Profit booking reins indices after strong open

MUMBAI: Extending previous day’s gains, equity indices opened strong on Tuesday but were off highs in a few minutes as investors turned cautious ahead of Reserve Bank of India’s monetary policy review later on Tuesday. This despite global cues being mixed.

Capital goods remained firm while FMCG and oil & gas shares dragged. Biggest Sensex gainers were BHEL (up 3.79%), Larsen & Toubro (2.16%), HDFC Bank (1.91%), Dr Reddy’s Laboratories (1.05%), HDFC (0.96%) and ONGC (0.92%).

At 10:04 am, Bombay Stock Exchange’s Sensex was up 128.61 points or 0.64 per cent at 20,106.28. National Stock Exchange’s Nifty gained 27.5 points or 0.46 per cent to 5933.40.

Losers on the Sensex comprised M&M (down 2.05%), ITC (0.82%), Ambuja Cements (0.80%), TCS (0.79%), and Bajaj Auto (0.68%).

Across BSE, 753 shares advanced and 153 declined.

Equities were expected to open higher today after the Sensex’s phenomenal rally past the 20,000-mark on Monday.

On the policy front, most players expect the RBI to keep the rates unchanged but a hike in cash reserve ratio is likely.

“We estimate the markets to react positively to the monetary policy; the interest sensitive sectors may remain in action,” Network Stock Broking said in a report.

The market will eye slew of corporate results today. Hindalco, Ramco Systems, HMT, MTNL, Ispat Industries, Central Bank of India, Bombay Dyeing, Power Grid, Sterling Biotech, Birla Corporation, Hindustan Unilever, CESC, Puravankara Projects.

On Monday, Wall Street posted modest gains as investors traded cautiously ahead of the Federal Reserve's 2-day meeting on interest rates, which starts today.

The market expects the Fed to cut its benchmark rate by another 25 basis points after the 50 bps cut in September to help combat a sluggish economy and turmoil in the credit markets.

Asian markets, on the other hand, were trading soft this morning. Japan's Nikkei 225 Stock Average fell 0.7 percent. Benchmarks in South Korea, Australia, Taiwan, Singapore and New Zealand dropped, while China, Malaysia and the Philippines rose.

Oil prices fell nearly 1 per cent to below $93 a barrel on Tuesday, off its latest record high as investors took profits from a rally fuelled by a Mexican supply outage and the spiralling dollar. US crude fell by 85 cents to $92.68 a barrel after hitting a record high of $93.80 in the previous session.