All eyes now on US Fed meet this week, say analysts


The benchmark indices rebounded on Monday, rising 1.4 per cent, after three consecutive days of declines buoyed by interest in IT and banking majors, optimism surrounding manufacturing data, and favourable global cues. The benchmark Sensex rose 831 points and closed at 60,138, while the Nifty rose 258 points to close at 17,946.

The indices had fallen sharply last week due to institutional selling and downgrade by some foreign brokerages citing valuation concerns. However, data on India's manufacturing activity released on Monday brought some cheer.

The purchasing managers' index (PMI) rose to 55.9 against 53.7 in September. This came on the back of new orders and improved production. However, higher input costs are denting profits.

"Today's rally provided relief to the investors post the recent sell-off. Good earnings season and strong macro data uplifted confidence with regards to economic recovery. Corporate commentaries continue to remain upbeat, with managements across sectors alluding to strong demand trends. With the economic cycle picking up, we expect the corporate earnings growth to revive, which has been lacking for many years now," said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.

Global markets, too, gained as robust earnings offset concerns about inflation and supply-side woes as a result of the pandemic. Investors are keenly watching central bank meetings in the US and some other developed countries to gauge how the tapering of bond purchases will pan out. The US Federal Reserve is likely to announce its plans for stimulus tapering during its meeting this week.

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