Sensex, Nifty rebound in early trade; high oil prices, Fed caution cap gains

New Delhi: Equity benchmarks Sensex and Nifty recovered in early trade on Wednesday as investors bought into stocks following the previous session’s sharp decline. However, elevated crude oil prices, persistent foreign fund outflows and caution ahead of the US Federal Reserve’s policy decision limited gains.

The BSE Sensex traded at 74,293.25 in early deals, while the NSE Nifty rose to 23,201.85.

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M&M, Reliance lead gains

Mahindra & Mahindra, Reliance Industries, Hindustan Unilever, HCL Tech, ITC and State Bank of India were among the leading Sensex gainers.

InterGlobe Aviation, Tata Steel, Tata Consultancy Services and Eternal were among the laggards.

Asian markets traded higher, with South Korea’s Kospi, Japan’s Nikkei 225, China’s Shanghai Composite and Hong Kong’s Hang Seng in positive territory. US markets closed lower on Tuesday.

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Oil prices, Fed decision remain in focus

Brent crude slipped 0.63 percent to USD 108.1 a barrel, but its elevated level continued to weigh on sentiment.

Hariselvan Radhakrishnan, Founder and CEO of research analyst firm HST Wealth, said the recovery could remain fragile as high oil prices and elevated global bond yields dampened risk appetite.

He identified the Fed’s policy decision, due later on Wednesday, as the key market trigger. While a quarter-point rate increase was widely expected, he said, investors would focus on the central bank’s guidance on further tightening.

Hawkish commentary could strengthen the dollar and put additional pressure on global equities, the rupee and foreign investment flows, while balanced guidance could support a relief rally, he added.

Foreign selling adds pressure

Foreign institutional investors sold equities worth Rs 2,977.86 crore on Tuesday, according to exchange data.

In the previous session, the Sensex fell 777.94 points, or 1.04 percent, to close at 74,003.82, a three-month low. The Nifty declined 279.50 points, or 1.19 percent, to settle at 23,118.60, its lowest close since April 6.

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