Huge Buying lifts IT and Banking Stocks - Alex Mathews

The markets had opened on a positive note tracking flat to positive moves in the Asian space and mixed markets in the US and moved sideways to positive till noon. In the second part of day, we saw huge buying happening in the IT and banking stocks and finally the markets came to a close near to the day high. Infosys was the star of the day gained over 6.98%. Infosys came out with good set of Q2 numbers with its net profit rising 10.68% as per IFRS to Rs 1906 crore on 8.2% growth in revenue to Rs 8099 crore. Another major data which came out today was the IIP numbers for the month of August which was at 4.1% against 3.3% in July 2011. The IIP numbers were below the street expectation and the YoY reading of 4.5% in August 2010. Manufacturing and mining have slowed and this can be attributed to the hike interest rate regime that we are experiencing now. Tomorrow we are going to see the weekly inflation and on Friday we will see the core inflation for the month of September 2011. The monthly inflation will influence RBI decision whether to increase rates further or not at their half year review on October 25th. Nifty VIX slipped around 6.5% to 28.41 and FIIs remained net buyers. The market breadth, indicating the overall health of the market, was strong. On BSE, 1,802 shares rose and 1,017 fell.

Nifty today managed to close well above the resistance of 5050 and is looking positive supported by better quarterly earnings and economic data. For Nifty, the next resistance would be around 5140 and 5181 while the support is there at 5028 and 4985 levels. Investors should keep their eyes and ears wide open for the weekly inflation and monthly inflation numbers to figure the further course of the market.

On the sectoral front, we saw immense buying in IT, technology, banking, realty and metal. All the sectors on BSE gained over 1%. SBI gained around 6% today on government's plan to infuse around Rs 3000-4500 crore into SBI this fiscal. The positiveness in SBI brought buying in other banking stocks as well. IT stocks gained after Infosys posted good results and revised upwards its earnings guidance for the full year. Copper price gained today also as Asian inventories are seen shrinking due to increased demand from China.

Asian markets were trading positive tracking European markets. Asian stocks fell initially majorly due to Alcoa's weak results. US markets had closed mixed as the markets are awaiting the results and one another setback to president Obama as his proposed $447 billion jobs plan got blocked in the senate. But the US index futures gained during the day as Euro strengthened and car makers gained. On the other hand bank of England's policy maker had said that they are prepared to add extra stimulus if needed which is lending some support at lower levels. Also the British manufacturing grew at 0.2% against -0.4%. Later in the day we are expecting the European industrial production and Australian employment change data. We are also expecting the FOMC member Fisher to speak today.

Source : Equity Bulls

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