From here, the Nifty may move in the range of 5,370 and 5,540. A close above 5,460 would be bullish for the short-term

Except for a few minutes of trading in the red, the indices traded in the positive for the entire session on Wednesday. The Sensex opened at 18,315 while the Nifty opened at 5,359.  The Sensex and the Nifty hit an intra-day low almost at the same level as yesterday. The Sensex hit a low of 18,188 while the Nifty hit a low of 5,319. The Sensex hit an intra-day high of 18,613 and closed at 18,568 (up 333 points or 1.83%) while the Nifty hit an intra-day high of 5,460 and closed at 5,448 (up 107 points or 2%). The indices covered up nearly half of yesterday’s fall but the rise was on lower volumes. The National Stock Exchange (NSE) recorded a volume of 58.50 crore shares.

Except for Realty (down 0.34%) and Media (down 0.85%) all the other indices on the NSE closed in the positive. The top five gainers were Metal (2.64%); Pharma (2.54%); Auto (2.51%); Infra (2.38%) and IT (2.36%).

Of the 50 stocks on the Nifty, 47 ended in the green. The top five gainers were Ranbaxy (8.70%); BHEL (6.46%), Jaiprakash Associates (6.13%); Lupin (4.59%) and Tata Motors (4.59%). The losers were DLF (1.02%); ITC (0.23%) and Maruti (0.07%).

RBI, yesterday, said housing loans from banks to individuals should be closely linked to the stages of construction as upfront disbursals of lump sum loans are likely to expose the banks as well as their home loan borrowers to additional risks. This is expected to put the squeeze on builders and lead to a fall in real estate prices. Please read our article Realty prices to crash as RBI curbs innovative borrowing schemes

RBI today issued certain clarifications regarding overseas direct investment notified on 14 August 2013. Among others, it has been clarified that in respect of funding of overseas direct investments by way of external commercial borrowings, instead of limit of 100% of the net worth, the earlier limit of 400% of the net worth will continue to apply. The explanation given by RBI was that it is not the intention of the bank to restrict bona-fide and genuine overseas direct investment transactions by Indian companies.

The economy continues to contract. Indian services activity shrank in August at its quickest pace since the depths of the global financial crisis as new business dried up, a survey showed. The HSBC Services Purchasing Managers' Index (PMI) compiled by Markit, slipped to 47.6 in August, the weakest since April 2009, from 47.9 in July. A number below 50 denotes contraction.

US indices ended in the green on Tuesday. Better-than-forecast economic data overshadowed concern over possible military action against Syria. The Institute for Supply Management's manufacturing index increased to 55.7 in August, the strongest since June 2011, from 55.4 a month earlier. Another report showed construction spending in the US increased in July to the highest level in four years, propelled by gains in residential real estate.

US House of Representatives Speaker John Boehner backed President Barack Obama's call for action against Syria, while Republican and Democratic leaders of the Senate's foreign relations panel agreed on a proposal backing a military strike. The Senate reached an agreement on a resolution authorizing military strikes against Syria. The resolution gives Obama 60 days to strike Syria, and is expected to be put to a vote on Wednesday, 4 September 2013.

Except for Nikkei 225 (up 0.54%), Shanghai Composite (up 0.21%) and NZSE 50 (up 0.08%) all the other Asian indices closed in the negative. The top loser was Jakarta Composite (2.17%).

Growth in China's services sector hit a five-month high in August underpinned by new orders and business optimism, a private survey showed on Wednesday, adding to views that the world's second-largest economy had avoided a sharp slowdown. The Markit/HSBC Services Purchasing Managers' Index (PMI) climbed to 52.8 in August after seasonal adjustments, up from July's 51.3 and the highest since March.

Euro zone businesses had their best month in over two years in August as orders increased for the first time since mid-2011. Markit's Eurozone Composite Purchasing Managers Index (PMI) rose to 51.5 last month from 50.5 in July. The forward-looking new orders index rose to 51.0. This is the first time it is above the 50 mark since July 2011. However, there are still major differences between Europe's two most important economies. The composite PMI for Germany, the euro zone's largest, jumped to a seven-month high of 53.5, but the French PMI dipped to 48.8 from 49.1. The PMI covering the dominant service sector bounced to 50.7 from July's 49.8, the first time it has risen above the break-even point since the start of 2012. Businesses' optimism about the future also rose to a 17-month high.

European indices were trading in the red and US Futures were trading marginally lower.