Sensex climbs 170 pts ahead of Fed meet, Nifty50 tops 7,700; Lupin, HUL, RIL gain

NEW DELHI: The NSE benchmark index climbed for the second trading session on Tuesday to reclaim the crucial psychological level at 7,700, as brisk buying seen across European markets boosted investor confidence on Dalal Street ahead of the two-day Fed rate-setting meeting.

Selling in banking stocks was offset by buying in other index heavyweights such as Reliance Industries, Hindustan Unilever, Tata Motors and ITC, which made sure the indices end at the day's high.
BSE benchmark Sensex climbed 170.09 points, or 0.68 per cent, to close at 25320.44. The NSE barometer, Nifty50, settled at 7,700.90, up 50.85 points, or 0.66 per cent.
The market breadth was mixed, with one of every two BSE-listed stocks ending in the red.
"Markets are coming out of oversold levels in the short-term charts. This could produce a slightly stronger recovery. But I think once the Nifty50 crosses the 7,700 level, we would look at 7,800 to about 7,830 as possible target," said Mitesh Thacker of miteshthacker.com.
"For the time being, I am not sure of this. But the first target has been met and there is no sign of weakness as yet. So we are tightening our stop losses, taking some profits," Thacker said.
Stocks such as Lupin, Hindustan Unilever, Reliance Industries and Tata Motors gained up to 2.6 per cent. ONGC, Tata Motors HDFC and Maruti Suzuki added between 1 per cent and 2 per cent.
Top Sensex losers included Wipro, ICICI Bank, NTPC and Vedanta, which fell between 0.77 per cent and 1.53 per cent. Vedanta, Coal India and BHEL also ended the day lower.
Most other Asian markets ended lower for the day. But buying in European markets, led by French CAC40 (up 2.3 per cent), influenced sentiments in the domestic market. All eyes are now on the US Fed policy meet, which begins later on Tuesday night.
Sachin Shah, Fund Manager, Emkay Investment Managers, feels markets globally are factoring in an interest rate hike of at least 25 bps by the US Fed.
"If that materialises, I do not think there is going to be any major weakness from here on. After a long time, valuations have come to a fairly reasonable level. If you look back, they are at the same level when the new government stormed to power. It is good 18 months now," he said.
"In these 18 months, we have seen a lot of reforms from the government. I think we are now seeing fairly attractive levels. It is a good opportunity for investors, who wish to invest for the next 2-3 years to actually commit more money to the market," Shah said.
Data available with NSDL showed FPIs have sold equities worth Rs 5,182 crore so far this month. Some analysts believe emerging markets (EMs) face a risk from the recent slump in commodity prices.
Ian Hui of JPMorgan said for a number of investors, commodity markets go hand in hand with emerging markets.
"We have the US interest rate hike coming and tightening is on the cards. But we still think equities will be outperforming fixed income assets. Equity wise, we favour developed markets over emerging markets. As far as the performance of developed markets is concerned, we think they are still in the middle of recovery, which is not very strong, but sort of moderate to weak. Still, developed markets are doing better than emerging ones," Hui said, adding that the commodity market is another concern for emerging markets.