VOLATILE

After hitting their lowest in more than 14 months, amid the rout in markets across the globe triggered by fears that political leaders are failing to tackle the US and Europe debt crises, the domestic benchmarks have showcased an awe-inspiring bounce back, halting the five straight session declining run. Hefty bargain hunting in beaten down but fundamentally strong bellwether stocks brought the frontline indices back into the green, recovering over six hundred points from the intraday lows. Sentiments in the local bourses improved after premier rating agency S&P's opined that there would be no immediate impact of US debt rating downgrade on India, providing the much-needed respite. Meanwhile, S&P's rating cut for the US may also prove as a blessing in disguise for the markets since it has brought about a broad based crash in international commodity prices, especially crude oil, helping the RBI in its battle against inflation. Also there was some short covering seen in information heavyweight stocks after apex software industry body Nasscom stated that although the global economic environment is a cause for concern, it is not likely to adversely impact the Indian IT industry, in the near-term future. Also the shares from the oil and gas space continued to gain a lot of traction on expectations of lower under recoveries and better realizations post the crash in international crude oil prices which have plummeted around 17% fall over last one month. On the global front, European shares opened steadier after Asian shares recovered some of their losses in a choppy session however, investors remained edgy after a severe loss of confidence caused by a downgrading of US debt and further strife in the euro zone.
Meanwhile, the broader markets too recovered a great deal from the intraday-lows but were outclassed by their larger peers. The bourses gained on large volumes of around Rs 1 lakh core while the market breadth on BSE was in favor of declines in the ratio of 951:1686 while 112 scrips remained unchanged.
The BSE Sensex is currently trading at 17,096.13 up by 105.95 points or 0.62% after trading as high as 17,107.78 and as low as 16,432.00. There were 19 stocks advancing against 11 declines on the index.
The broader indices were trading on a mixed note; the BSE Mid cap index gained 0.11% and Small cap shed 0.52% respectively. 
On the BSE sectoral space, Realty up 1.66%, Auto up 1.60%, FMCG up 1.52%, Bankex up 1.23% and Capital Goods up 1.09% were the major gainers; while IT down 1.85%, Healthcare down 1.63%, TECk down 1.21%, oil & Gas down 0.13% and Metal down 0.06% were the only losers on the index.
M&M up 4.65%, JP Associates up 3.74%, DLF up 3.57%, Bajaj Auto 3.44% and BHEL up 3.10% were major gainers on the Sensex, while Sun Pharma down by 2.81%, TCS down 2.70%, Wipro down 2.41%, Cipla down 2.24% and Infosys down 1.90% were the major losers on the index.
Meanwhile, the Reserve Bank of India on Tuesday allowed foreign investors to buy the domestic Mutual Fund with the cumulative limit of $10 billion. This move of the central bank is expected to have positive impact on the capital inflow.
"A SEBI registered Foreign Institutional Investor (FII) and Non Resident Indian (NRI) may purchase, on repatriation basis, units of domestic Mutual Funds (MFs), subject to such terms and conditions mentioned therein and limits as prescribed for the same by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), from time to time," RBI said in the statement.
In consultation with the Government and the SEBI, the decision to allow non-resident investors (other than SEBI registered FIIs and SEBI registered FVCIs) who meet the KYC requirements of SEBI, hereinafter called 'Qualified Foreign Investors' (QFIs), to purchase on repatriation basis rupee denominated units of equity schemes of domestic MFs issued by SEBI registered domestic MFs in accordance with the terms and conditions as stipulated by the SEBI and the RBI from time to time in this regard, the statement added.
The QFIs can invest in rupee denominated units of equity of schemes of domestic Mutual Funds issued by the SEBI registered domestic Mutual Funds under the Direct Route i.e. SEBI registered Depository Participants (DP) route and Indirect Route, i.e. Unit Confirmation Receipt (UCR) route.
The QFIs also can buy additional $3 billion of debt funds that invest in minimum 5-year infrastructure related debt. However, it would be within the upper limit of $25 billion for FII investment in corporate bonds issued by the infrastructure firms.
This move of the RBI is expected to help in the growth of Indian Mutual Fund industry. According to data from the Association of Mutual Funds in India, currently the total asset under management of all Mutual Fund companies stood around Rs 7.28 trillion ($166 billion) till July 2011 with the equity funds accounting for 23%.
The S&P CNX Nifty is currently trading at 5,165.05, higher by 46.55 points or 0.91% after trading as high as 5,165.45 and as low as 4,946.45. There were 34 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were Ambuja up 5.08%, M&M up by 4.53%, JP Associates up 4.41%, DLF up 3.83% and Sterlite up 3.73%.

R Power down 3.11%, Dr Reddy's down 2.93%, Sun Pharma down 2.41%, Wipro down 2.25% and TCS down 2.05% were the major losers on the index.
Asian markets traded on a somber note, Shanghai Composite plunged 27.36 points or 1.08% to 2,499.46, Hang Seng got annihilated by 1,326.99 points or 6.48% to 19,163.58, Jakarta Composite got decimated by 158.16 points or 4.11% to 3,692.10, KLSE Composite plummeted 38.55 points or 2.58% to 1,458.44, Nikkei 225 got lacerated by 403.25 points or 4.43% to 8,694.31, Seoul Composite got obliterated by 161.10 points or 8.62% to 1,708.35 and Taiwan Weighted got butchered by 235.37 points or 3.12% to 7,317.43.
The European markets traded on positive note as France's CAC 40 added 1.14%, Germany's DAX gained 0.59% and London's FTSE rose 0.13% .