Choppy trade amid extreme volatility

As mentioned in our morning update the markets opened sideways and since then the Indian markets have witnessed a very choppy trading amid extreme volatility, having notched up some early morning gains and then moved into the red on some selling pressures. Post noon the markets have again fallen into the red zone on the back of the widening crack in the banking space.

However in respite the European stock markets bounced higher in early trades, shrugging off a downgrade of Italy by Moody's Investors Service, with bank stocks climbing sharply following a late rally on Wall Street.

Back home, PSU OMCs fell while oil exploration stocks rose as crude prices gained. Capital goods stocks edged higher. Cement stocks rose on highercement shipments in September 2011.

Big wigs like RIL, HUL, BHEL and Wipro are adding pressure on the market today as these stocks are down 0.7-0.9%.Consistent buying is, however, observed at the counters of ITC, HDFC and L&T, which have gained between 1.3% and 1.7%, capping the downside. Infosys, TCS and ONGC too are up 0.4-0.7%.Tata Motors, DLF, Sterlite, Sun Pharma, Dr Reddy's Labs and Reliance Communications rallied 1.5-2.5%.

The market breadth, indicating the overall health of the market, has turned negative. On BSE, 1489shares fell and 1068 shares rose. A total of 125 shares remained unchanged.

In conclusion,we stick to our expectation that the marketswould continue to remain volatile for the remainder of the day and adviseinvestors to stay cautious.