Sensex ends 120 points higher; banks, metals, cap goods up

Equity benchmarks moved up further on Wednesday after a pause for one day, led by financial, metal, cement, FMCG and capital goods companies' shares. The Nifty settled above 6150 level, might be ahead of likely announcement of quantitative easing in FOMC (Federal Open Market Committee) meet today evening and Coal India listing tomorrow.

The second round of quantitative easing, popularly known as QE2, is expected to be bold and controversial. The US Federal Reserve is expected to unveil plans to inject billions of dollars into the country's economy to jump-start its sluggish recovery. (Quantitative easing (QE) is a monetary policy used by some central banks to increase the supply of money by increasing the excess reserves of the banking system - courtesy: wikipedia)

Arjuna Mahendran of HSBC said he is expecting the Fed to release around usd 500 billion through QE2. He expects a slow but gradual recovery in the US. He, however, hopes for a lower quantum of QE2 which will be a sign of relief for the emerging markets. It could also be good for risk assets particularly for equity markets given that fears of future inflation would not be terribly high, he said.

Commenting on the effect of the bailout package infusion on the Indian market, Vikas Pershad of Veda Investments said he expects a significant market reaction if QE2 is over USD 2.5-3 trillion. "If the additional funds come in over a longer period of time than anticipated or is less than anticipated, we will see a sell off," he said. On sectors, Pershad said he was positive on brokerages and banks.

Another big event - Coal India, India's largest coal producing company will be listing its equity shares on exchanges. Investors, who did not get allotment, have received their refunds back into accounts. These investors might be looking to invest in the stock on listing day. Experts expect the listing would be around Rs 270-300 a share.

Rahul Mohindar of viratechindia.com says that there are clear indications that markets want to wait at 6150 as they are going to consolidate a bit more before we make the next move.