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Benchmark domestic equity indices opened in the green on Wednesday on positive global cues and strong domestic macro data. In opening trades, Sensex rose 117 points or 0.20% to 58,364 while the Nifty 50 was trading at 17,416 up by 32 points or 0.19%.

“The primary driver of this bull run has been liquidity and therefore a reversal of the trend is likely to happen only with a decline in liquidity, particularly capital outflows triggered by FPI selling. Even though there were signs of this happening in July, there are no such signals now. In fact, the reverse is happening with continuous FPI buying during the last few days. CPI inflation in the US for August coming at below expectations at 5.3% gives credence to the Fed’s view that inflation is transient. This can support further FPI inflows into India, which, in turn, can impart resilience to the market,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

However, investors should remember that these positive developments are pushing valuations very high. The outperformance of the broader market continues this month with a disproportionate rise in some mid-small-cap stocks. There is a hyper speculative activity in the broader market. Investors should be cautious operating in this segment, Vijayakumar added.

Gainers & losers

Top gainers & losers on the Sensex.

Sectoral strand

Sectoral indices on the NSE open mixed. The Nifty Media index continued its dominance among the sectoral indices as it advanced 2.17%. While Nifty Realty, Nifty Auto, Nifty FMCG, Nifty IT, Nifty Pharma and Nifty Metal indices gained up to 0.62%.

On the downside, the Nifty Bank index declined 0.22%.

Broader markets

The broader markets outperformed benchmark indices with the BSE MidCap index scaled to a new high as it gained 145 points or 0.58% to 25,199. Likewise even the BSE SmallCap index touched a new high of 28,191.

The market breadth remained in the favour of bulls as 1,717 shares advanced compared to 601 declining and 100 remained unchanged.

Economy

On the macro front, India’s exports rose by 45.76% to $33.28 billion in August, as against $22.83 billion in the same month last year, according to commerce ministry data released on Tuesday. Imports during the month increased by 51.72% to $47.09 billion, the data showed. The trade deficit in August widened to $13.81 billion as against $8.2 billion in the same month last year.

Global markets

Overseas, Asian stocks are trading lower on Wednesday following losses overnight on Wall Street, with investors reacted to the release of Chinese economic data.

Retail sales growth in China slumped heavily in August further, accentuating the slowdown in the Chinese economy, the latest economic data shows. Retail sales grew by a mere 2.5% in August compared with a year earlier, way down from the 8.5% increase in July. Industrial production grew by 5.3% in August from a year earlier after a 6.4% gain in July.

U.S. stock indexes closed lower Tuesday, giving up gains earlier in the session after a better-than-feared inflation reading and falling back into their September doldrums.

US consumer prices rose a lower-than-expected 0.3% in August, the smallest increase in seven months and a hopeful sign that inflation pressures may be cooling. The August gain fell from a 0.5% increase in July and a 0.9% surge in June, the Labor Department reported Tuesday. It was the smallest increase since a similar 0.3% rise in January.