Indian markets also appear to be unscathed from a hedge fund blowup in the US. A sharp decline in FII selling coupled with large buying by DIIs can support the market and even take it higher, said an analyst.
“But there are many concerns like surge in Covid-19 cases, particularly in economically crucial Maharashtra, appreciation in US 10- year bond yield above 1.7 per cent and the dollar index moving up to 92.8 levels. DIIs and retail investors are likely to be buyers in banking, IT, cement and metal stocks which look attractive at present levels. Year-end considerations also are likely to lead to further DII buying,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
FACTORS DRIVING MARKETS
Fed remains dovish: The Federal Reserve is “a long way from raising interest rates at this point”, Governor Christopher Waller said on Monday, reinforcing hopes that the central bank is ready to remain dovish as long as virus woes linger.
Factory activity in China: China’s factory activity was expected to have grown at a faster pace in March, a Reuters poll showed.
Year-end MF buying: Analysts believe that in the remaining couple of days of the current fiscal year, mutual fund managers will also step up their buying to make sure the NAVs of their respective funds end on a higher note.
Dollar gains: The dollar climbed to a one-year high against the yen on Tuesday as accelerating vaccinations and the massive stimulus in the US stoked inflation concerns.
Hedge fund trouble: Concerns about a potential fallout of a hedge fund’s default on margin calls also elevated the greenback’s safe-haven appeal. Losses at Archegos Capital Management, run by former Tiger Asia manager Bill Hwang, sparked a fire sale of stocks on Monday, including some US tech companies.
Yields rise: During the Asian session, benchmark 10-year yields hit 1.7321 per cent, up 1.4 basis points, after earlier trading marginally higher in the US, following the state of New York’s announcement on Monday that people aged 30 and older could get coronavirus vaccinations starting March 30.
How are the blue chips stocks doing?
After opening in the green, benchmark indices rose further. At 9:52 am, BSE flagship Sensex was up 676.72 points or 1.38 per cent at 49,685. NSE benchmark Nifty followed, and rose 208 points or 1.43 per cent to 14,715.
“The Nifty is currently trading around a resistance patch which is 14,700-14,800. We need to get past these levels on a closing basis so that we can summarize that the short term downtrend is over for the time being. If we can keep above this level, we could be headed higher to 15,200-15,300. If we collapse from the current levels and break 14,500 on a closing basis, there is every possibility we go down to retest the recent lows,” said Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments.
In the 50-share pack Nifty, Titan was the biggest gainer, up 3.72 per cent. JSW Steel, Tata Steel, HUL, Shree Cement, ONGC, GAIL, NTPC, Divi’s Labs and Power Grid were among other gainers.
M&M was the top loser in the pack, down 0.64 per cent. Bharat Petroleum was the only other loser in the pack.
Broader market indices were trading with gains, but underperforming their headline peers. Nifty Smallcap was up 1.11 per cent while Nifty Midcap advanced 1.18 per cent. The broadest index on NSE — the Nifty 500 — was up 1.29 per cent.
V-Guard, Ipca Labs, SAIL, Moil, Wockhardt Pharma and Vakrangee were gainers from the space, while KEC, Cyient, Inox Leisure, Future Retail, Edelweiss Financial Services and M&M Financial were under selling pressure.
In Asia, the MSCI’s broadest index of Asia-Pacific shares outside Japan was marginally higher by 0.08 per cent in early trade on Tuesday.
Hong Kong’s Hang Seng Index was up 0.36 per cent at 28,440 but in Australia, a weaker tone emerged when the S&P/ASX200 slid 0.4 per cent to its lowest point for a week. Mainland China’s CSI300 index is 0.18 per cent higher in early trade while Japan’s Nikkei is off 0.1 per cent.