Softer US inflation data drives Sensex 200 points higher

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A lower-than-expected US inflation data raised hopes that Federal Reserve could soon dial back its inflation-taming interest rate hikes, providing a leg up to the equity market bulls. Key Indian equity indices opened higher on Wednesday, led by gains in banking, financial and IT stocks, ahead of the Fed meeting outcome tonight.

BSE Sensex was trading 176 points or 0.28% higher at 62,710. Nifty50 was at 18,662, up 54 points or 0.29% at around 9.17 am.

“The lower-than-expected November CPI inflation in the US which came at 7.1% YoY and only 0.1% MoM confirms the market expectation that the Fed will hike rate by only 50bp today. The consensus terminal Fed fund rate is now slightly below 5%, which is market positive,” V K Vijayakumar, Chief Investment Strategist at

said.

“In India, the bank index, and within the bank index the PSU bank segment, is the strongest segment and this can continue to remain resilient. The resumption of FII buying is another positive. However, Nifty is unlikely to break out of the 18,400-18,800 range and sustain at higher levels. High valuations are likely to cap the rally,” Vijayakumar added.

Among Sensex stocks,

, , , , L&T and were the top gainers, rising about 1-1.5%. , , , and also opened higher. However, , and opened with cuts.

Sectorally, Nifty IT gained 1.12% and Nifty PSU Bank 0.94%. Nifty Metal and Nifty Media also opened higher. Whereas in the broader market, Nifty Midcap50 advanced 0.58% and Smallcap50 increased by 0.35%.

US stock indices closed higher in volatile trade on Tuesday as investors shifted focus to the Federal Reserve’s next rate decision after inflation data showed more signs of cooling. On Tuesday, Dow Jones Industrial Average rose 0.30%, S&P 500 surged 0.73% and Nasdaq Composite gained 1%.

In early trade in Asian markets, Japan’s Nikkei 225 gained 0.79%, South Korea’s Kospi advanced 0.80% and China’s Shanghai Composite rose 0.13%.

The Indian rupee increased 0.12% to 82.70 against the US dollar in early trade on Wednesday. Meanwhile, the dollar index, which tracks the movement of the greenback against a basket of six major world currencies, increased by 0.08% to 104.06 level.

Brent crude February futures declined 0.30% to $80.44 a barrel, while U.S. West Texas Intermediate (WTI) crude futures decreased 0.25% to $75.20 a barrel.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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