- Indian equities rebounded on September 16, with Nifty rising 0.7% and Sensex up 400 points
- FMCG led sector gains, rising over 1.71%, while Defence declined by 0.64%
- Markets awaited the US Federal Reserve rate decision and economic outlook guidance
Indian equities staged a rebound on Wednesday, September 16, after the sharp selloff in the previous session, with the Nifty 50 rising around 0.7% and the Sensex gaining over 400 points from the day's low.
The recovery comes as investors look beyond Tuesday's selloff and wait for the US Federal Reserve's policy decision later today.
Sectorally, most indices are trading in the green. FMCG was leading the gains, rising over 1.71%, while Defence lost 0.64%.
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Three reasons why the stock market is rising
1. Relief after Tuesday's sharp selloff
The sharp decline in the previous session has prompted some buying at lower levels. The Nifty's close near 23,119 on Tuesday marked a fresh five-month low, while technical indicators had moved into oversold territory. The rebound on Wednesday is therefore partly a recovery from those depressed levels.
Ponmudi R, CEO of Enrich Money, said the opening gains have been uneven across sectors, highlighting that investors remain cautious despite the positive start.
2. Fed decision takes centre stage
The Federal Reserve's September 15-16 meeting concludes Wednesday, with markets awaiting both the rate decision and guidance on the path ahead. A 25-basis-point hike is widely expected, with Reuters reporting that rate futures were pricing in more than a 90% probability of a hike. Since much of the move is already priced in, investors are likely to focus more closely on the Fed's inflation assessment, economic projections and forward guidance.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Investments, said the Fed commentary on the evolving macro outlook could prove more market-moving than the rate decision itself.
3. Oil pressure has eased marginally
Crude remains elevated but prices have softened slightly in early Asian trade. WTI was around $104-$105 a barrel, while Brent remained above $107. The easing from recent highs may have provided some relief to risk sentiment, although elevated oil prices continue to threaten inflation and keep pressure on the rupee.
The rupee closed at ~CHECK~95.955 per dollar on Tuesday after seven consecutive sessions of decline, adding another layer of pressure for investors.
Vijayakumar cautioned that high crude and elevated US bond yields could continue to constrain any sustained market recovery.
Indian benchmarks had fallen over 1% on Tuesday, with the Nifty closing at a five-month low of 23,118.60 and the Sensex losing 777.94 points.
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