Sensex up 130 points; metal, auto names edge higher

However, profit taking in HDFC and IT heavyweights cap gains in noon trades

Markets continued to trade in a narrow range in noon trades, off day highs as profit taking in HDFC and IT heavyweights capped gains in metal and auto names.

At 1400 hrs, the Sensex was up 130 points at 25,544 and the Nifty added 28 points to trade at 7,640.

In the broader markets, the smallcap index gained 1.3% and the midcap index gained 0.6%, both outperforming the Sensex which was up 0.5%.

On the macro front, Indian factory activity expanded in June at its quickest pace since February while output prices rose at the fastest rate in eight months, signalling a further rise in inflation that is bound to vex the Reserve Bank of India (RBI), a business survey showed on Tuesday.

The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, advanced to 51.5 in June from 51.4 in May.  But domestic demand remained weak, hurting jobs growth.

The Indian rupee was trading higher at Rs 60.10 compared to the previous close of Rs 60.18 per on the back of strong gains in domestic equities.

Sectors & Stocks

Auto and Metal indices were among the top sectoral gainers up 2-3%.

Maruti Suzuki was up 5.7% at Rs 2,577, after reporting a 33.5% year on year increase in its total sales for June at 1,12,773 units. The country's largest car-maker had sold 84,455 units in the same month last year.

Tata Motors was up 4.2%, M&M gained 4% while in the two-wheeler space Bajaj Auto rose 1% and Hero MotoCorp was up 0.6%.

Metal shares firmed on the back of encouraging data from China. China's factory growth rose to a six-month high in June on improving domestic and foreign demand, indicating that the economy is witnessing an uptick.

Hindalco gained 7% and was the top gainer among sensex-30. Some of the other gainers from the metal space were Tata Steel was up 3%, and Sesa Sterlite firmed up 2%.

Meanwhile, capital goods shares continued their uptrend after a private survey showed that India's manufacturing sector growth in June. L&T and BHEL were up 1% each.

IT majors witnessed profit taking and were among the top losers. TCS, Infosys and Wipro were down 1-1.3%.

Sun Pharma, Gail India, Reliance Industries and NTPC down 0.4-1% were some of the other names in red.

HDFC twins were weak with the scrips down 0.3-1%.

The market breadth was positive ion BSE. 1817 stocks advanced while 1107 stocks declined.

Global Markets

 Asian shares held near three-year highs on Tuesday on upbeat Chinese manufacturing data and expectations that U.S. monetary policy will stay loose for some time, while the dollar was broadly soft.

Japan's Nikkei rose 1.3% while the MSCI's broadest index of ex-Japan Asia-Pacific shares was flat, staying just under a three-year high hit three weeks ago. Hong Kong markets were closed for a holiday.

China's official Purchasing Managers' Index showed factory growth rose to a six-month high in June, as expected, and a similar private survey also showed strong activity, reinforcing signs of stabilisation in the economy.

All the major markets in Europe were in green. CAA, DAX and FTSE gained 0.2-0.5%.