Markets Lose Early Gains On Weak Euro Opening

The Indian markets gave up some of their morning gains on the back of the weak opening of the European markets. The RBI's rate cut, however, held the market on a positive note. The central bank's stance will provide some support to the market sentiment in the short term. However, the key worry, i.e. high inflation, still remains a major concern.

Among the interest rate-sensitive sectors, Auto continue to trade higher. Auto stocks such as Bajaj Auto, Hero MotoCorp, Maruti Suzuki and Tata Motors are trading with gains of 2.82%, 1.09%, 0.84% and 1.96% respectively. The rate cut by the RBI will lead to higher liquidity in the system and will boost the investment cycle of the manufacturing sector in the country.

Other Asian markets continue to trade higher, with the Hang Seng, Shanghai and Nikkei trading with gains between 1.07%-2.10%. The markets are higher on the back of positive news coming from Europe and the US. Strong earnings results in the US and successive bidding for Spanish bonds lifted sentiments.

The European markets opened on a negative note today, after the rally in yesterday's trade went into correction mode. Firm demand for the Spanish bonds provided a ray of hope over the European debt concerns, which are still looming and may keep resurfacing.

Back home, other rate-sensitive stocks such as HDFC Bank, ICICI Bank and SBI are trading higher with gains of 1.27%, 0.91% and 0.87% respectively. Other indices such as Consumer Durables, Pharma, Metals, Power, etc. are leading with gains between 1.05%-1.34%.

HCL Tech continues to trade higher up by 3.86% to Rs 499.40 on back of the results announcement by the company. The company has posted decent earnings during Q3 FY12, and the consolidated net profits of the company have grown by 5.2% QoQ to Rs 602.50 crore. However, the consolidated revenue of the company declined by 0.6% QoQ to Rs 5215 crore.

Sun Pharma rose by 2% over news that the US Supreme Court has ruled in favour of its subsidiary in a litigation over its generic diabetes drug, Prandin.

The market breadth, which indicates the overall health of the market, is positive. On the BSE, 1713 shares gained, 991 shares declined and 145 shares remained unchanged.

We expect the markets to remain positive for the rest of the day on the back of the rate cut.