Uptrend to continue with pauses

The range-bound market saw a sharp rise in the noon session on positive news from the government. The development ensured a green close for the third straight day. We had mentioned that uptrend on the Nifty will continue to the level of 5,450, subject to dips. We maintain the stance. Today the benchmark made a higher high and a higher low and closed in the positive. The National Stock Exchange (NSE) saw a higher volume of 78.92 crore shares.

The Indian market opened flat with a mixed bias in the absence of cues from the US markets, which were closed on Wednesday for the Independence Day holiday. Investors also awaited policy decisions from the European Central Bank, which are expected later today.  The Nifty opened six points down at 5,297 and the Sensex resumed trade at 17,478, up 15 points over its previous close.

The indices fell to their intraday lows in initial trade itself on profit booking tracking a mixed trend across Asia. At the lows the Nifty went back to 5,289 and the Sensex fell to 17,423. The market was range-bound amid volatile trade in subsequent trade.

Meanwhile, the rupee recovered marginally in mid-morning trade and was seen at 54.90 to a dollar, after breaching the 55 level earlier. The Indian currency had closed at 54.49 on Wednesday.

Select buying lifted the indices into the positive in late morning trade. The market witnessed a sharp rise in the in the noon session following reports quoting Mauritius foreign ministry officials that the Indian government will not take any steps which would hinder Mauritius economic interests. This apart, the finance ministry is working on a proposal to reduce the incidence of withholding tax on external commercial borrowings (ECB) to encourage Indian companies to raise funds from overseas markets.

These developments helped the market hit its intraday high in the post-noon session. At this point, the Nifty climbed to 5,331 and the Sensex surged to 17,563. The market came off the highs as investors booked profits at higher levels.

The benchmarks settled off the highs with the Nifty gaining 25 points at 5,327 and the Sensex at 17,539, up 76 points over its Friday’s close.

The Asian pack closed mixed as investors awaited the outcome of the ECB policy meeting. Analysts opine that the central bank is likely to cut rates in a bid to spur growth in the crisis-ridden continent.

The Hang Seng gained 0.50%; the KLSE Composite added 0.04%; the Straits Times climbed 0.77% and the KOSPI Composite rose 0.06%. On the other hand, the Shanghai Composite declined 0.50%; the Jakarta Composite fell by 0.15%; the Nikkei 225 slipped 0.27% and the Taiwan Weighted declined 0.47%.

At the time of writing, two of the three key European indices were in the green while the US stock futures were mixed with a negative bias.

Back home, foreign institutional investors  were net buyers of shares totalling Rs239.19 crore on Wednesday while domestic institutional investors were net sellers of equities amounting to Rs161.77 crore.