Markets trade firm, Sensex up 130pts

Markets were trading higher in a choppy session of trade as heavyweight Reliance Industries reversed losses and buying interest emerged in IT shares. The Sensex was at 17,198, up 133 points, and the Nifty was hovering around 5,164, up 40 points.

Earlier in the day, the Nifty touched a low of 5,098 in opening trades, tracking subdued Asian peers and recovered thereafter for a brief period. The markets received a fresh jolt around noon after food price index was reported close to double digits, at 9.6 percent for the second consecutive week, raising concerns that the Reserve Bank of India will continue to maintain a hawkish stance and raise interest rates by another 25 bps during the policy review next week.

Asian markets faltered during the second half of the trading session led by losses in financial shares. The Nikkei Stock Average ended marginally higher, up 0.3%, but the Hang Seng and the Shanghai Composite indices closed down 0.6% each. European markets were trading marginally higher; FTSE, CAC and DAX were trading higher by 0.5-0.8% each. Markets will closely watch the European Central Bank meeting on Thursday as it may signal an end to the rate hike cycle.

Back in India, Reliance Industries (up 2% at Rs 847) was helping the Sensex up move; the heavyweight contributed 34 points to the index. RIL touched a low of Rs 814, down 1% after the Comptroller Auditor General in a report said that oil & gas conglomerate had violated the production sharing contract for blocks in the KG D6 basin. L&T, ICICI Bank and Tata Motors were also other prominent gainers on the Sensex, up almost 2% each. However, Coal India, Bajaj Auto and Tata Power were weighing on the index, down over 1% each.

Value buying emerged in the BSE IT index on expectations that the United States President Barack Obama would unveil a stimulus package of around $300 billion to improve jobs according to various news reports; Wipro was leading the gains, up over 3%, TCS and Infosys were also up between 1-2 percent.

Market breadth was positive, 1,695 stocks advanced, for 1,016 stocks which declined on the BSE.