Taking Stock: Indices end higher after Fed keeps interest rates unchanged

Sensex and Nifty 50 ended higher on March 21 tracking a rally in global markets after the US Federal Reserve maintained its projection of three rate cuts this year, boosting investor sentiment.

Following the Fed's decision, all three Wall Street benchmarks touched new highs. In the Asia-Pacific markets, Japan's Nikkei hit a fresh all-time high.

On March 20, the Fed decided to keep the interest rate unchanged at 5.25-5.50 percent. "This is encouraging for stocks, as a reduction in the cost of borrowing can lead to faster economic growth, said Viram Shah, CEO, of Vested Finance. Shah said that in a declining interest rate environment, three sectors--consumer discretionary, utility, and real estate--stand out as potential beneficiaries.

The retreating US 10-year Treasury yield, the descending dollar index, and broad-based buying also aided the benchmarks.

At close, the Sensex was up 590.60 points or 0.82 percent at 72,692.29, and the Nifty 50 was up 175.70 points or 0.80 percent at 22,014.80.

Stocks and sectors

The biggest gainers on the Nifty 50 included BPCL, NTPC, Tata Steel, Power Grid Corp, and Coal India while the top losers included Bharti Airtel, ICICI Bank, HDFC Life, Maruti Suzuki, and Axis Bank.

With all sectors ending in green, Nifty Realty and Nifty PSU Bank rose the most and Nifty Bank and Nifty FMCG saw the least gains.

In the broader market, BSE Midcap and BSE Smallcap added over 2 percent gains.

A long build-up was seen in REC, NALCO, and Muthoot Finance while a short build-up was seen in Petronet, Abbott India, and Shriram Finance.

Amanaya Venture, Avenue Supermarts, Bharti Airtel, CG Power, Cummins India, City Online, KEI Industries, and Hitachi Energy were among other stocks which touched their 52-week high on the BSE. Click here for the full list

Outlook for March 21

Shiju Koothupalakkal, Technical Analyst, Prabhudas Lilladher Pvt Ltd

The Indian markets gained significantly on March 21. From the low made near 71,675 zone in the previous session, the Sensex managed to move past the important 50-EMA level of 72,200 zone and breached the 72,500 levels intraday.

Sensex gained 515 points and sentiment has improved along with a positive bias, so a further rise can be anticipated. Construction, metals, PSU Banks, media & entertainment, energy, consumer durables, financial services and pharma were among the major sectors which moved the index higher on March 21.

Ajit Mishra, SVP - Technical Research, Religare Broking Ltd

Markets surged strongly and gained nearly a percent, tracking favorable global cues. After the gap-up start, Nifty 50 oscillated in a narrow range till the end and finally settled at 22,011.95 level.  All the key sectors participated in the move wherein realty and metal were among the top gainers.  The broader indices also made a strong comeback and gained approximately 2.5% each.

The buoyancy in the US markets is not only helping the index to cap the damage and also triggering a rebound in between. On the benchmark front, Nifty tested the immediate hurdle of short-term moving average i.e. 20 EMA on March 21 but it couldn’t surpass it. We may see some consolidation now and need sustainability above 22,200 to mark any meaningful recovery. Meanwhile, participants should stay stock-specific until we see clarity over the next directional move and stick with the index majors and large midcaps.

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