Sensex gains 258 points ahead of US Fed meet; banking shares lead upmove

The benchmark Sensex breached the psychological 26,000-mark in the second half of market trade, but failed to hold above the crucial level at close even as broad market sentiment displayed a positive trend through the session tracking recovery across the global indices. While investors across the stock market fraternity are keenly awaiting the outcome of the two-day US Fed meet on rate hike beginning later today, the mood was more of a cautious optimism amongst the investors. [caption id=“attachment_2436156” align=“alignleft” width=“380”]  Reuters[/caption] With markets still under the grip of sharp volatility on the back of lingering global economic worries and sluggish domestic growth concerns, traders found solace in banking stocks, which led the advance today, as hopes of a rate cut by the RBI amid receding inflation level aided sentiment. Ahead of the stock market close on Thursday on account of Ganesh Chaturthi, the 30-share BSE S&P Sensex today ended firm at 25,963.97, up 258.04 points, or 1 percent from previous close. Intra-day, the index surged to the day’s high of 26,006.75, up 301 points. The broader 50-stock CNX Nifty closed at 7,899.15, up 70.05 points, or 0.9 percent. Despite the rebound in key benchmark indices, market breadth ended weak with 1,411 stocks declining against 1,259 advances on BSE. Mirroring overnight gains in the US markets, key Asian gauges such as Japan’s Nikkei and China’s Hang Seng & Shanghai Composite ended around 1-5 percent higher. Major European gauges, too, were in the green ahead of the US Fed meet. In the run-up to the US Fed meet, market experts across the globe seem to be divided in their opinion over the much-hyped policy rate hike plans. G Chokkalingam, founder & managing director, Equinomics Research & Advisory, feels the Fed may not hike the rates aggressively in one go as US policy makers had recently highlighted the need to consider the state of other economies before making any major policy changes. “When most currencies of the emerging markets have crashed and many economies are contracting, it is highly doubtful if the US can afford to hike the rates aggressively at this juncture,” said Chokkalingam. “Once more clarity emerges from the US Fed meet, traders will have a fair idea about the near-term market direction,” a stock market expert said. Several frontline shares, including banking logged significant gains. Shares of Bharti Airtel rose 2.5 percent to Rs 359.10, Sun Pharma gained 2.4 percent to Rs 887.35, Axis Bank added 2.3 percent to Rs 494.10, Vedanta gained 2.1 percent to Rs 98.95 and HeroMoto Corp was up 2 percent at Rs 2,357. Others such as Bajaj Auto, Wipro, ICICI Bank, ITC, HDFC, Hindalco, HDFC Bank, SBI, Tata Motors, NTPC, M&M and Lupin were up around 1-2 percent each.