Indian equities surge on positive global cues

Indian market moved strongly northwards to catch-up to the positive global rally witnessed by major indices overnight. However in the second half, markets gave up its initial gains as the cues from Europe were not exiting.  European markets are trading in a narrow range after the downgrade of 12 UK banks by Moody’s Investors service. Metals, Banking and Realty stocks had a good run up in today’s session after been beaten down in past one week.

Action by European officials to contain debt crisis boosted the confidence in other Asian markets which also were in green today. The Dow Jones Futures is currently trading 22 points or 0.20 per cent down at 11024 indicating a negative sentiment in the US markets.

Among the SENSEX stocks, Sterlite and Jindal steel were up 8 per cent. Other metal stocks like Hindalco and Tata steel also showed a good run up. Among the banking space ICICI bank surged 5.5 per cent to Rs 823.55. SBI after witnessing strong selling pressure over the past trading sessions, the stock today bounced backed and was up 2 per cent to Rs 1750.  Most of the stocks were trading higher today apart from Bharti Airtel which was down 4 per cent to Rs 353 as Goldman Sachs said that the stocks may miss its sixth quarter target on a trot.  Insecticides India was up 4 per cent at Rs 390 as it is planning to expand it wings globally.

Company plans to export South East Asian Countries within two to three months. Tata Motors was up 7 per cent; as it launched two premium commercial vehicles Manza Sedan and Prima in South Africa. Primary articles inflation for week ended September 24, 2011 came in at 10.84 per cent versus 11.43 per cent (WoW) and food prices inflation stood at 9.41 per cent versus 9.13 per cent (WoW).

 BSE clocked turnover of Rs 1825 crore, lower than Rs 2373 crore on 5th October 2011. The market breadth, indicating the overall health of the market, was positive. Out of 3242 stocks traded, 2074 stocks advanced while 1040 declined. A total of 128 stocks remained unchanged.

In conclusion, we recommend our investors to not just blindly buy into this rally as there are still the macro concerns looming at large over the global as well as domestic economy. A high interest rate scenario coupled with stubborn inflation and subdued expectations for the Q2FY12 earnings still remain a key downside to this rally.