Auto stocks take the Sensex to 7900

Markets opened with a positive gap from yesterday's closing levels and the Sensex went well past 7900 in early trades. Some amount of selling emerged at higher levels and the indices moved into negative territory within an hour of opening.

Strong buying in auto stocks and select oil stocks like BPCL lifted the frontline indices and they were back to their morning levels by early afternoon. The indices traded within a range for the rest of the day and managed to close at new lifetime highs.

Sensex closed at 7900, a gain of 23 points, and the Nifty at 2416, a gain of 10 points. Nifty September futures closed at a discount of 9 points to the spot index.

Maruti, Tata Motors and BPCL were the biggest gainers on the Nifty while Zee Tele, L&T and Infosys were the major losers.

Expectations that the Fed would be less keen to raise interest rates after the destruction caused by Hurricane Katrina helped US markets to recover from early losses and close on a flat note. Continuing rally in oil stocks also helped the frontline indices.
The Dow and NASDAQ closed marginally in the negative while the S&P 500 closed with marginal gains.

Crude oil remained firm yesterday also as reports of more destruction from the hurricane continue to come in. Markets are concerned about more hurricane warnings in the next two months. Crude futures for October delivery closed at $69.47 yesterday. Crude futures are trading lower at $69 in early European trades today.