Sensex ends up 282 points

Sensex ended (provisional) at 16,749 - up 282 points. Nifty ended up 71 points at 5,012.
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(Updated at 1440 hrs)

The markets have surged in late-noon trades as investors bought IT shares. A recovery in European markets also helped the Sensex to climb to a high of 16,718. The BSE benchmark index has pared some gains and is now up 181 points at 16,649. The Nifty reclaimed the 5,000-mark and is now up 58 points at 4,998.

European bourses recovered after opening in the red. CAC was up marginally at 2,897. FTSE added 0.4% to 5,193.

Moody's Investors Service on Wednesday downgraded credit ratings on Credit Agricole SA (CASA) and Societe Generale SA by one notch, citing their exposure to the Greek economy.

Meanwhile, fears of a spiralling inflation continued to haunt sentiments. Headline inflation inched closer to the double-digit mark in August, rising to 9.78% on the back of soaring prices of food and manufactured products, which may prompt the RBI to continue with its monetary tightening policy. Overall inflation, as measured by the Wholesale Price Index (WPI), stood at 9.22% in July. The rate of price rise stood at 8.87% in August, 2010.

Keeping the inflation numbers in view, RBI is likely to increase key rates on Friday's credit policy review. Markets are also likely to watch the corporate advance tax figures which is set to come out on Thursday.

The IT index surged 4% to 5,019. metal, auto and oil & gas stocks also rose smartly. Infosys gained 5.3% to Rs 2,344. Wipro and TCS gained 2-4% each.

Among other gainers were jaiprakash Associates, Hindustan Unilever, Jindal Steel and Tata Steel. Relianxe added 1% to Rs 820.

However, capital goods and realty indices remained weak. Tata Power, Larsen & Toubro, Cipla and Bharti Airtel shed 1-2% each in trades.