Europe has opened in the green, BSE Sensex up by 3%

The markets have continued to trade on a strong note on the back of heavy buying in front line stocks despite rating agency Moody's cutting ratings of 12 UK banks.

The European stock markets have opened on a flat note reacting to the downgrade of 12 UK banks by Moody's Investors Service. The rating agency said the downgrades reflect a decrease in the probability that the U.K. government would provide future support to financial institutions if they need it. Moody's downgraded Lloyds TSB Bank and Santander U.K. PLC by one notch to A1 from Aa3 and also cut RBS PLC and Nationwide Building Society by two notches to A2 from Aa3. The rating agency also downgraded Co-Operative Bank PLC and seven smaller building societies.

This development has not had much impact on the global markets as much of it is already priced in. Other Asian markets are also seen trading firm, tracking cues from early morning gains.

Back home, interest rate sensitive sectors like banks, realty and autos continued to trade higher. Metal stocks shined after commodities across the globe rallied yesterday. In the large cap space, Sterlite Industries, Tata Motors, Axis Bank, Jindal Steel and DLF were up in the range of 6-9%. Bharti Airtel and Ambuja Cements were the only 2 stocks in Nifty 50 bleeding in red.

The broader markets have actually underperformed with respect to large caps. BSE Mid-cap and Small-cap indices were up close to 2% each compared to benchmark index SENSEX.

The market breadth, indicating the overall health of the market, is very strong. On BSE, 1825 shares rose and 757 shares fell. A total of 102 shares remained unchanged.

In conclusion, we expect the markets would continue its strong performance for the remainder of the day.