Markets continue to trade higher on back of gains in IT and banking shares. The Sensex has surged 144 points to 19,280 and the Nifty has moved up 40 points to 5791.
Markets have undergone a sharp correction in the past week due to home loan bribery racket and 2G telecom scandal; analysts expect this overdue correction to last for some more time, with downside being capped. Rajat Rajgarhia, Director (Research), Motilal Oswal Securities said, "Markets are likely to trade in a range for some more time. While upsides will be capped led by recent events, earnings momentum and valuation support will prevent any big downside."
Asian markets are trading mixed, European Union agreement to pay 85 billion Euros ($112 Billion) in bailout package to Ireland has bolstered sentiment, but tensions in South Korea continue to weigh. The Japan's Nikkei Stock Average is up 0.9% on back of gains in exporter shares as Yen Softened and Taiwan Weighted also gain 0.9%.. China's Shanghai Composite has fallen 0.6%. Hong Kong's Hang Seng is flat, up 0.2% and South Korea's Seoul Composite and Straight Times are off 0.2% each. Property and Financial shares are dragging the Asian markets lower.
IT stocks are leading the gains, the index is up 0.5%; Tech Mahindra is up 2.6%, TCS gains 1.8% and Mphasis surges 1.7%. Analysts expect IT sector to do well in FY12 as Rupee appreciation concerns wane off. "The IT sector seems headed for a strong growth in FY12 on back of a strong growth in FY11. With currency concerns abating and investors looking for safety, stocks like Infosys Technologies is likely to outperform," said Rajgarhia.
Banking shares have also rebounded in early trades, the index surges 1.4% led by gains Bank of India, up 3.7%, Yes Bank, up 1.8% and ICICI Bank, up 1.7%. After the knee-jerk reaction to the bribery case, the shares are moving northwards as analysts shun concerns on the asset quality of the banks."We do not see any pressure on asset quality of banks. We are positive on the loan growth and believe that bank's earnings will be driven by loan growth and stable margins. Valuations post this correction will look attractive again for the sector," Rajgarhia reckoned.
FMCG stocks are laggard in morning session, Godrej Consumers has dipped 1.3%, followed by ITC, down 1.2% and Dabur India is
off 0.5%.
On the Sensex Reliance Infra is the top loser, down 3%, DLF slides further, down 1.7% and Reliance Communication has also
lost 1.3%.
ICICI Bank isthe top gainer among the Sensex stocks, up 1.6% followed by TCS and NTPC, up over 1% each.
Broader markets were trading mixed, midcap index was up 0.1% and smallcap index gained 0.3%.
