Indian market wrap: Stocks rebound as Asia gains ahead of U.S. Fed meeting

Indian market wrap: Stocks rebound as Asia gains ahead of U.S. Fed meeting

MUMBAI (NewsRise) — Indian shares climbed to a two-week high Wednesday, following rallies in the U.S. and China, as investors braced for Federal Reserve’s verdict on interest rates.

     China’s Shanghai Composite Index rose nearly 5%, surging in the last hour of trade to reverse most of its 6% two-day decline earlier in the week. U.S. stocks, which rose to over two-week highs Tuesday, were poised to open higher.

     The benchmark BSE Sensex rose 1% to 25,963.97 points, its highest level since Aug. 31, while the broader NSE CNX Nifty Index gained 0.89% to 7,899.15 points. India’s financial markets are closed Thursday for a local holiday.

     Twenty-six of the 30 Sensex constituents ended higher, while overall declining issues outnumbered advancing ones 1,411 to 1,259, and 116 closed unchanged.

     “Even if the Fed increases rates, we think it is very unlikely that it will embark on a significant rate hike cycle. We do not believe that a rate hike will have much of an impact on Indian equities, except in the very near term,” said G. Chokkalingham, managing director at Equinomics. “After this uncertainty passes, markets are likely to recover and we expect a major rally in October.”

     The U.S. Fed’s two-day policy meeting starts later today and market participants remain divided on expectations about a rate increase or another pause. Emerging market assets have been under pressure in recent months on concerns the Fed’s first rate hike in nearly a decade may pull cash away from the region.

     The BSE Bank Index was the best performing sectoral index Wednesday, rising 1.42% to 19,435.07 points. India’s top private lender ICICI Bank and HDFC Bank- the country’s biggest lender by market value rose 1.45% to 272.90 rupees and 1.27% to 1,024.40 rupees, respectively. ICICI shares have recovered nearly 10% from the over one-year low touched last week.

     The nation’s biggest lender by assets, State Bank of India, rose 1.22% to 236.65 rupees.

     Investors also await the Reserve Bank of India’s monetary policy review on September 29, especially after retail inflation eased to a record lows for the last two months.

     Mortgage major Housing Development Finance Corp rose 1.32% to 1,193.05 rupees.

     Sun Pharmaceutical Industries rose 2.38% to 887.35 rupees after the drugmaker said it plans to acquire InSite Vision, a U.S.-based ophthalmic product specialist. Sun Pharmaceutical’s shares have risen about 5% over the last five trading sessions.

     Other drugmakers, Lupin and Cipla, rose 0.87% and 0.58% to 1,847.85 rupees and 660.65 rupees.

     India’s largest software services companies, Tata Consultancy Services and Infosys, rose 0.31% to 2,551.15 rupees and 0.28% to 1,101.50 rupees, respectively.

     Value-buying lifted a number of index heavyweights that fell to multi-month lows earlier this month and in August.

     ITC Ltd. — which has the highest weightage of 10.75% in the Sensex — rose 1.44% to 321.30 rupees on defensive buying, contributing most to gains on the index. The stock has risen 1.6% over the last month, against about a 7% decline in the Sensex.

     Capital goods stocks, Larsen & Toubro and Bharat Heavy Electricals were among the laggards and dragged the BSE Capital Goods index down 0.46%.

     Larsen fell 0.58% to 1,547.85 rupees and BHEL ended lower by 0.66% to 210.30 rupees. Brokerage downgrades and worries of a delay in investment cycle pickup have weighed on the sector. The BSE Capital Goods Index has slumped nearly 12% over the last one month, making it the worst performing sectoral index for the period.

Indian market wrap: Stocks rebound as Asia gains ahead of U.S. Fed meeting