Sensex, Nifty trade firm in early trade

Benchmark equity indices bounced back in early trade on Thursday after facing heavy correction in the last two trading days, amid massive buying by domestic institutional investors and a rally in frontline stocks HDFC Bank, Reliance Industries.

The BSE benchmark Sensex climbed 254.5 points to 77,945.45 in early trade. The NSE Nifty went up by 86.25 points to 23,645.30.

The BSE benchmark had tanked 1,805.2 points or 2.27 per cent in the past two days.

From the 30-share Sensex pack, HCL Technologies, HDFC Bank, NTPC, Reliance Industries, Tech Mahindra and Axis Bank were the major gainers.

UltraTech Cement, Power Grid, Mahindra & Mahindra, Hindustan Unilever, Maruti and Larsen & Toubro were among the laggards.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,502.58 crore on Wednesday, while Domestic Institutional Investors (DIIs) bought shares worth Rs 6,145.24 crore, according to exchange data.

"During a correction phase in the market, like the present one, there will always be counter moves, which will facilitate a bounce back. The huge liquidity at the disposal of the DIIs can trigger this bounce back. But such a bounce back is unlikely to sustain since the fundamental factors are unfavourable.

"The Trump factor has triggered many profound changes in markets already. The dollar index is strong and rising and is currently at 106.61. The US 10-year bond yield is at 4.48%. These two are strong headwinds for equity markets in emerging economies like India," V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

The positive factor is the huge liquidity at the disposal of the DIIs and the sustained flows into these funds, he said.

"Domestically, the worry is the disappointing Q2 results and the consensus earnings downgrade," Vijayakumar added.

In Asian markets, Seoul, Tokyo were trading higher while Shanghai and Hong Kong quoted lower.

The US markets ended on a mixed note on Wednesday.

Global oil benchmark Brent crude dipped 0.36 per cent to USD 72.02 a barrel.

The BSE benchmark Sensex tanked 984.23 points or 1.25 per cent to settle at 77,690.95 on Wednesday. Registering its fifth day of decline, the Nifty tumbled 324.40 points or 1.36 per cent to 23,559.05.