Sensex pares some gains, but holds above 29,000; RIL top gainer

In the broader market, the BSE Midcap and BSE Smallcap indices gained 0.6% and 0.5%, respectively

The benchmark indices on Monday continued to trade higher even as global markets traded mixed after US Federal Reserve Chair Janet Yellen indicated near-certain prospect of an interest rate hike in March barring any sharp deterioration in economic conditions.

At 12:03 pm, the S&P BSE Sensex was trading at 29,065, up 233 points, while the broader Nifty50 was ruling at 8,965, up 68 points. 

In the broader market, the BSE Midcap and BSE Smallcap indices gained 0.7% and 0.6%, respectively. 

"A strong support is seen in the zone of 8,850-8,800 on Nifty; whereas the immediate resistance level is at 8,993. We would reiterate that the trend is strong and hence, one should look to utilise intra-week dips to create fresh longs rather than getting worried about the overbought condition of the market," said brokerage Angel Broking in a technical note. 

Buzzing stocks

IT stocks such as Infosys and TCS were the top losers and shed up to 1% on the Sensex, while Reliance Industries extended gains to hit its fresh 52-week high of Rs 1,301 on bright prospects of its telecom unit Reliance Jio. The scrip was the top gainer on Sensex.

Shares of Dredging Corporation rallied over 16% to hit its 52-week high on news report that the government is looking to sell a 51% stake in the company. CLICK HERE FOR THE FULL REPORT 

Shares of sugar companies continue trading higher for the second straight day, gaining by up to 18% on BSE.

Thiru Arooran Sugars, Dhampur Sugars, Uttam Sugar Mills, DCM Shriram Industries, Oudh Sugar Mills, Dwarikesh Sugar and Rajshree Sugars were trading higher in the range of 3% to 8% on the BSE. 

Fed rate hike in March?

Yellen, in a speech on Friday signaled the Fed is set to raise interest rates this month if employment and other economic data hold up. She also said rates are likely to rise faster this year.

US money market futures are pricing in about 90% chance the Fed will raise interest rates by 0.25 percentage point at its meeting on March 14-15, with another rate hike fully priced in by September.

Geopolitical tensions 

Risk appetite also took a hit on rising geopolitical tensions in East Asia, as North Korea fired four ballistic missiles early in the day, while a spat between China and South Korea over missile defence deepened.

China cuts growth goal

China has cut its growth target this year as the world's second-largest economy pushes through painful reforms to address a rapid build-up in debt, and erects a "firewall" against financial risks.

China aims to expand its economy by around 6.5% compared to its 2016 goal of 6.5 to 7% when actual growth came in at 6.7%.

Global markets

US stock futures dipped 0.4%, a fairly large move for Asian trade. Japan's Nikkei dropped 0.4%, Seoul shares were down 0.5%, Australia dipped 0.1%, while China's Shanghai Composite and Hong Kong's Hang Seng index bucked the trend to gain 0.3% and 0.2%, respectively. 

(With inputs from Reuters)