Markets continue to trade higher

The Indian benchmark market continues to trade higher with support from technology, banks, metal, oil & gas and FMCG stocks. It witnessed a low level sell-off on news that the IIP August 2011 data has been weak, but gained momentum later. The IIP came in at 4.1% compared to 4.5% during the same period previous year and 3.8% during July.

The rally is being powered by Infosys which is on buyer’s radar after the company's net profit saw 11% rise at Rs 1906 crore in Q2FY12. The company also raised its earnings per share guidance to Rs 143.02-145.26 versus earlier EPS of Rs 128.20-130.08 for FY12. However, the technology bellwether has cut its US dollar revenue guidance for the current fiscal year, saying the global macroeconomic environment remained uncertain, and currency also remained volatile. The company now expects revenue in the range of USD 7.08-7.20 billion, up 17.1-19.1% year-on-year, lower than the USD 7.13-7.25 billion it had expected earlier. It expects full year earnings per American depository share (ADS) in the range of USD 3.02-3.06, up 15.3-16.8% from a year ago.

Meanwhile, European stock markets dropped in early trades after Slovakia failed to approve changes to the euro zone's rescue fund and as broker downgrades weighed on several stocks. Other Asian shares are trading mixed.

Back home, apart from Infosys TCS, Wipro, Jindal Steel, State Bank of India, ITC, Sterlite Industries, Cipla and Tata Steel also advanced 1.7%-3.4% each in trades, thus far.

On the other hand, Coal India was the top loser, down 3.2% to Rs 333. Tata Power, Tata Motors, Mahindra & Mahindra, HDFC, DLF, Bharti Airtel and J P Associates were also among the laggards on the benchmark index.

On the sectoral front, BSE IT index was the top gainer having jumped 4.2% or 222 points to 5,467 on back of buying in the heavyweight IT stocks. Bankex also jumped 1.2% to 10,639. FMCG, Oil & Gas, Metal, Capital Goods, Healthcare, Realty and Consumer Durable indices were also among the gainers, up 0.4-1% each. At the same time, the Auto index was the only loser on the sectoral charts.

The market breadth, indicating the overall health of the market, is positive. On BSE, 1401 shares rose and 11165 shares fell. A total of 140 shares remained unchanged.

In conclusion, we expect the markets to behave in a volatile manner towards as there are some speculative concerns looming over the headline inflation data to be announced on 14 Oct 2011 which shall provide cues on the RBI’s policy stand.