The Sensex rose 461 points to open at 76,532.40, while the Nifty 50 gained around 170 points to 23,700.
UltraTech Cement, Bharat Electronics (BEL), Bajaj Finance, HCL Technologies, Tech Mahindra, and Mahindra & Mahindra (M&M) were among the top gainers on the Sensex, rising up to 2%. Meanwhile, Sun Pharma, HDFC Bank, and ICICI Bank were among the laggards.
Oil prices ease
Oil prices declined on Wednesday morning, after a mind-boggling rally which was fuelled by the prolonged closure of the Strait of Hormuz as Iran attacked ships trying to pass through the critical waterway. Brent crude declined more than 1% to trade at $102 per barrel, while WTI crude fell nearly 2% to $94.53 per barrel. Despite the decline, oil prices are still holding above the key $100 per barrel mark, which they had crossed for the first time earlier this month since Russia’s invasion of Ukraine back in 2022.
Today’s fall in oil prices comes after the Iraqi government and Kurdish authorities reached an agreement to resume oil exports through Turkey’s Ceyhan port, providing modest relief to concerns about Middle East supplies.
Bond yield declines
US bond yields on five to 30-year Treasuries declined for the second consecutive session, while two-year yields declined for the third day. The benchmark 10-year yield dipped 2.2 basis points to 4.198%. U.S. two-year yields, which reflect interest-rate expectations, were also down, slipping 1.1 bps to 3.669%. The yield has slid nearly 10 basis points over the last three days, the largest three-day fall since late November.Notably, markets are actively awaiting comments from the US Federal Reserve which is set to announce the decisions taken during its FOMC meeting later today.
Global markets rise
Wall Street ended higher on Tuesday, as the US Federal Reserve began its two-day policy meeting amid investors’ worries about high oil prices and the Middle East conflict. The S&P 500 climbed 0.25% to end the session at 6,716.09. Tech-heavy Nasdaq gained 0.47% to 22,479.53, while the Dow Jones Industrial Average rose 0.10%.
Asian markets mostly remained in the green on Wednesday morning, with Japan’s Nikkei jumping over 2% and South Korea’s Kospi rallying nearly 4%. Hong Kong’s Hang Seng, however fell marginally.
In Europe, meanwhile, France’s CAC gained 0.5%, Germany’s DAX rose over 0.7% and UK’s FTSE gained 0.8% yesterday.
The ongoing buying spree in Indian markets comes after a massive selloff seen during the first two weeks of March, as the escalating tensions between Iran and the US-Israel rattled markets. The sharp selloff may have led to investors resorting to value buying.
All is well?
Despite the optimism in the markets, some caution is warranted. The war between Iran and the US-Israel still shows no sign of de-escalation, and continues to rattle the oil-rich Middle East. Iran confirmed on Tuesday that its security chief, Ali Larijani, had been killed in an Israeli attack. The US military, meanwhile said it had targeted sites along Iran’s coastline near the Strait of Hormuz because Iranian anti-ship missiles posed a risk to international shipping there.
Currency watch:
Indian rupee fell 3 paise to 92.43 against the US dollar in early trade. Rupee is being pressured by a firm dollar index hovering near 100, along with elevated crude oil prices close to $100, which continue to strain India’s import bill, said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
“The combination of strong dollar demand and rising energy costs is keeping the rupee under pressure. The overall bias remains weak as long as crude sustains at higher levels. Market focus now shifts to the US Fed policy decision due tomorrow late evening, which is expected to act as a key trigger for the next directional move in the dollar, and consequently, the rupee,” he added.
FII selling continues
Foreign investors meanwhile continued to offload Indian equities, selling shares worth Rs 4,741 crore on Monday — marking their 13th consecutive session of net selling. While this does not reflect today’s activity, sustained outflows in recent sessions have weighed on investor sentiment.
What lies ahead?
Despite the uncertainty regarding the war, markets have staged a bounce back, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. “One factor that enabled this bounce back is crude remaining around the $ 102 level and fears of spiking above $120 not materialising. The near-term scenario will be one of markets responding mildly positively to some good news and negatively to bad news,” he said.
“Despite being sustained sellers in the market, FIIs have been selectively buying in some sectors like telecom. This partly explains the resilience in telecom stocks. Also, there is a portfolio churn happening away from IT and highly valued FMCG stocks towards telecom, pharmaceuticals, defense and select financials. Market leaders and fancied stocks in these segments will continue to be resilient even in a choppy market,” the analyst added.
Technical view:
Nifty 50 formed a small bullish candle with shadows in either direction signaling extension of pullback for the second session in a row amid high volatility on account of the weekly expiry and volatile global cues, said Bajaj Broking. It added that the index was seen rebounding in the last two sessions from extreme oversold territory after testing the psychological 23,000 levels.
“Going ahead, index holding above Tuesday low (23346) will signal extension of the pullback towards the immediate resistance of 23,700-23,800 levels being the confluence of the last week breakdown area and 8 days EMA. Key short term support is placed in the 22,700–22,400 zone, which coincides with the previous gap area and the 78.6% retracement of the earlier major up move,” it added.
(With inputs from agencies) (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)