Sensex Trades Firm, Banks Lead Gains

BSE Sensex and Nifty moved higher in early trade, tracking gains in Asian markets and Wall Street. The Sensex rose as much as 253 points at 25,875 in early trade while Nifty jumped above 7,850. At 9:30 a.m., the Sensex was up 207 points at 25,829 while Nifty rose 62 points to 7,850.

Here are top 10 developments:

1) With the September 17 Fed meet drawing closer and today being the final trading day of the week, analysts say that traders in Indian markets are likely to remain cautious. This could keep the gains capped today.

2) The Federal Reserve is expected to raise its interest rate next week amid improving economic recovery in the US.

3) However, some analysts say that the recent turmoil in the global markets triggered by the devaluation of China's currency could force the Fed to delay the rate hike.

4) Analysts say that in the short term Indian markets are likely to take cues from its global peers, which are expected to remain volatile due to the uncertainty over the Fed rate hike.

5) Analysts also remain worried about the relentless selling from foreign investors in Indian stock markets. Foreign investors sold a record Rs 16,877 crore worth of domestic stocks in August. On top of that, they sold Indian stocks worth nearly Rs 6,000 crore in the past eight sessions.

6) An interest rate hike in the US could accelerate the selling from foreign investors who would like to park their money in US bonds. Besides, a rate hike in the US would strengthen the dollar, putting further pressure on rupee.

7) Domestic institutional investors have been buyers of stocks despite the selloff from foreign investors, providing some support to Indian markets. On Thursday, they bought shares worth Rs 66 crore.

8) The gains in the Indian markets were broad-based with all the BSE sectoral indices trading in the green. The breadth of the market was strong with the BSE midcap and smallcap indices rising nearly 1 per cent. Banking, auto, realty, and oil & gas stocks were among the outperformers.

9) Traders will also keep an eye on the rupee which affects the dollar returns of foreign investors. The dollar index, which tracks the greenback against a basket of six major rivals, edged up today. The rupee was traded higher at 66.35/dollar against Thursday's close of 66.43.

10) Asian markets were mixed today with Japan's Nikkei and China's Shanghai Composite trading flat. Hong Kong's Hang Seng rose 1.4 per cent. Overnight, on the Wall Street, major indexes edged higher amid a bout of volatile trade as investors showed nervousness ahead of next week's Federal Reserve meeting. The Dow Jones industrial average rose 76.83 points, or 0.47 per cent.