Sensex recovers losses, up 500 points: Key factors at play

NEW DELHI: Benchmark indices recovered afternoon losses on Tuesday amid buying in metal, IT and FMCG segment.

Concerns are being expressed whether the Evergrande crisis might turn out to be China's Lehman moment. This appears far-fetched now since the debt is not widely held and, therefore, is unlikely to lead to a contagion with systemic risks, said an analyst.

“However, investors have to be cautious since markets are richly valued and, therefore, vulnerable to corrections. The ultimate impact of the Evergrande crisis is yet to be seen and known," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

How are the bluechips doing?
After opening in the green, benchmark indices rose higher. At 3.12 pm, BSE flagship Sensex was up 500 points or 0.85 per cent to 58,991. NSE benchmark Nifty advanced 154 points or 0.89 per cent to 17,551.

In the 50-share pack Nifty, ONGC was the biggest gainer, up 3.62 per cent. Coal India, JSW Steel, HCL Tech, NTPC, HUL, Asian Paints, L&T and Grasim Industries were among other gainers.

Maruti Suzuki was the top loser in the pack, down 1.65 per cent. Bajaj Finserv, Tata Motors, Bajaj Auto, Axis Bank, Nestle India, M&M, Bajaj Finance and Hero MotoCorp were among those that traded in the red.

FACTORS DRIVING MARKETS
Good news
Fed meet: The FOMC meet starting today may give a timeline on tapering. This will be watched closely by markets globally. This is likely to be a 'taper without tantrum', said analysts.

Advantage India: There is another view that the Chinese crisis -- the regulatory crackdown earlier and the Evergrande crisis now -- bode well for India, facilitating increasing capital flows to India. This may play out in the medium to long term, analysts noted.

FII keep buying: Net-net, foreign portfolio investors (FPIs) turned buyers of domestic stocks to the tune of Rs 92.54 crore, data available with NSE suggested. The fact that FPIs did not sell yesterday is also very encouraging for Indian investors and hence a bounce back today is very likely, said analysts at East India Securities.

Bad news
China’s Lehman moment?: Investors fear a messy collapse or liquidation at Evergrande could ripple through China's property sector at a time when growth in the world's second-largest economy is already looking fragile.

Broader markets
Broader market indices were trading lower, underperforming their headline peers. Nifty Smallcap was down 0.26 per cent while Nifty Midcap declined 0.02 per cent. Broadest index on NSE, Nifty 500 was up 0.24 per cent.

Quess Corps, National Aluminium, Sequent Scientific, Godrej Properties, Prestige Estates and Oil India were gainers from the space while Tata Elxsi, CESC, Laurus Labs, HEG. Amber Enterprises and JK Lakshmi Cement were under selling pressure.

Global markets
Asian markets were jittery in volumes thinned by public holidays in China, Taiwan and South Korea. The Hang Seng recovered from an early drop to trade near flat as financials and property firms bounced, while Japan's Nikkei returned from a market holiday with a drop of almost 2 per cent.

S&P 500 futures rose 0.3 per cent following the index's biggest fall in two months overnight and the Chinese yuan rebounded in offshore trade to recover Monday losses.