Sensex settles 200 pts higher, Nifty at 25,050: IT, FMCG rally among key factors behind market rise

Sensex, Nifty rise amid renewed buying interest in the domestic market. 

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The equity benchmark indices bounced from early losses to trade higher on Wednesday, led by buying in IT, FMCG and metal shares.

Sensex settled 213.45 points or 0.26 percent higher at 81,857.84, while the Nifty finished the trade at 25,050.55, up 69.90 points or 0.28 percent.

Infosys, ETERNAL, TCS, HUL and Wipro were among the major gainers, rising up to 4 percent intraday. Market breadth was also positive as about 2143 shares advanced, 1383 shares declined, and 134 shares unchanged.

Key factors behind the market rise:

1) Strong Buying in IT: Shares of IT firms rose ahead of US Federal Reserve's Jackson Hole conference. The American central bank is set to hold its annual symposium from August 21 to August 23 in Jackson Hole, Wyoming. Fed Chair Jerome Powell is scheduled to speak on the economic outlook and central bank's policy framework on Friday.

Investors turned their attention towards Powell's forthcoming statements at the Jackson Hole Symposium and minutes from the Fed's recent meeting.

Infosys, Mphasis, other IT shares rise up to 3% ahead of Fed's Jackson Hole conference: Here's why

2) Rise in FMCG shares: FMCG stocks extended gains after Prime Minister Narendra Modi announced sweeping reforms in the GST rate structure during his Independence Day address on August 15.

"The rally in the Nifty came in response to the unexpected announcements relating to GST reforms, which are likely before Diwali. The market has been responding to the potential demand boost to sectors like automobiles, FMCG, insurance, and select financials," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

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3) Improving India-China ties: Market sentiment was aided by reports that China has lifted curbs on exports of fertilisers, rare earth magnets and tunnel boring machines to India. Chinese Foreign Minister Wang Yi, during his visit to India, conveyed the assurance to External Affairs Minister S Jaishankar.

"Improvement in India-China relations has also contributed to the rally. However, there is no scope for a sustained rally since the August 27 deadline for the 25 percent secondary tariff on India is fast approaching," Vijayakumar added.

4) Easing Geopolitical tensions: The current geopolitical situation also supported the market after US President Donald Trump pushed for a peace initiative in Ukraine. Hamas has also agreed to a truce deal in Gaza proposed by Qatar and Egypt.

Technical view

“Though yesterday’s upswings stalled as feared on approach to 25,013, the bounce off 24,850 is a positive signal. As long as 24,850 holds, our preferred strategy would be to buy on dips, with upsides limited to 25,096–25,156–25,200,” said Anand James, Chief Market Strategist, Geojit Financial Services.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.