Markets recover as metal and bank stocks surge

The markets bounced back recovering from the aftershock of the London bomb blasts. The day opened with a huge positive gap as the damage from the blasts turned out to be much lower than expected. Most analysts in Europe and US do not expect the terrorist attack to have much of an impact on the financial markets as they start focussing on the earnings season ahead.

The rebound in the US markets towards close yesterday also helped to reinforce this sentiment.

The up trend was short-lived though as the indices lost most of their gains and went back very close to yesterday's closing levels within an hour or so. ONGC, which was trading with gains in the morning, declined and added to weakness in the indices.

The indices started a steady recovery by early afternoon as some buying emerged. The fact that the overall market breadth remained very positive encouraged the traders to take a more positive view.

Strength in metals, banks, telecom and media stocks helped the indices to recover part of yesterday's losses.

Sensex closed at 7212, a gain of 67 points, and the Nifty at 2196, a gain of 17 points. Nifty July futures discount to the spot index narrowed to 12 points from yesterday's 21 point.

Zee Tele, Bharti and Tata Steel were among the major gainers among Nifty stocks while ONGC, BPCL and HPCL were the major losers.

After a weak opening following the London blasts, US markets recovered and closed with gains yesterday. Though there was some initial panic after the large decline in most European markets, traders were of the view that the incident does not pose much threat to US economic performance. The Dow and NASDAQ closed with gains of close to one third of a per cent.

Crude futures for August delivery crashed more than 4 per cent after news of the terrorist attack in London. The commodity recovered later and closed the day with a loss of less than a per cent at $60.73 to a barrel yesterday. Crude is seeing a fresh rally in Asian and early European trades today and NYMEX grade crude is very close to its all time high of over $62.

Most Indian ADR's had a weak day despite the late bounce back in the broad indices. Technology stocks Infosys, Wipro and Satyam all ended with losses. HDFC Bank, Tata Motors, MTNL and Dr. Reddy's also closed with losses. ICICI Bank and VSNL closed with gains of over a per cent each.

Inflation for the week ended 25 June rose marginally to 4.14 per cent from 4.1 per cent reported for the previous week.

Bharti Televentures surged over 7 per cent in late afternoon trades after reports that the company has added almost 4.5 lakh subscribers during June. The stock closed with gains of 5 per cent.

Zee Tele has been one of the best performers for the last few days on expectations of higher popularity for some of its new programmes. The stock which opened firm surged more than 7 per cent in late afternoon trades. The stock closed over 6 per cent higher.