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Markets may end the week on a firm note
December, 16th 2010

Markets are expected to end the volatile session in the green led by recovery in rate sensitive indices-realty and bankex after the Reserve Bank of India (RBI) kept rates unchanged in the mid-term policty review. IT stocks continue to lead the gains after scaling all time highs are also pulling the markets higher.

The Sensex flip-flopped on account of RBI policy. The Sensex opened flat at 19,699 and touched a high of 19,739, before the policy. The RBI policy was on expected lines as the Reserve Bank kept the rates intact, cut the the Statutory Liqudity Ratio (SLR) by 1 per cent and and surpised the markets by announcing Rs 48,000 liquidity infusion via bond auciton.

The Sensex there after, slipped into the red and touched a low of 19,554. Currently the benchmark has recovered from day's low, up 164 points, at 19,807 and the S&P CNX Nifty has surged 54 points to 5949.

The open market auction will inject sufficient liquidity into the system and ease the cash cruch which the banks are facing. Indranil Pan, Chief Economist, Kotak Mahindra Bank said, "Given the current liquidity deficit of about Rs 1,00,000 - 1,10,000 crore, the liquidity  infusion of Rs 48,000 crore will definitely help."

In the world markets, Asian markets ended mostly lower on concerns stemming from Eurozone after Moody's said that they may downgrade Spain on debt re-financing concerns. Hong Kong's Hang Sang Index was off 1.3%,  athe Shanghai Composite index closed down 0.6%. Japan's Nikkei Stock Average was ended flat, South Korea's Seoul Composite fell 0.4% and Taiwan's main index rose 0.3%.

Rebound in Banking and Realty shares has pulled in the markets higher. IDBI Bank has risen 3.1%, followed by Kotak Mahindra Bank, up 2.7% and Canara Bank, up 2.4%. From the realty space, DLF has surged 1.9%, followed by Ackruti City, up 1.9% and HDIL, up 1.8%.

IT index continued to lead the sectoral pack led by Wipro, up 3.6%, TCS, up 3.2% and Mphasis, up 3.1%.

Hero Honda continued to swing between gains and losses ahead of the final annoucement of the structure of the joint venture (JV) after the Honda group decided to terminate the JV and sell 26 per cent stake in the 26-year-old venture to focus on wholly owned unit.

ONGC stock was bolstered by stock split of 2:1, 1:1 bonus issue and Rs 32/dividend.

Hero Honda was the top gainer on Sensex, up 4.6%, Wipro has risen 3.5%, TCS, up 3.1% are the top gainers on the Sensex. Mahindra & Mahindra has fallen 2.7%, BHEL has dipped 2.6%, and Bajaj Auto has fallen 1%.

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