Indices jump even as crucial Fed meet gets underway; Sensex up 578 points

Indian benchmark indices gained on Tuesday along with some Asian peers even at the US Federal Reserve’s (Fed’s) two-day monetary policy meeting got underway. The benchmark Sensex rallied close to 1,000 points to go past 60,000 but retreated ahead of the market close amid a correction in European equities.

The Sensex ended the session at 59,719, a gain of 578 points or 0.98 per cent. The Nifty50 on the other hand ended the session at 17,816 a gain of 194 points or 1.1 per cent. Financials and pharma stocks led the advance amid positive flows from foreign portfolio investors (FPIs).

FPIs on Tuesday bought shares worth Rs 1,196 crore, according to provisional data from exchanges. Overnight gains in the US indices had provided some impetus to stocks in Asia in morning trade. Bargain hunting, after a 2 per cent rout on Friday, contributed to the gains over the past two days.

On Friday Indian benchmark posted its biggest single-day fall in three months amid a surge in the US dollar, which triggered bets of an outsized rate hike by the Fed.

However, the uncertainty surrounding the outcome of the Fed meeting saw investors cut their risky bets. Global investors are trying to gauge whether policymakers will be compelled to tighten the rate hikes to tame runaway inflation.

The Fed is widely expected to hike rates by 75 basis points, taking the rates above 4 per cent and then pause. Analysts said that though a 100-bps hike could move markets, the Fed's forecast on where the policy rate will stop and how long it will stay at that level will be equally important.

"It seems like a relief rally on account of hopes that it may not be a 1 per cent hike. There is a view that inflation is likely to come down due to a fall in commodity prices. The markets started correcting during the second half and one is doubtful whether the recent gains can be sustained. It's not just the hike but the communication thereafter that is equally important," said UR Bhat, co-founder of Alphaniti Fintech.

On Tuesday, the market breadth was favourable with 2,071 stocks advancing and 1,402 stocks declining. Barring four, all the Sensex constituents advanced. ICICI Bank rose 2 per cent and contributed the most to index gains.