Sensex rises 650 pts from day's low, Nifty above 22,850: Fed rate decision among key reasons behind market gain
The Federal Reserve kept interest rates unchanged on Wednesday
Benchmark indices Sensex and Nifty erased early losses to trade in deep green on October 29 due to various reasons, including the US Federal Reserve keeping interest rates steady. At 10:32 am, the Sensex was up 566.21 points or 0.77% at 73,812.24, and the Nifty was up 162.65 points or 0.72% at 22,861.50. About 2,032 shares advanced, 1,467 shares declined, and 185 shares were unchanged. Sensex rose 650 points from day's low while Nifty was trading above psychologically important 22,850-mark.
Key reasons behind market gain The Federal Reserve kept interest rates unchanged on Wednesday, opting to delay any changes to borrowing costs until after next week's US midterm elections while it awaits further data on inflation, which it said "remains elevated." Higher interest rates increase the appeal of Treasuries and the dollar, making emerging market equities, including India, less attractive for foreign portfolio investors.
Indian equity benchmarks have dropped in six of the last seven trading sessions as elevated oil prices raised concerns over knock-on effects on inflation, interest rates and the rupee. "The Fed holding rates as expected is mildly positive for equity markets. However, from the Indian perspective, the headwinds continue to be strong," said VK Vijayakumar, chief investment strategist at Geojit Investments, pointing to high US Treasury yields and crude oil prices.
FPIs bought Indian shares worth Rs 872 crore ($91.58 million) on Wednesday in a second consecutive session of buying, provisional data showed. They have offloaded $3.74 billion worth of shares so far in October. DIIs also turned net buyers, investing Rs 643 crore during the session. Buying by both foreign and domestic institutional investors provided broad-based institutional support to the market.
Nifty needs to trade below 22,650 for any bearish momentum to return to the market, said analysts. "Going ahead, a follow strength above Tuesday’s high 22,830 will open further pullback towards 23,000 and 23,175 levels being the confluence of last week high and 50 days EMA. "Failure to move above 22,830 will signal extension of the last four sessions consolidation in the range of 22,370-22,830. Within the consolidation immediate support is placed at 22,500 being the confluence of Wednesday’s low and retracement of last two sessions pullback," said Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking.
"On the downside, 22,600/73,000 and 22,500/72,500 are the key support zones, and bullish sentiment is likely to continue as long as the market holds above them. On the upside, 22,850/73,500 is the immediate hurdle for the bulls. A move above it could take the index to 23,000/73,800–74,000. However, if the index falls below 22,500/72,500, sentiment could turn weak and it may slip to 22,350/72,100 or 22,200/71,700," said Shrikant Chouhan, Head Equity Research, Kotak Neo.
"The Nifty index remains range-bound on the daily chart, consolidating within the broader 22,400–22,800 band. Key support is placed at 22,500, where solid buying interest repeatedly emerges, while 22,800 acts as formidable resistance after the index failed to hold 22,700 during market hours. A decisive breakout beyond these levels will trigger the next trending move. With elevated crude oil, US 10-year yields topping 5%, and India VIX above 15, traders should maintain caution and strictly align strategies with the prevailing broader trend," said Vatsal Bhuva, Technical Analyst at LKP Securities.
