SENSEX, NIFTY50 snap two-day losing streak led by ITC, SBI, Reliance Industries

The Indian equity benchmarks snapped their two-day losing streak on Wednesday, September 16, powered by gains in banking and financial services shares after the government announced a revised framework for Merchant Discount Rate (MDR) fee, under which 0.4% charge, capped at ₹300 per transaction, will apply to specified person-to-merchant (P2M) UPI transactions above ₹2,000.

The SENSEX rose as much as 502 points and NIFTY50 index touched an intraday high of 23,285 led by gains in index heavyweights like ITC, State Bank of India, HDFC Bank, Axis Bank, ICICI Bank, Mahindra & Mahindra and Kotak Mahindra Bank.

The SENSEX ended 333 points higher at 74,336 and NIFTY50 index advanced 99 points to close at 23,218.

Market participants will closely watch out for United States Federal Reserve's interest rate decision and commentary about future path of interest rates from Fed Chair Kevin Warsh. Analysts expect Fed to hike interest rate due later today with odds of a rate hike crossing over 90%, according to the CME FedWatch Tool.

12 of 15 major sector gauges compiled by the National Stock Exchange (NSE) ended higher led by the NIFTY FMCG index's 1.61% gain. FMCG shares surged led by ITC after reports suggested that it has undertaken another round of cigarette price hikes, with Classic Connect prices rising by around 10% to ₹21.4/stick, while Gold Flake Super Star now costs ₹89 for a 10-cigarette pack.

Banking and financial services shares also witnessed strong buying interest with NIFTY PSU Bank, Bank, and Financial Services indices advancing between 0.7% and 1.4% after analysts at various investment firms gave a thumbs up to the MDR fee framework for UPI transactions.

Analysts at JPMorgan noted that the new MDR mechanism will be positive for ecosystem economics, with issuer banks emerging as key beneficiaries. View the newly announced framework as positive for Indian banks and payment players, albeit with an uneven distribution of benefits, JPMorgan noted.

On the other hand, IT, pharma and healthcare shares witnessed selling pressure.

Broader markets ended on a subdued note as NIFTY Midcap 100 index ended unchanged while NIFTY Smallcap 100 index declined 0.2%.

HDFC Life was top gainer in the NIFTY50 index, the stock rose 2.73% to close at ₹530. SBI Life, State Bank of India, ITC, Nestle India, JSW Steel, Axis Bank, Bajaj Auto and Hindalco also rose between 1.46% and 2.65%.

On the flip side, TCS, Wipro, Infosys, Tech Mahindra, Larsen & Toubro, Bajaj Finserv, IndiGo, Tata Motors PV, NTPC and Maruti Suzuki were top losers in the NIFTY50 index.

The overall market breadth was marginally negative as 1,855 shares ended lower while 1,688 closed higher on the NSE.