MARKETS REBOUND IN STYLE

After four straight sessions of horrendous performances, Indian benchmark equity indices finally showed great enthusiasm as market bulls eagerly waited for some significant upside triggers to cover the huge pile of short positions that got build up through the September futures and options series. The frontline indices surged on large volumes as risk appetite of investors, improved globally and they resorted to hefty bottom fishing after the recent brutal assault in equity markets. The key gauges registered colossal gains of almost three percent on the pullback rally following steep global upmoves after a likely bailout plan for Europe caught bears on the wrong foot. Marketmen turned sanguine on expectations that the European leaders and policy makers would get their act together to tackle Greece's debt woes and prevent another full-blown banking crisis. Reports indicated that EU policy makers had plans to use the EU rescue fund to recapitalize vulnerable euro-zone banks. On the global front, the European counterparts got off to a flying start and the benchmarks there are trading with strong gains in the range of 2.50% - 4% while the Asian markets too whole-heartedly participated in the rally and the major gainers from the region were Seoul Composite and Jakarta Composite which jumped 5.02% and 4.76% respectively. Back home, despite the sharp run-up market participants did not seemed completely convinced with the relief rally as they believed that the gains in the session were only build on hopes of a resolution to lingering Euro-zone debt problem but the outlook still remained cloudy as nothing has changed on the horizon as yet. However optimists were of the belief that a good monsoon and the dramatic decline in commodity prices may bode well for the markets in the time to come as it may ease inflationary pressure on Asia's third largest economy which would be followed by a peaking of the interest rate cycle.
Earlier on Dalal Street, the benchmark got off to a gap-up start as the indices sailed past the psychological 4,900 and 16,250 levels in the early trade since investors largely remained influenced by the sanguine sentiments prevailing in Asian markets. Post the smart start the indices just didn't have to look back through the session as they kept moving from strength to strength with the support of encouraging global leads. The northbound journey only came to a halt with the end of the trading session which helped benchmarks in snapping the four session declining streak with massive gains. Eventually the NSE's 50-share broadly followed index Nifty, accumulated triple digit gains to settle just below the crucial 5,000 support level while Bombay Stock Exchange's Sensitive Index, Sensex amassed close to five hundred points and closed above the psychological 16,500 mark. Moreover, the broader markets too traded with strong gains in the session but lacked the fervor with which their larger peers rallied. On the BSE sectoral space, the high beta Realty pocket topped the gainers' chart with handsome gains of over four and half a percent as major developers like DLF, HDIL and Unitech garnered a lot of traction. The information technology counter too witnessed hefty buying interests as the rupee depreciated by around 8% in the last quarter which helped boost the companies' margins. Shares of IT bellwethers like Infosys and TCS rallied by almost 4% in the session. Among individuals, index heavyweight Reliance Industries made its presence felt in the session as it rocketed by over five percent after being butchered by over nine percent in the previous three sessions. The markets soared on weaker volumes of over Rs 1.78 lakh crore while the turnover for NSE F&O segment too remained on the lower side as compared to Monday at over 1.66 lakh core despite this being the second day of September series F&O expiry week. The market breadth remained optimistic as there were 1873 shares on the gaining side against 952 shares on the losing side while 108 shares remained unchanged.
Finally, the BSE Sensex surged 472.93 points or 2.95% to settle at 16,524.03, while the S&P CNX Nifty climbed by 135.85 points or 2.81% to close at 4,971.25.
The BSE Sensex touched a high and a low of 16,551.65 and 16,282.74 respectively. The BSE Mid cap and Small cap index were up by 1.60% and 1.36% respectively.
The major gainers on the Sensex were DLF up 8.46%, Jaiprakash Associate up 5.93%, Tata Motors up 5.92%, Reliance up 5.09% and Hindalco Industries up 4.26%. While, Cipla down 0.28% was the only loser on the index.
The top gainers on the BSE sectoral space was Realty up 4.66%, IT up 3.56%, Oil & Gas up 3.47%, TECk up 3.02% and Consumer Durables (CD) up 2.82%. There was no loser on BSE sectoral space.
Meanwhile, in order to attract more foreign fund at the time of global slowdown, the Reserve Bank of India (RBI) relaxed the norms for the infrastructure companies with direct foreign equity up to 25% to raise funds in aboard without government's permission. In a statement the RBI said, on a review, it has been decided, to further liberalize the External Commercial Borrowings (ECBs) policy in respect of the infrastructure sector.
The RBI allowed direct foreign equity holder which is holding at least 25% of the paid-up capital and indirect foreign equity holder holding minimum of 51% of the paid-up capital, to provide credit enhancement for the domestic debt raise by the Indian firms engaged exclusively in the development of infrastructure via issue of capital market instruments.
It includes Infrastructure Finance Companies (IFCs) and no prior approval will be required from the RBI for providing such credit enhancements, RBI said. The company meeting foreign equity criteria will not require permission for raising ECB up to $5 million.
Now onwards the term debt in the debt-equity ratio will be replaced with ECB liability and the ratio will be known as ECB liability-equity ratio to make the term signify true position as other borrowings or debt are not considered in working out this ratio, RBI noted. Service sector units, in addition to those in hotels, hospitals and software, could also be considered as eligible borrowers if the loan is obtained from foreign equity holders, RBI's notification said. By adding further it says this would facilitate borrowing by training institutions, R&D, miscellaneous service companies, etc. ECB from a group company may also be permitted provided both the borrower and the foreign lender are subsidiaries of the same parent, it added.
The S&P CNX Nifty touched high and low of 4,982.95 and 4,905.15, respectively.
The top gainers on the Nifty were DLF up 7.82%, Tata Motors up 6.64%, JP Associate up 5.99%, Reliance up 5.20%, and Tata Power up 4.75%. On the flip side, Cipla down 0.47% and BPCL down 0.11% were the top losers on the index.
The European markets were trading in the green. France's CAC 40 climbed by 3.95%, Britain's FTSE soared by 2.33%, and Germany's DAX higher by 3.40%.

After witnessing bloodbath in previous session, all the Asian counterparts bounced back and ended the terrific day of trade with a decent gain after a pledge by European officials to resolve the region's debt problems helped soothe market sentiment. Investor's sentiment improved after European ministers told a meeting of global finance leaders in Washington over the weekend that they would take bolder and more decisive steps to pull Greece back from the brink of bankruptcy.The country has only enough money to last until mid-October. Moreover, financial stocks were buoyed by hopes that a plan was in the works to prevent Greece from defaulting on its debts - an event that might crush banks with significant holdings of the country's bonds and cause domino-style defaults in other indebted countries such as Italy.