Markets were trading marginally higher in afternoon trades led by gains in IT shares, but investors remained cautious ahead of the Reserve Bank of India policy on rate hike on Friday. The Sensex was up 60 points, at 16,774 and the Nifty advanced 29 points, at 5042.
The Nifty opened higher, tracking firm cues from Asia, but investors booked some profits before the RBI policy. The index touched a low of 4,960 in the mid-morning session; however the index recovered around noon deals and was trading in the positive territory around 2:30 pm.
Positive re-assurances that Euro-zone countries France and Germany would stand by Greece incase of a default lifted European markets.
In Asia, the Nikkei Stock Average closed up 2%, the Hang Seng index added 0.7%, but China’s Shanghai Composite bucked trend and closed down 0.2%. In Europe, the DAX, CAC and the FTSE indices rallied between 1-2% in the opening trades.
On the macro front, food inflation for the week ended September 3rd climbed to 9.5% versus 9.6% in the previous week increasing expectations of a 25 bps rate hike. Reliance Mutual fund in their weekly market update said, “the Indian equity markets are looking much better now than they were in 2008, and fears of 2008-like meltdown seems totally out of context.”
TCS, Infosys and Tata Motors were the top gainers, up between 1-4%; while Larsen & Tourbo, ICICI Bank and Tata Steel were dragging the index down, down over 1% each.
BSE IT shares were leading the gains for the second consecutive day as Rupee dipped for the ninth consecutive day in a row. Patni Computer rallied over 5%, Oracle Finance and Tech Mahindra were up over 1% each.
Realty shares were on a firm ground; DB Realty was the top gainer, up 7%, followed by Sobha Developers and Unitech, up between 4-5%.
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Capital goods shares were reeling under selling pressure due to expectations of another rate hike, which would further dampen the investment cycle.
Top losers on the Sensex were Larsen & Tourbo, down over 1%, followed by Tata Steel and Hindustan Unilever.
Market breadth was positive, 1411 stocks are advance for 1170 declining stocks.