Last week, it was the US Fed chairman who lifted global equity sentiment with soft statements on inflation. Today, it was the turn of RBI to ease interest rate concerns by stating that inflation was contained within the target range during the first quarter of current financial year.

The RBI statement has raised hopes in the market that the central bank may leave interest rates unchanged at its meeting tomorrow. Banking stocks surged on these hopes and ended with strong gains.

Short covering ahead of Thursday's settlement also benefited the indices. The decline in crude oil improved the sentiment and helped stocks like ONGC.

After opening with considerable losses, the indices recovered and were back in positive territory by early afternoon. Strong opening by Europe and recovery in Asian markets pushed them up further in afternoon trades.

Sensex closed with gains of 129 points at 10215 and the Nifty gained 41 points to close at 2986. Nifty July futures ended at a premium of 5 points to the spot index.

Banking stocks surged in afternoon trades, on expectations of stable interest rates. ICICI Bank, which had also announced good results over the weekend, was the biggest gainer among index stocks and closed more than 6 per cent higher.

OBC and PNB added around 4.5 per cent each while SBI rallied 3.5 per cent. HDFC Bank ended with gains of close to 3 per cent.
Among the smaller banking stocks, Vijaya Bank was the biggest gainer and ended 16.5 per cent higher. Bank of Baroda, Bank of India and ING Vysya were the other major gainers.

Tech stocks made a smart recovery, led by Wipro which closed 4.5 per cent higher. Satyam gained close to 4 per cent while TCS added nearly 3 per cent.

Index heavyweight ONGC rallied close to 3 per cent on hopes of lower subsidy sharing as crude oil prices have retreated from record highs.

Suzlon Energy also recovered and closed more than 2.5 per cent higher.

Metal stocks opened considerably lower and maintained the downtrend despite the market recovery. Nalco was the biggest loser among index stocks, closing nearly 3.5 per cent lower.

Hindalco lost close to 1.5 per cent while SAIL gave up close to 2 per cent. Tata Steel ended nearly a per cent lower.

Siemens, ITC, Cipla, Grasim, Gail India and Zee Tele were among the other major losers.

Global markets / crude oil
Asian markets were weak in early trades but recovered towards the end of the day. Indonesia was the biggest loser, closing nearly a per cent lower. South Korea lost around 0.65 per cent while Thailand, Malaysia and Japan closed with modest losses.

Singapore, Hong Kong and Shanghai closed with marginal gains.
European markets opened firm and have gained further. Major indices are trading with gains of around a per cent each.

Crude oil prices have lost further ground as the hostilities in the Middle East have not escalated further. Near month NYMEX futures is trading more than a per cent lower at around $73.6 per barrel in European trades today.

Large-cap news flow

• TCS has announced the signing of an agreement to set up a software company in China in association with Microsoft and Chinese organisations. Financial details have not been disclosed, but Microsoft would be a strategic investor.
  
• TVS Motor would start commercial production at its new plant in Himachal Pradesh shortly. The company would launch three wheelers in the domestic market and 2-wheelers in Indonesia towards the end of the current financial year.

Mid-Cap Action
Mid-caps and small caps also lost further ground, despite the recovery in large caps. In line with the market mood, mid-caps opened with heavy losses before recovering part of the lost ground in the afternoon. However, mid-cap and small cap indices closed lower.

The CNX Mid-Cap index ended with losses of 14 points, or 0.38 per cent, to end the day at 3626. BSE mid-cap index lost 0.45 per cent and the BSE small cap index gave up 1.17 per cent.

Seshasayee Paper, Andhra Sugar, Amara Raja Batteries, UTV Software and Nova Petro were among the other mid-cap gainers.

Balrampur Chini, HMT, Shreyas Shipping, Aarti Industries, Uttam Sugar and Vimta Labs were among the major mid-cap losers.

Mid-cap news flow

• The open offer for 22 per cent of Mysore Cements by Heidelberg would open during the period 06th September to 25th September. The offer is being made at a price of Rs58 per share.
• PSL has won an order worth Rs270 crore to supply coated pipes for a water supply project in Rajasthan. The company has won another order worth Rs218 crore from Gail India.
• Petron Engineering has won an order worth Rs42.3 crore for fabrication and installation of process heaters for the RPL refinery at Jamnagar.
• Aban Loyd has transferred another offshore rig to a Singapore based indirect subsidiary of the company for a consideration of $96 million.
• The board of Escorts has approved a preferential issue of convertible warrants up to 5 per cent of the current equity base of the company. Conversion price would be as per the relevant guidelines.
• Shareholders and creditors of Flex Engineering have approved the merger between the company with Flex Industries and FCL Technologies.
• The board of NCL Industries has approved the merger of NCL Energy with the company, subject to independent valuation.
• Unity Infraprojects has received new construction orders worth a total of Rs297 crore in the state of Maharashtra and Andaman & Nicobar islands.
• Adhunik Metalliks has been allotted an iron ore mine in Orissa. The company had earlier signed an agreement to set up a steel project in the state.

*Disclaimer: The author may have positions in some of the stocks specifically mentioned above at the time of writing this article. This analysis / report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.