Markets postive, but volatility persists

The markets are trading on a positive zone with some bouts of volatility. The BSE Sensex and Nifty are both up by about 0.5% so far.

Global cues have been strong, with the Asian indices managing to keep up their firm performance seen in the early trading hours. Exporters and banks stocks have gained on the back of a higher finish on Wall Street and rising optimism over Europe. The gains in Hong Kong were capped by data showing further contraction of Chinese manufacturing activity.

The European markets have also opened on a very firm note.

Among the sectoral indices, Bankex has gained 2.7% so far. Consumer Durables is also looking stronger by 2.4%. However, the FMCG index is down by 1.5% on the back of a 2% decline in share price of ITC. This slip was following concerns about moderating volume growth, despite the fact that ITC reported higher-than-expected 22% rise in quarterly profits, aided by price increases.

Of the 30 Sensex stocks, Bajaj Auto is the top gainer, up by 6.5% on the back of good results posted for Q3 FY12. ICICI Bank is next, at 5.6% over its previous closing price. ITC is among the top losers, closely followed by Coal India and Maruti.

In other stocks, Axis Bank is trading up by 4% on the back of good expectations from its Q3 results. Wipro is trading higher by 2% at Rs 413 after reporting 10.4% YoY growth in its consolidated net profits at Rs 1,456 cr for the quarter ended Dec 31,2011, as against Rs 1,319 cr in the year ago quarter. RIL, whose results are also expected today, is currently quoting at Rs 787 a piece. The overall consensus over the company is very weak and negative this quarter.

Among the latest developments, it has emerged that the Supreme Court has ruled that taxing Vodafone's 2007 India acquisition is not within the jurisdiction of the IT office. The Apex court turned down the 'extinguishment of rights' argument, which implies there is no transfer of assets. The court has also ordered the sum of Rs 2500 cr to be returned to Vodafone with interest.

The market breadth, which indicates the overall health of the market, is positive. Out of a total of 2773 stocks, 1424 stocks advanced, and 1227 stocks declined. 122 stocks remained unchanged.

In our opinion, the markets will remain positive ahead in the day.