Markets open higher; auto and metals rally

Markets kicked off 2011 with gains led by rally in auto and metal stocks. The Sensex surged 142 points to 20,652 and the Nifty gained 43 points to 6177.

Markets climbed 18% in 2010, technical charts also indicate an uptrend in the long term and minor correction in the near term. Edelweiss in a research note said "momentum oscillators continue to build on the strength on the daily chart. The weekly RSI (Relative Strenght Index) has triggered a buy signal reinforcing the bullish bias. After confirming the ‘double bottom’ reversal, Nifty continues to build on the strong momentum and price action. The target for the breakout is set at 6300-6450, however in the immediate short-term it is approaching a cluster of resistance of 6135-6155 from where a bout of corrective action in expected."

Other markets in Asia were trading mixed in a holiday thinned trade as China's Shanghai Composite and Japan's Nikkei 225 were shut. Hong Kong's Heng Seng surged 1.4% to 23,365 led by modest gains in local banks and exporters. Straits Times climbed 1.1% to 3,225, Seoul Composite and Taiwan Weighted were up 0.7% and 0.6% each.

Back in India, Auto shares were in the top gear on back of strong December sales. Apollo tyres zoomed 3.2%, Maruti Suzuki climbed 1.7% and Ashok Leyland advanced 1.6%.

Metals stocks added sheen, Bhushan Steel jumped 2.5%, Welcorp rallied 2.2% and JSW Steel rose 1.8%.

Patni Computer Services was on the buzzer this morning, the stock slipped 2% after US software firm iGate cancelled a press conference it had scheduled today where it was expected to announce a deal with Apax Partners for a majority stake in Patni for more than $900 million. On the other had JSL Stainless stock rose 0.8% on reports of power purchase agreement with Gridco Ltd.

On the Sensex Tata Steel was the top gainer, up 2.4%, followed by Mahindra & Mahindra, up 2.3% and Sterline Industries, up 1.4%.

Only three components on the Sensex were trading in the red. Bharti Airtel lost 0.7%, BHEL dipped 0.5% and Cipla was flat, down 0.04%.
 
Broader markets were trading on a firm note with midcap index and smallcap indices up 1% each. Market breadth was positice 1561 stocks advanced for 391 stocks which declined.