Sensex bounces as Dalal Street bulls cheer Fed commentary: Key factors driving market

NEW DELHI: The dovish stance of the Federal Reserve in its latest policy review pushed benchmark indices higher as Dalal Street bulls breathed a sigh of relief. Barring pharma and IT, all sectors traded in the green.

The US central bank kept the interest rate unchanged and reiterated its stance to keep benchmark rates near-zero levels through at least 2023. Meanwhile, the second wave of Covid cases in parts of the country, though not serious, is an area of concern, said analysts.

“The outcome of the FOMC meet is very positive for equity markets. Fed chief's comments that the accommodative monetary stance is appropriate and will continue through 2023 mean the ample liquidity conditions and low interest rate will sustain for an extended period of time," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

“A concern in India is the second wave of Covid attack in parts of the country, particularly in Maharashtra. But, going by experiences this is unlikely to impact the market much. The second wave in the US and Europe, much less in intensity, didn't impact markets."

Factors driving markets

• Fed meet: The Federal Reserve said on Wednesday that the US economy is on track for its fastest expansion in nearly 40 years, but its policymakers pledged to keep their foot on the gas despite an expected surge in inflation.
• Bond yield: US Treasuries yields on the longer end of the curve remained elevated, while yields on shorter-term debt fell on Wednesday after the Federal Reserve's views.
• US-China relations: Officials say the US will take an uncompromising stand in talks with China on Thursday in Alaska, in the first face-to-face meetings between senior officials from the two rivals since the US President Joe Biden took office.

How are the blue chips doing?
After opening in the green, benchmark indices maintained their lead. At 9:46 am, BSE flagship Sensex was up 421 points or 0.85 per cent to 50,222. NSE benchmark Nifty followed and advanced 137 points or 0.93 per cent to 14,858.

In the 50-share pack Nifty, Hindalco was the biggest gainer, up 2.90 per cent. Bajaj Finance, Tata Motors, Tata Steel, Maruti Suzuki, L&T, ONGC, IndusInd Bank and M&M were among other gainers.

Infosys was the top loser in the pack, down 1.57 per cent. Dr Reddy’s Laboratories, Divi’s Laboratories, Britannia Industries and HCL Technologies were other losers in the pack.

Broader markets
Broader market indices traded with gains, outperforming their headline peers in morning trade. Nifty Smallcap was up 1.20 per cent while Nifty Midcap advanced 1.32 per cent. The broadest index on NSE -- the Nifty 500 -- was up 0.90 per cent.

BHEL, SAIL, Fortis Healthcare, Dixon Tech, Graphite India and Just Dial were among major gainers from the space, while Sonata Software, JK Lakshmi Cement, Affle India, Edelweiss Financial Services, SRF and Godrej Industries were under selling pressure.

Global markets
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.99 per cent, while stocks in China rose 0.46 per cent. Australia's market bucked the trend and fell 0.3 per cent.

E-mini futures for the S&P 500 advanced 0.3 per cent.

The S&P 500 closed at a record high on Wednesday and the Dow Jones Industrial Average closed above 33,000 points for the first time, bolstered by the Fed's strong economic forecast and Powell's comments that it is too early to discuss tapering-off measures.