Mid-day Mood | Sensex, Nifty off the day's high: A look at factors driving the market

The Sensex and Nifty 50 came off the day's high by noon on March 21 after an over 1 percent gain. The rally in the benchmark indices ended jitters in the market a day after the US Federal Reserve decided to keep the rates unchanged at 5.25-5.55 percent and refrained from a hawkish message.

Optimism following the in its Federal Open Market Committee meeting outcome was reflected in the market response as the Nifty 50 once again reclaimed the crucial level of 22,000, said Sheersham Gupta, director and senior technical analyst at Rupeezy.

Gupta said that the recent correction in the market has thrown up opportunities to acquire high-quality stocks at appealing price points and investors should consider accumulating stocks such as those in large-caps which are currently trading at very attractive valuations.

The broader market outperformed the benchmarks with the BSE Midcap and BSE Smallcap gaining 2 percent each.

At 12.23 pm, the Sensex was up 437.78 points or 0.61 percent at 72,539.47, and the Nifty was up 137.90 points or 0.63 percent at 21,977.00. About 2,533 shares advanced, 715 shares declined, and 96 shares unchanged.

Let's take a look at the various factors driving the market on March 21.

1. FOMC Outcome: The US Federal Reserve kept the interest rates unchanged overnight, in-line with Street expectations. Fed chair Jerome Powell's overall message was dovish and continued to hint at a rate cut in June. The Fed hinted at three rate cuts this year.

2. Optimism in Global Markets: The global equity markets cheered the Federal Reserve's decision to keep the key lending rate unchanged. While Wall Street's three major indices hit record closing highs, other Asian indices also gained. Japan's Nikkei went up 2 percent to a fresh peak over 40,700 as of 11.37am.

3. Descending Dollar Index: The dollar index, which measures the greenback against a basket of currencies, slipped below 103 after the Fed retained a dovish stance for the year.

4. Retreating US yield: The 10-year benchmark US Treasury yield has been retreating three sessions. On March 20, it declined to 4.27 from 4.30 in the previous session, causing investors to flock to the equity market.

5. Broad-based buying: All sectors in the domestic market were in the positive territory on March 21 with Nifty Metal and Nifty PSU Bank seeing the most gains of 2.5 percent. The broader market also outperformed the benchmarks.

Fundamental View

"The markets have reacted favourably to the positive global handover, in reaction to the FOMC meet outcome, which kept the hopes alive for three rate cuts in FY25. However, we feel it is important to hold the gains and surpass the hurdle at 22,200 in Nifty to make any meaningful recovery else the profit-taking will resume. Participants should stay stock-specific until we see clarity over the next directional move and stick with the index majors and large midcaps." said Ajit Mishra, SVP, Technical Research, Religare Broking Ltd.

Technical View

"The US Federal Reserve has held interest rates constant but has hinted that they may decrease rates three times this year. This bodes well for equities markets," said Deven Mehata, Research Analyst at Choice Broking. Indian markets are facing resistance near the 21,950-22,000 levels, he said. Once Nifty 50 closes over the aforesaid resistance, it can move on to the next resistance level of 22,200, Mehta added.

Key Nifty gainers

NTPC, BPCL, Tata Steel, IndusInd Bank

Key Nifty losers

Hero MotoCorp, Maruti Suzuki, Nestle, Infosys

Key Sensex gainers

NTPC, Tata Steel, IndusInd Bank, Power Grid Corp

Key Sensex losers

Maruti Suzuki, Nestle, Infosys, TCS

Stock moves

IRB Infrastructure Developers: Shares surged as much as 10 percent after Kotak Institutional Equities upgraded the stock and raised the fair value (FV), driven by adjustments to traffic estimates for private InvIT assets.

BSE: Shares surged nearly 8 percent in the early trade after brokerage firm Investec upgraded its rating for the scrip to "buy". The firm also assigned a price target of Rs 2,800 for the stock, reflecting an upside potential of around 38 percent from the previous close.

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