Sensex ends 323 points higher ahead of credit policy; banks up

Equity benchmarks staged a strong performance on first day of November month, led by banks, telecom, realty and capital goods, and ahead of credit policy tomorrow. The Sensex added more than 300 points and the Nifty successfully settled above the 6100 mark. Overall it was a good start for the week ahead of major events domestically as well as internationally.

A confident Naresh Kothari of Edelweiss Capital believes the markets this week will inch up further on the back of huge newsflow that is expected. However, this month, according to him, should be reasonably range-bound and the Nifty should continue hovering in the 5,800-6,200 range.

"With the Coal India listing, with liquidity coming in because of Coal India back into the markets, with the refunds are coming back, with the domestic RBI policy not pushing for any significant change at least in our view and with QE2 also happening, if you put all of these together, it is an active week and it should be a good week," he explained.

Major events lined up for the week are: Coal India refund is likely today & tomorrow, which will again fuel the liquidity and Coal India will be listing on Thursday. On the global front, US mid-term elections will be beginning from November 2; FOMC meeting on November 3; ECB & BoE announcements on November 4; and US October unemployment report & Bank of Japan policy meet on November 5.

The rally was mainly led by financials post strong numbers declared by ICICI Bank and ahead of RBI policy meet on November 2. Nandan Chakraborty of Enam expects hike in repo and reverse repo rates. "If the QE quantum falls short of market expectations it could cause a correction in equities and commodities in the short-term. However, in the longer run any quantitative easing in the US and Japan will fuel further liquidity into EMs and commodities. We expect the RBI to hike Repo and Rev Repo rates by 25 bps each tomorrow," he said.

ICICI Bank continued its uptrend for the second consecutive day, especially after stellar performance in quarterly results. Its Q2 net profit was up 21.8% at Rs 1395 crore. The stock rallied 12% in two days. The BSE Bankex rose 3.4%.