Sensex reclaims 56k in early trade, Nifty near 16,700; metal stocks rally

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Equity benchmarks opened in the green on Wednesday tracking a positive trend in global markets. In early deals, Sensex advanced 201 points or 0.3% to scale a fresh record high of 56,160, while Nifty added 29 points or 0.18% to 16,654.

“The resilience in global equities continues with the Nasdaq and S&P 500 closing at fresh record highs. In India market momentum and sectoral rotation are taking the indices higher. When the market leader IT Index takes a breather, Bank Nifty surges taking the Nifty forward. An important development in the banking space is HDFC bank bouncing back smartly. HDFC bank has the potential to regain its leadership position. Smart money (FIIs) continues to be on the sell mode. DIIs and retail investors continue to be exuberant about the rally regardless of valuations,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The Jackson Hole Symposium and the Fed chief’s commentary expected on 27th August will be keenly watched by global markets. If the Fed commentary indicates an earlier-than-expected tapering, FIIs are likely to press further sales. Investors may wait and watch. Meanwhile, the exuberance in the primary market is slowly waning as evidenced by some recent IPOs trading below the issue price. Investors should be careful while applying for IPOs because there are lots of unknowns about these new companies, added Vijayakumar.

Gainers & losers

Sectoral strand

Sectoral indices on the NSE opened mixed. The Nifty Metal was leading the sectoral pack followed by the Nifty Realty, Nifty Auto, Nifty IT, Nifty FMCG and Nifty Bank. On the other hand, Nifty Pharma was in the red.

Broader market

The broader markets outpaced benchmark indices. The BSE MidCap index rose 0.59% to 22,951 level and the BSE SmallCap index was quoting at 26,020 up by 0.91%.

However, the market breadth was positive as 1,707 shares advanced compared to 491 declined while 61 remained unchanged.

Global markets

Overseas, Asian stocks are trading mostly higher on Wednesday, as optimism continued to drive U.S. stocks, with the S&P 500 and Nasdaq reaching record highs overnight.

US stocks were higher Tuesday following a broad-based rally on news that U.S. regulators granted full approval for Pfizer-BioNTech’s Covid vaccine.

Investors are eyeing the Federal Reserve’s annual central banking event in Jackson Hole, Wyo. later this week, focused on whether or not central bankers will detail their plans for tapering monetary stimulus. The Fed has started discussions to pull back its $120 billion a month bond-buying program by the end of this year. The summit will take place virtually on Thursday, and Fed Chairman Jerome Powell will give a speech on Friday.