Markets End Day With 1% Rally

The Indian equities made a U-turn today, beating all expectations to end in gains. From the opening, the markets were seen lurching under the heavy burden of S&P’s latest comments on India’s investment grade credit ratings. While in the choppy trend, the markets awaited a trigger on the IIP front. As soon as the IIP figure for Mar 2012 came in flat, the markets rebounded from the previous negatives. The benchmark BSE Sensex closed at 16862, while the 50-share Nifty regained the 5100 mark today.

In the past two days, the Indian equity markets have behaved exactly opposite to the world indices. Yesterday, the Indian markets closed negative while the global indices rallied in response to Spain's bailout. This is a very speculative market, and there is a mixed feeling about whether or not there will be a rate cut. Analysts differ on whether the RBI will go in for a CRR cut or a Repo rate cut. In fact, after the petrol price hike, it will be very interesting to see what happens on the inflation front. The markets have started discounting the anticipation of the rate cut. However if the inflation numbers come in very high later this week, the markets may snap all the previous gains.

The global indices are currently showing mixed trends. While the Asian indices made losses today, the European indices are seen rising from their opening value. Dow Jones Futures is currently trading 69 points down at 12451.

On the sectoral front, the HC index was the only index in losses at closing, and all the others closed in the green. The interest rate-sensitive Bankex and Realty were the top gainers. Auto was also up by 1.7%.

Among the Sensex stocks, Maruti Suzuki gained 3.48% and was the top gainer. Capital Goods major, L&T, was also up by 2.53%. Tata Motors, Sterlite and Hindalco were each 2% up. Dr. Reddy’s Labs, on the other hand, was the greatest loser, lower by 1.81%. Wipro was also in the losers list.

The shares of BEML, which tanked 2.5% yesterday, were seen recovering by 2.3% today. Videocon and BPCL have gained further on the news of new gas discoveries.

Shanthi Gears, which had clarified yesterday that it is not selling major stake to Bharat Forge, has gained marginally. The shares of Bharat Gears has also gained by 2%.

UCO Bank, Ambuja Cements, GMR Infra and Allahabad Bank were all up by 5% each. Pantaloon Retail was also up by 4.7% by day's end.

The market sentiment, which was negative during the opening hours, improved to positive at closing.

We expect the markets to gain further in this week on anticipation of the rate cut. This gives traders and investors a very short-term opportunity to make profits. Investors should take this opportunity to book partial profits on the stocks in their portfolio.