Sensex rises 250 pts, Nifty nears 18K: Key factors at play

NEW DELHI: Investors on Dalal Street saw past concerns over Evergrande default, rising crude oil prices and climbing bond yields to push benchmark indices further higher on Monday.

Investors seem to be convinced that Evergrande is not going to be a Lehman moment and most analysts are of the view that the worst case could be a planned unwinding, a la IL&FS, and not a cascading belly up, said an analyst.

“Nifty is likely to hit the 18K mark and momentum remains very strong. While a pullback can and should come but timing the same in foresight can only be a stroke of luck given the strong momentum we are seeing. We would recommend raising some cash from frontline large cap stocks," said Sageraj Bariya, Vice President - Institutional Sales, East India Securities.

How bluechips are doing
After opening in the green, benchmark indices jumped further higher. At 9.26 am, BSE flagship Sensex was up 257 points, or 0.43 per cent, to 60,305. NSE benchmark Nifty gained 75 points, or 0.36 per cent, to 17,916.

“For Nifty, 17,700 shall act as a crucial support while near term resistance could be seen around 18,000 levels,” said Mohit Nigam, Head - PMS, Hem Securities.

In the 50-share pack Nifty, ONGC was the biggest gainer, up 2.31 per cent. Tata Motors, Maruti Suzuki, M&M, Eicher Motors, Coal India, SBI, Bajaj Auto and Bharat Petroleum were among other gainers.

Divi’s Labs was the top loser in the pack, down 1.83 per cent. Wipro, Cipla, HCL Tech, Tech Mahindra, Tata Consumer, Dr Reddy’s Labs and Asian Paints were among those that traded in the red.

FACTORS DRIVING MARKETS
Good news
FII buying: After massive selling in July (Rs 11,308 crore) and tepid buying in August (Rs 2,083 crore), FIIs have turned aggressive buyers in September with a buy figure of Rs 13,536 crore up to September 27.

Bad news
Crude at a high: Oil pushed past its July peaks as global output disruptions forced energy companies to pull large amounts of crude out of inventories, while a shortage of natural gas in Europe pushed costs up across the continent. Brent added another 62 cents on Monday to $78.71 a barrel, while US crude rose 71 cents to $74.69.

Evergrande crisis: The fate of China Evergrande Group remained a major unknown after the property giant missed a payment on offshore bonds last week, with further payment due this week.

Yields rise: The 10-year Treasury is at its highest since early July at 1.46 per cent amid talks that the reflation trade could be back on as the world braces for the end of super-cheap money. The lift in yields underpinned the US dollar, particularly against emerging market currencies which compete with Treasuries for global funds.

Broader markets
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.56 per cent while Nifty Midcap advanced 0.26 per cent. Broadest index on NSE, Nifty 500, was up 0.31 per cent.

PVR, Century Ply, Vakrangee, Tata Chemicals, Ashok Leyland and L&T Financial Holdings were gainers from the space while Zee Entertainment, Laurus Labs, Sanofi India, Balrampur Chini Mills, Century Textiles and JK Lakshmi Cement were under selling pressure.

Global markets
MSCI's broadest index of Asia-Pacific shares outside Japan was flat, after three consecutive weeks of loss.

Japan's Nikkei gained 0.4 per cent on hopes for further fiscal stimulus once a new prime minister is chosen. Nasdaq futures edged up 0.1 per cent, and S&P 500 futures 0.3 per cent.