Markets have rallied over 2% in afternoon trades on back of positive news from Europe and short covering in the frontline stocks. The Nifty is up 116 points, at 4,867 and the Sensex has advanced 378 points, at 16,171.
Markets played a catch up after the holiday and made a gap up opening, tracking gains across global markets as Eurozone pledged to shore up banks, easing concerns of wide spread default. A positive start to the European markets also helped Indian bourses sustain the gains.
Steps taken by the European Central Bank to ease pressure on struggling banks boosted markets across Asia. The Nikkei Stock Average ended up 1%, Hang Seng added 3%, but Shanghai Composite bucked trend and ended down 0.3%.
In Europe, the markets have shrugged Moody’s downgrade of 12 financial institutions and 9 Portuguese banks. The FTSE 100 and the CAC 40 gained 0.2%, while the DAX has added 0.4%.
Back in India, Reliance Industries, up 4%, ICICI Bank, up 6% and Infosys, up 3% lifted the Sensex by nearly 200 points. Hero Motor Corp, TCS and ONGC were trading in the red, down marginally.
Dipen Shah, Head-Fundamental Research, Kotak Securities said, “Markets will take cues from more economic data from US and Europe. Domestically, Industrial Production (IIP) data for August will also be closely watched. The quarterly results season will also be very important, especially in the backdrop of the weak economic situation. We recommend a bottoms-up approach.”
Among individual stocks - Bharti Airtel slipped 4% and Idea Cellular dipped 6% on reports that the Department of Telecom (DoT) has asked its legal wing to examine the 3G roaming agreements between Bharti Airtel, Vodafone and Idea Cellular.
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Gains were also visible most metal stocks. Sterlite Industries rallied 9%, followed by Jindal Steel and Hindalco, up 7 and 5% each. Bargain buying in State Bank of India, Axis Bank and Kotak Mahindra Bank, up 3 – 5% has pulled up the banking index.
The other notable gainers include ITC, Sun TV Network, Uflex and United Spirits that have rallied on back of huge volumes.
The market breadth was positive, as 1833 stocks advanced for 820 declining stocks.