Opening Bell: Nifty zooms past 16,500, Sensex gains over 600 points; Oil & Gas top gainer on windfall tax relief

Continuing with the bullish run, the Indian market opened strongly on Wednesday. Benchmarks Nifty50 and Sensex rose higher by more than one per cent in the opening trade. The broader Nifty50 went past 16,500 while the Sensex gained almost 700 points. The two indices opened at 16,562.80 and 55,486.12 respectively. 

"The sharp 8% pullback in Nifty from the June lows of 15183 is all set to continue aided by a flood of good news. First, the US markets have rebounded sharply driven by impressive corporate earnings. Second, FPI selling appears to have bottomed out. FPIs have bought 5 days this month," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. 

Besides, the dollar index declining to 106.6 from above 108 is likely to persuade FPIs to buy rather than sell, he said.  

Third, the relief announced by the government for the petroleum sector through reduction in windfall tax and cuts in duties on exports will be a major boost for the sector, particularly for RIL, said the expert. 

"However, investors have to exercise some caution because selling may reemerge at higher levels. Results from the leading financials are likely to be good and the ongoing rally may continue. After the recent correction IT valuations are attractive. If the US succeeds in avoiding a recession, IT will bounce back smartly," added the expert/ 

Meanwhile, following benchmarks, Nifty Midcap rose by 0.6% and Smallcap gained almost one per cent in the opening trade 

On the sectoral front, all indices were trading in the green with Oil & gas gaining the most over windfall tax relief. Nifty IT and Nifty Metal were other top gainers 

In the pre-open, the Sensex rose higher by more than 700 points or 1.3% as all 30 stocks sat in the green.  

"The dip, consolidation and the push higher expected yesterday (Tuesday), unfolded even before testing our turnaround level of 16145, ending up in successfully closing above the wall of worry of 16200-16275. This has triggered the next leg of upsides aiming16800, the near-term target that we had set out with, at the start of the week," said Anand James - Chief Market Strategist at Geojit Financial Services, in his pre-market commentary. 

However, given how the short-term oscillators have run up in the last three days, a pull back below 16450 after the opening surge, may be taken as a cautionary signal, the expert highlighted.  

Earlier, all major Asian indices were trading higher in the morning trade on Wednesday.  

Hinting at positive opening for the domestic market, SGX Nifty rose by nearly 200 points on the Singaporean Exchange in early trade. Likewise, Nikkei 225 surged 2.3%, Hang Seng Index at the Hong Kong Exchange was trading higher by almost two per cent and Chinese Shanghai Composite gained 0.7% on Wednesday morning.  

In the overnight closing, the US benchmarks Dow Jones ended 2.4% higher, Nasdaq Index gained more than 3% and S&P 500 ended higher 2.7% in the US market on Tuesday.