Markets Open Higher; Nifty IT Surges 3% Ahead Of Fed Policy Decision

Indian benchmark indices opened sharply higher on Wednesday, buoyed by strong gains in IT stocks and positive Asian cues, even as crude oil prices rebounded overnight and investors remained cautious ahead of the US Federal Reserve's policy decision.

At around 9:15 am, the Sensex was up 677.26 points, or 0.88%, at 77,443.18, while the Nifty 50 gained 187.75 points, or 0.78%, to 24,173.10, reclaiming the 24,100 mark.

Market breadth was firmly positive, with 1,412 stocks advancing, 756 declining and 134 remaining unchanged.

All Nifty sectoral indices traded in the green, led by the Nifty IT index, which surged more than 3% in early trade.

IT Stocks Extend July Rally

Technology stocks continued their strong July rally after foreign institutional investors (FIIs) reduced holdings in seven of the 10 Nifty IT companies during the June quarter.

Despite the selling, the Nifty IT index has rallied 16% so far in July, indicating improving sentiment as attractive valuations, lighter positioning and stronger technical indicators drew investors back into the sector.

The broad-based buying in IT stocks helped offset concerns arising from the overnight rebound in crude oil prices.

Fed Decision In Focus As Crude Rebounds

Investor attention remained firmly on the US Federal Reserve's policy decision due later in the day.

WTI crude oil rose 4.35% to $82.71 a barrel, while Brent crude climbed 3.95% to $85.32, raising fresh concerns over inflation and India's import bill if higher prices persist.

Meanwhile, the Indian rupee remained largely stable, with USD/INR at 95.836, providing support to the domestic macroeconomic outlook.

Asian equities traded higher as investors awaited the Fed's policy outcome and another round of corporate earnings.

Fed Outlook, Monsoon Remain Key Triggers

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the market's current range-bound phase could eventually break on the upside as valuations remain reasonable.

"The present range-bound construct of the market is likely to be broken on the upside assisted by the fairly valued stocks in the Nifty. This might take time. Big conviction buys by the FIIs need clarity on the trajectory of the crude price and progress of the monsoon," he said.

He added that the sharp correction in South Korean chip stocks could work in India's favour.

According to Vijayakumar, the Federal Reserve is widely expected to keep interest rates unchanged, although its commentary is likely to remain hawkish given inflation concerns in the US.

He said a status quo on rates is already priced in by the market, but an unexpected rate hike could weigh on emerging market equities, including India, by driving foreign institutional flows towards US bonds.

Apart from the Fed outcome, investors will continue to track quarterly earnings and foreign institutional investor activity for further market direction.