“At present, valuation concerns have taken a back seat. Every positive news is being projected and negative news ignored. We don’t know how long will this exuberance last. Moody’s upgrading India’s rating outlook to stable has come as a shot in the arm for bulls,” said an analyst.
“The major headwind for the economy and markets is likely to come from imminent inflation. With sustained rise in petrol and diesel prices, cost-push inflation will soon become a macro headwind. The MPC will be forced to withdraw from its accommodative stance. But how far this is going to impact the bullish sentiments remains to be seen,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
How are bluechips doing
After opening in the green, benchmark indices maintained the lead. At 9.28 am, BSE flagship Sensex was up 137 points or 0.23 per cent to 59,882. NSE benchmark Nifty advanced 52 points or 0.29 per cent to 17,874.
“If Nifty continues its uptrend, then the level of 17,750 can act as a good support level and can go till the next resistance level which is at 17,935. But on the other hand, if the Nifty slips below 17,750 then it can move down till 17,620 level,” said Mohit Nigam, Head – PMS, Hem Securities.
In the 50-share pack Nifty, ONGC was the biggest gainer, up 4.09 per cent. Indian Oil, UPL, M&M, Coal India, Bharat Petroleum, SBI, Bajaj Finance, NTPC and Britannia were among other gainers.
Divi’s Labs was the top loser in the pack, down 0.79 per cent. Titan, Dr Reddy’s Labs, JSW Steel, Sun Pharma, Cipla, Maruti Suzuki and Tech Mahindra were among those that traded in the red.
FACTORS DRIVING MARKETS
Moody’s upgrade: Moody’s outlook upgrade to stable reinforces the fact that risks for the financial sector are lower now along with visibility of sustained growth and gradual fiscal consolidation. The fiscal situation is also better than what it seemed at the start of the pandemic, said an analyst.
Inflation transitory: Chicago Fed President Charles Evans said on Tuesday he continues to believe supply bottlenecks are driving most of the recent increase in inflation and will subside. He also repeated that the central bank is close to begin reducing its monthly asset purchases.
Us payroll data: Friday’s US payrolls data is forecast to show 488,000 jobs were added in September, and would be crucial to the Federal Reserve’s timeline for tapering economic support.
Crude at a high: The gains in oil are driven by concerns about energy supply, and come two days after the OPEC+ group of producers stuck to its planned output increase rather than raising it further. US crude rose to its highest level since 2014 on Wednesday but pared gains and was last off 0.09 per cent to $78.87 a barrel. Brent crude lost 0.08 per cent to $82.49 per barrel, having hit a three-year high in the previous session.
Evergrande crisis: Uncertainty about Evergrande’s fate roiled Chinese property developers’ bonds and Hong Kong-listed shares and bonds on Tuesday following fresh credit rating downgrades.
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.70 per cent while Nifty Midcap advanced 0.32 per cent. Broadest index on NSE, Nifty 500, was up 0.35 per cent.
Trident, Dilip Buildcon, Gujarat Narmada Fertilisers, Hindustan Copper, AU SFB, IRCTC were gainers from the space while RBL Bank, Aditya Birla Fashion, Mindtree, TV18 Broadcast, HEG and Birla Corporation were under selling pressure.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6 per cent, reversing early gains, while Japan’s Nikkei lost 0.78 per cent.
Traders say markets are jittery due to worries about China’s real estate market as well as approaching higher interest rates around the world.
There were falls in Hong Kong off 1 per cent, Korea down 0.9 per cent and Australia down 0.45 per cent. US stock futures, the S&P 500 e-minis shed 0.44 per cent.