Markets Positive On China Stimulus Hopes

The Indian markets have seen a positive opening today on the back of the stimulus package in China. The BSE Sensex is trading in 0.5% gains and the 50-share Nifty is up 0.53%.

In the Asian markets, optimism is running high, with the Hang Seng soaring by 1% and Shanghai in gains of 2%. Chinese stocks have climbed on speculations that the equities are undervalued and the government will announce a stimulus policy to lift growth rates in the economy.

Meanwhile, the International Monetary Fund has said that some Asian currencies are undervalued relative to the medium-term fundamentals of the respective countries. The IMF has also said that India and China's growth is expected to be slow down further. It has pegged China's growth at 7.8% and also said that India's growth would be less buoyant at 4.9%. The international body has lowered its forecasts due to the rising current account deficit, weak business sentiment, red tape and rupee depreciation.

Back in the Indian equity markets, the Healthcare index is the top gainer, up 1.3%. The Metals, CD, Bankex, CG and FMCG indices are also trading with over 1% gains. IT and Teck, however, are showing volatility ahead of Infosys' results due on Friday.

Among the Sensex stocks, the shares of Dr Reddy's Labs are also in demand as the company has expanded its operations in the UK. Sun Pharma has also surged to its new high of Rs 720. Another pharma company, Cipla, is over 1% higher. Hero, Mahindra, Maruti and Tata Motors are also in gains. Tata Power is the top Sensex gainer, up by 2%. Similarly, Sterlite, Coal India, Jindal Steel and ONGC are all in gainers list. Bajaj Auto, on the other hand, is down over 1%. Wipro, TCS and Infosys have turned volatile and may remain under pressure for today.

In other shares, Ranbaxy has gained 1.6% on news of the launch of the authorised generic version of Evoxa in the US market. United Spirits and United Breweries have notched up about 6% gains each. JSW Energy is up 5% on the new SEB reforms. The shares of Emkay Global, though, have tanked 10% on news that the NSE and SEBI will inquire about Friday’s market irregularity. JTL Infra has tanked 13% on the delisting news.

The market breadth is positive, with 62% stocks showing advances and 33% showing a decline.

This week, Infosys and HDFC will announce their Sept 2012 quarter results. Besides, the IIP data due on Friday is also crucial as it will be watched to gauge whether the worst is over as yet or not. This earnings season as well as the IIP data will also be important for the RBI to take a decision on the interest rates.

Ahead today, we expect the markets to remain volatile.