vice President for Research at Mehta Equities.

“Technically, the biggest intraday make-or-break support for Nifty is seen at the 17,189 mark. While the gap between the 2-year and 10-year note US bond yields is the widest in over two decades, tensions between the US and China over Taiwan are the latest catalyst for stock markets across the globe,” he added.

Asia-Pacific bond yields increased On Wednesday, alongside US Treasury yields, and the dollar gained more ground after Federal Reserve members indicated that interest rate hikes are far from over.

Yields also benefited from a decline in demand for the safest assets when US House Speaker Nancy Pelosi arrived in Taiwan without incident, despite threats from China, which sees the island as a renegade province. The haven yen’s decline persisted.

That lifted stocks in Asia.

Japan’s Nikkei gained 0.5 per cent, rebounding from Tuesday’s two-week closing low, while Chinese blue chips jumped 0.86 per cent and Hong Kong’s Hang Seng gained 0.76 per cent, according to Reuters.

“Hong Kong and Chinese shares have recovered around a third of yesterday’s losses because of relief that there was no major confrontation overnight,” Steven Leung, executive director for institutional sales at UOB Kay Hian in Hong Kong, told Reuters.

“However investors are going to remain nervous due to the military exercises planned for after Ms Pelosi’s departure.”

A trio of Fed policymakers signalled on Tuesday that there would be no let-up in the tightening campaign aimed at taming the highest inflation since the 1980s, even though it will take rates to a level that will more significantly curb economic activity.

That pushed the dollar higher, but a fall in crude oil helped Indian stocks.

Oil prices fell about 1 per cent in early trade on Wednesday, reversing gains from the previous session ahead of a meeting OPEC producers on fears of a slowdown in global growth hitting fuel demand and a firmer dollar.

Indian shares were also helped by metal, energy and information technology stocks gains, as investors eye the central bank’s policy meeting outcome expected later this week.

Market participants will turn focus to the Reserve Bank of India’s (RBI) three-day monetary policy meeting which begins on Wednesday.

With inflation at multi-year highs, the RBI’s monetary policy committee is seen raising rates, though the views on the quantum of increase were split wide between 25 basis points and 50 basis points, a Reuters poll of economists showed.

“The upcoming RBI policy is expected to resonate the rate increase action taken by peer central bankers with the consensus between 35-50 bps hike getting acknowledged across the yield curve,” said Srikanth Subramanian, CEO-Designate at Kotak Cherry.

“Equity markets seem to have discounted a 35-50 bps rise and hence a corresponding rate hike may not result in a big shock specially on the back of good earnings and economic momentum,” he added.