Indian equities tracking recovery in Asian markets started on a firm note. At the open, Sensex traded higher by 0.2 per cent or 164.58 points at 81,724.12, while the Nifty traded near 25,000 levels up 0.25 per cent or 62.65 points.

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Sectorally, there was broad-based buying seen, with pharma and realty stocks most resilient with gains of up to 1 per cent.

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services stated, "There are some significant recent trends in the market: One, there is weakness in the mid and small caps segments; two, the banking segment which has been a consistent underperformer is exhibiting resilience and is moving up; three, defensives like pharmaceuticals and FMCG are slowly gaining and there are signs of accumulation in these segments. The message from these trends is that there is an increasing preference for quality in the market now. This is in sharp contrast to the irrational exuberance and totally unhealthy trends associated with the SME exchange.

Ahead of the September 18th Fed meeting, traders will closely monitor two inflation reports, including the US CPI for August and producer price data. Meanwhile, the Bajaj Housing Finance IPO has seen strong initial demand, noted Prashanth Tapse, Senior VP (Research), Mehta Equities.

Meanwhile, most Asian markets traded strong tracking recovery in the US markets in overnight trade as focus shifted to the inflation data which will offer cues on interest rate cuts. Last, the MSCI Asia Pacific Index ex-Japan traded weak by over 1 per cent.