Sensex up 200 pts, Nifty hits 7900; metals, IT shine

Moneycontrol Bureau9:50 am Buzzing: Shares of Eveready Industries rallied 7 percent after the Reserve Bank of India has raised FII investment limit in the battery manufacturer.
The Reserve Bank of India on Tuesday notified that foreign institutional investors/registered foreign portfolios investors can now invest up to 49 percent of paid up capital of Eveready Industries India under the portfolio investment scheme.

The company had already passed this resolution at its board of directors’ level and a special resolution by shareholders, agreeing for enhancing the limit for purchase of its equity shares and convertible debentures by FIIs/RFPIs.

As of June 2015, FIIs shareholding in the company stood at 16.29 percent, which has been increased consistently from 10.47 percent in March 2015, 7.47 percent in December 2014 and 3.43 percent in September 2014.

9:35 am FII View: Mahesh Nandurkar, CLSA believes that over the next 12-18 months, lending rates will likely reduce by about 150 bps. The RBI policy rate cut of 50 basis points yesterday paves the way for this, he feels.
He says a slight tweak by the RBI in its language towards an easier real interest rate methodology has raised hopes of more rate cuts in certain sections of the market. While corporate capex should be slow to react due to demand issues, rate reductions should help to stabilise property markets, he adds.

Nandurkar believes key beneficiaries of falling rate environment in his coverage universe will be IndusInd Bank, HDFC, Maruti, property companies, Power Grid and leveraged companies, including IRB Infra and PVR.9:15 am Market Check

The market extended previous day's rally further in early trade Wednesday. The Sensex surged 225.78 points or 0.88 percent to 26004.44 and the Nifty climbed 71.35 points or 0.91 percent to 7914.65.

Tata Steel, Vedanta, TCS, Hindalco Industries, SBI, HDFC and IndusInd Bank rallied 1.5-2.5 percent.The Indian rupee gained 9 paise in early trade today. It has opened at 65.87 per dollar against previous close of 65.96.Pramit Brahmbhatt of Veracity feels reduction in FII inflows coupled with profit booking in local equities may pressure the rupee to trade weak.He sees range for today between 65.40-66.40/dollar.

Globally, the markets are mixed with the US markets ending mixed as the market stabilised after a steep sell-off. The Dow and S&P closed higher while the Nasdaq closed lower.

European equities closed in the red as investors' sentiment turned negative despite recoveries in mining, autos and oil prices. London-listed commodity firm Glencore staged a rebound, climbing as much as 18 percent during trade after a note from Citi said that the selloff has been "overdone." The broker maintained its "buy" rating for Glencore.

Asian markets, meanwhile, are a mixed bag early Wednesday morning. The Nikkei has bounced back from eight-month lows. Lower than expected data released before the market open did little to dampen sentiment. Kospi is playing catch up after being shut for holidays. The market is currently trading near three-week lows.In other asset classes, the US Dollar slipped as commodity currencies steady on Glencore shares rebound. Crude prices slipped with Nymex Crude hovering around the USD 44 mark while Brent slipped below USD 48 per barrel.