Markets trading near day highs

Tata Motors is the top Sensex gainer, up over 3%

Markets are trading near days high with the Sensex and the Nifty trading above 17,500 mark and 5,300 levels, respectively. The gains are led by buying among index heavyweights, financial and auto shares. Firm Asian markets have also cheered the sentiments among local investors.

At 1300 hrs, the Sensex was up 151 points at 17,562 and they Nifty gained 50 points at 5,325 levels. The Sensex and the Nifty touched an intra-day high of 17564 mark and 5,327 levels, respectively.

Meawhile, The rupee falls from a session high of 55.30 to trade at 55.45/46, slightly up from its previous close of 55.52/53. USD/INR had hit a one-week low on Monday after Finance Minister P. Chidambaram promised forthcoming fiscal consolidation steps.

On the global front, Japan's benchmark Nikkei has gained 0.7%, followed by Hang Seng. Markets across Asia moved up amid fresh hope for European action to support the region’s weaker economies.

On the domestic front, the Finance Minister P Chidambaram’s assurance for a review of the retrospective amendments to the Income Tax Act and new measures to attract investment in Mutual Funds has boosted investor sentiments.

Sectors like IT, Auto, Realty, Banks and Metal have gained by almost 1% each. Counters like Capital Goods, PSU, FMCG, Healthcare and Power are trading marginally in green zone. However, BSE Oil & Gas and Consumer Durable indices are trading marginally in red zone.

Banks, auto makers and property developers gain after the finance minister's comments about interest rates being high spark hopes the government will exert pressure on the RBI to ease monetary policy.

Tata Motors gains 3.3 percent, while Bajaj Auto advances 1.8 percent as lower interest rates would reduce financing costs for vehicle purchases.

DLF gains 1.5 percent, a day after India's biggest property company said April-June net profit fell 18 percent because of high interest rates and slowing home sales.

From the IT space, Infosys has gained by nearly 2%. In the quarter ended June 30, the Nasdaq-listed Cognizant Technology Solutions has overtaken India’s second largest IT services company, Infosys, by a comfortable margin of $43 million. TCS too is up by almost 2%.

Bank stocks also benefit after P. Chidambaram said the government would shortly announce measures tackling investments into mutual funds.

Banking and financial shares like SBI, ICICI Bank and HDFC have gained over 1%. 

Other notable gainers include GAIL India, JSPL, HUL, BHEL, ONGC, Hindalco, Sun Pharma and Tata Power.

On the losing side, Hero MotoCorp and RIL have declined by nearly 1%. Index heavyweight Reliance Industries (RIL) has edged lower on profit taking after Monday's rally.

Among individual shares, Bharat Earth Movers Limited (BEML) has dipped 4% at Rs 306, its lowest level since December 2008, after reporting net loss of Rs 39 crore for the quarter ended June 30, 2012, due to fall in operational income and higher operating cost.

Engineers India is trading higher by 3% at Rs 245 after the state-owned company said that it has secured a project management consultancy contract from GSPL India Transco Limited (GITL), for Mallavaram-Bhopal- Bhilwara-Vijaipur Natural Gas Pipeline (MBBVPL) project.

The broader markets are trading marginally positive, both up by nearly 0.5% each. The overall market breadth in BSE remains marginally positive with 1,369 shares advancing and 1,110 shares declining.