Experts believe the FOMC is a much bigger event than RBI primarily because most of the volumes that are happening in the market are largely driven by FIIs. FIIs have bought more than Rs 7,000 crore worth of shares in September till yesterday.
The late trade rally pushed the equity benchmarks -- Sensex and Nifty -- above psychological 20000 and 5900 levels intraday Wednesday ahead of Fed meeting outcome later tonight. The rally was largely by banks, FMCG and oil & gas.
The Sensex rose 158.13 points to close at 19962.16 after hitting a day high of 20013.33 while the Nifty gained 49.25 points to 5899.45.
Experts believe that FOMC meeting is a much bigger event than RBI monetary policy review primarily because most of the volumes that are happening in the market are largely driven by FIIs. FIIs have bought more than Rs 7,000 crore worth of shares in September till yesterday.
Fed tapering expectations have risen since the day FOMC hinted, in its last meeting, about reducing bond purchases irrespective of economic data. If there is no Fed tapering then the market may see major sell-off tomorrow, feel experts.
Amit Trivedi, Co-Founder, Investworks.in expects the market to rally if Fed tapering is less than USD 10 billion. He sees the Nifty touching 6,000-6,100. However, if the Fed disappoints then one should brace for a sell-off.
A CNBC poll shows the market watchers are expecting Bernanke to taper the monthly bond buying programme by nearly USD 15 billion.
Stock specifically, banks, FMCG, power, oil & gas, healthcare and metals stocks led support to the market in late trade.
Index heavyweights Reliance Industries and ITC advanced 1.4 percent each while Hindustan Unilever, HDFC Bank, State Bank of India and ICICI Bank rallied 1-2 percent.
Power stocks charged up in last couple of hours of trade today with the NTPC and Tata Power rising more than 3 percent.
Among pharma stocks, Sun Pharma and Cipla gained 1-1.5 percent while Dr Reddys Labs rallied 2.6 percent after UBS raised its target price on the stock to Rs 2,750 from Rs 2,600 on account of USFDA approval for Vidaza (which is used for cancer treatment).
DLF gained more than 4 percent. Bank of America Merrill Lynch has a buy rating on the stock with a target price of 230. The brokerage house says the stock is trading at attractive valuations and could surprise positively once macro improves.
However, BHEL and Hero Motocorp were major losers in the Sensex, falling nearly 5 percent and 3 percent, respectively.
Among midcaps and smallcaps, Polaris rose nearly 2 percent on a media report that the company is in talks to sell services business to Japan’s NEC Corp. The deal with NEC could possibly value the services division at USD 400-450 million, the report says.
PC Jeweller surged 4.4 percent after the government hiked import duty on gold jewellery from 10 percent to 15 percent. The hike in customs duty is aimed at containing the current account deficit.
MCX shares plunged more than 7 percent as FMC sources told CNBC-TV18 that Financial Technologies group's representation is set to reduce to one on mcx board from four now. MCX will be run like a public institution where board controlled by institutional shareholders, say sources.