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Sensex snaps 5-day fall but fails to hold 33K on caution ahead of US Fed meet

The BSE Sensex on Tuesday closed higher for the first time in the last six sessions, but failed to hold the 33,000 level as investors remained cautious ahead of the two-day policy meet of the US Federal Reserve.

HDFC, Infosys, and Tata Group stocks helped the market close higher, but sustained selling in Reliance Industries, ICICI Bank and HDFC Bank capped gains.

Overall, it was a volatile session for the market after it opened weaker on unfavourable cues from other Asian markets. However, it immediately recovered from its early lows to trade higher within a tight range.

The 30-share BSE Sensex, which ended at 32,996.76, trimmed its gains from 180 points earlier in the day to just 73.64 points when the market closed. The 50-share NSE Nifty finished 30.10 points up at 10,124.40.

“Overall markets seem to have reached oversold territory in the short term, and we would recommend entering fresh positions at this juncture with a long-term view towards portfolio building,” said Nikhil Kamath, Co-Founder and Head of Trading, Zerodha.

The broader markets closed mixed as the Nifty Midcap index was up 0.4 percent, while the BSE Smallcap declined 0.2 percent. The breadth of the market remained in favour of declines for majority of the session, as around three shares declined for every two shares that rose on the BSE.

On the global front, all eyes were on the two-day policy meet of the US Fed, which will begin later in the day. The American central bank is seen increasing interest rates but newly-appointed Fed Chair Jerome Powell’s comments will be closely watched.

Powell recently hinted that he would remain on course to raise rates in the coming year. The Fed has maintained a hawkish stance over the last couple of years, which is reflected in 100 bps increase in rates over the last 18 months.

“Ever since the start of the year, possibilities have been ripe for 3 more rate hikes in 2018, but the recent comments suggest that there could be a case for a fourth rate hike also by end of December, but that only time will tell. For now, focus remains on the impending rate hike in the March meeting and the new Fed Chairman comments,” said domestic brokerage Motilal Oswal.

Asian markets closed mixed, with Japan’s Nikkei falling 0.5 percent, China’s Shanghai Composite rising 0.3 percent and Hang Seng gaining 0.1 percent.

European markets were flat after a positive start as investors focused on earnings ahead of the Federal Reserve’s meeting.

Back home, Vedanta fell 6.5 percent after the stock price adjusted for interim dividend. Cipla recouped its losses to end 1.2 percent down, having traded 6.6 percent down earlier in the day, after the company clarified that certain observations issued by US FDA during product specific pre-approval inspection of its Goa unit were procedural in nature.

Reliance Industries, ICICI Bank, HDFC Bank, Yes Bank, ONGC, BPCL and UltraTech Cement were down by up to 1.5 percent.

The Nifty IT was the biggest gainer among sectoral indices, rising 1.5 percent, as Infosys, TCS, Tech Mahindra, Wipro and HCL Technologies gained 1-4 percent.

Bharti Infratel was the top gainer among Nifty50 stocks, gaining 5 percent, followed by HDFC, Eicher Motors, L&T, Tata Steel, Bajaj Finance and Adani Ports, that rose 1-3.5 percent.

Among midcaps, Marico, SAIL, JSW Steel, Jindal Steel & Power, Balrampur Chini, KPIT Technologies, NIIT Technologies, Jaiprakash Associates, DHFL, Manappuram Finance, REC and Bata India rallied up to 5 percent.

Gujarat State Petronet, Canara Bank, NBCC, Graphite India and HEG fell by up to 6 percent.

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