Markets volatile in a narrow range, Midcaps surge

Benchmark indices continue to remain volatile in a narrow range. Capital goods shares are trading higher post the announcement of better-than-expected July factory output data.

By 10:15, the Sensex was up by 68 points at 19,850 mark and the Nifty gained by 21 points at 5,872 levels.

The rupee weakened in opening trade on Friday tracking weakness in offshore non-deliverable forwards but better-than-expected factory output data may limit a very sharp fall.

At 10:05 am, the rupee was trading at Rs 64.02 compared with previous close of Rs 63.54 per dollar.

Wholesale price inflation data, due on Monday, will be the next key trigger for markets.

On the global front, Asian shares fell on Friday and the dollar held to overnight losses against the yen as investors fretted over not whether but by how much the U.S. Federal Reserve will cut its monthly stimulus at next week's monetary meeting.

The Fed is expected to reduce its $85 billion a month bond-buying programme at its two-day policy meeting ending on Sept 18. Nikkei and Hang Seng have declined by over 0.5%.

Back home, BSE Capital Goods, Power, Healthcare, Realty, PSU, Metal and Auto indices have gained between 1-2%. However, banking and It share are trading marginally lower.

Capital goods shares are witnessing buying demand on announcement of better-than-expected July factory output data. Index of industrial production (IIP) rose by 2.6% in July on a y-o-y basis after falling for 2 consecutive months.

While mining output continued to contract, both manufacturing and electricity output rebounded sharply and grew by 3.0% and 5.2% respectively in July.

L&T and BHEL have gained over 2%.

Other notables gainers are Tata Power, Sun Pharma, Coal India, Hero Moto, Tata Motors and GAIL have surged between 1-2%.

On the losing side, ICICI Bank, Wipro, HDFC, HDFC Bank and Bharti Airtel have declined by 1% each.

Shares of India's aviation companies have climbed 20-35% in the last fortnight on the back of air fare hikes.

SpiceJet is up around 20% while that of Naresh Goyal-promoted Jet Airways is trading 35% higher.

IL&FS Engineering surged 10% in the opening trades this Friday after bagging an order worth Rs 244.46 crore from realty firm Emaar MGF.

MTNL gained over 4% on Friday, continuing its uptrend for second trading session after a Group of Ministers (GoM) on late-Thursday decided to refund the money paid by the  BSNL and MTNL for surrendering BWA spectrum worth more than Rs 11,000 crore.

The broader markets are outperforming the benchmark indices- BSE Midcap and Smallcap indices are up nearly 1%.

The market breadth in BSE remains positive with 883 shares advancing and 318 shares declining.