RALLY CONTINUES

Indian equity markets extended the early gains and trading near high point of day in the late morning trades following gains across Asia. Sensex sees triple digit rally, while Nifty gained more than 100 points. Investors sentiments were strengthen amid expectations that the policy makers in Europe will support the Euro-zone financial system. Eurozone officials are planning for a European investment bank already in existence to use special purpose vehicles to issue bonds that would help finance the purchase of debt. On sectoral front all indices were trading positive. Realty, consumer durables, bank, IT and metal stocks were mostly up with sharp gains. A number of stocks from oil, TECk, power, capital goods and automobile sectors too rallied sharply. FMCG and healthcare stocks were trading firm as well. Reliance Capital surged 3% as founder Anil Ambani said he would consider bonus issue and special dividend for company. On the global front, Asian markets were trading green. Back home, the market breadth favoring the positive trend; there were 1,770 shares on the gaining side against 626 shares on the losing side while 83 shares remained unchanged.
The BSE is currently trading at 16,402.61, up by 351.51 points or 2.19%. The index has touched a high and low of 16,405.38 and 16,282.74 respectively. There were 29 stocks advancing against just 1 decline on the index.
The broader indices too were performing well; the BSE Mid cap and Small cap indices captured gains of 1.72% and 1.60% respectively.
All sectoral indices were trading positive. The top gaining sectoral indices on the BSE were, Realty up by 2.96%, CD up by 2.84%, Bankex up by 2.54%, IT up by 2.35% and Metal up by 2.23%.
The top gainers on the Sensex were Jaiprakash Associate up by 5.64%, Tata Motors up by 5.17%, DLF up by 3.82%, ICICI Bank up by 3.63% and Sterlite Industries up by 3.58%. The only loser on the Sensex was Sun Pharma down by 0.21%.
Meanwhile, D Subbarao, justifying the Reserve Bank of India's monetary policy stance on the hovering inflation, said that the inflation at around 9% is inimical to growth.
The RBI Governor said that while modest inflation can help boost growth, rapid growth in price pressures requires tighter monetary policy. The headline inflation has been hovering around 9% from last nine months. The headline inflation measured by the Wholesale Price Index (WPI) stood at 9.78% for the month of August from 9.22% in last month.
In order to cap inflation RBI has increased its key policy rates by 12 times in last 18 months. Due to increased interest rates the investment activities have been declined as a result affecting the pace of Economic growth.
'If inflation is below 6% , there's probably an argument that we can tolerate a bit of higher inflation, but when it is around 9%, as it is (in India), we are way past the threshold,' Subbarao said. 'There is no question, inflation is inimical to growth," he added.
On the issue of current global economy situation, Subbarao said that the policymakers around the world lack the monetary and fiscal fire power they possessed in 2008 to fight a renewed global slowdown. Central banks and governments today 'have no fire power left: governments cannot raise fiscal stimulus and central banks have exhausted most conventional and unconventional' policies,' he added.

On the issue of the growth in emerging and slowdown in developed economies, the RBI Governor said, is the different stages of the business cycle seen in major world economies. Emerging markets such as India are still growing at a healthy clip while Europe, Japan and the United States are growing more slowly.

The S&P CNX Nifty is currently trading at 4,942.30, higher by 106.90 points or 2.21%. The index has touched a high and low of 4,942.70 and 4,905.15 respectively. 49 stocks were advancing against 1 declining one on the index.
The top gainers of the Nifty were Tata Motors up by 5.76%, JP Associates up by 5.49%, Reliance Capital up by 4.56%, Hindalco up by 3.77% and Cairn up by 3.60%. Meanwhile, Sun Pharma down by 0.07% was the lone loser on the index.
All the Asian equity indices were trading in the green; Shanghai Composite was up by 0.83%, Hang Seng was up by 2.91%, Jakarta Composite was up by 4.34%, KLSE Composite was up by 1.62%, Nikkei 225 was up by 2.34%, Straits Times was up by 1.70%, Seoul Composite was up by 4.91% and Taiwan Weighted was up by 3.09%.