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The markets are going strong this afternoon on account of strength in the capital goods space and a bounceback in the banking counters ahead of the RBI policy meeting on Tuesday. The Sensex is quoting at 24,631, stronger by 413 points and the Nifty is at 7350, up 120 points. The midcap index is at 8624, higher by 157 points and the smallcap index is at 9155, up 140 points. All the major sectoral indices, barring defensives such as FMCG and pharma are in the green, with capital goods and banks leading the upmove.
The RBI is widely expected to keep rates unchanged when it reviews its monetary policy on Tuesday, the first since the new Modi-led government's reign at the Centre.
On the economic front, manufacturing activity inched up in May compared to the previous month, according to the widely-tracked HSBC Purchasing Managers' Index (PMI). The index for manufacturing rose marginally to 51.4 points in May from 51.3 points in April.
Meanwhile, encouraging China factory data and another closing record on Wall Street lifted Asian equities and commodities, while the euro held recent gains against the dollar ahead of a European Central Bank meeting. Tokyo's Nikkei led by way, rising 2.1%. MSCI's broadest index of Asia-Pacific shares outside Japan was little changed. Greater China markets are closed on Monday for a holiday.
The capital goods and banking stocks are having a good session of trade. L&T has soared by 5.6% at Rs 1636 to top the gainers list on the BSE and BHEL has jumped by 2.4% at Rs 247 to give it company in the capital goods space. The banking space seems to have given a breakout after trading in a sideways manner in the past 1-2 weeks. SBI has soared by 3.5% at Rs 2631, HDFC has gained 3.1% at RS 903, Axis Bank has firmed up by 2.8% at Rs 1888, ICICI Bank has jumped by 2.7% at Rs 1458 and HDFC Bank has added 2.6% at Rs 815.
The midcap banking space is also witnessing a rally across the board. Canara Bank (up 5.26%), Union Bank of India (up 4.42%), IDBI Bank (up 4.01%), Bank of India (up 3.29%), Punjab National Bank (up 2.95%), Bank of Baroda (up 2.76%), are rocking in noon trades.
On the other hand, the defensive pharma and FMCG stocks are among the laggards this afternoon. Sun Pharma has weakened by 1.3% at Rs 599 and Dr Reddy's has shed 1.1% at Rs 2420. In the FMCG space, Hindustan Unilever has shed 1% at Rs 594 and ITC has lost 1% at Rs 338.
The market breadth is strong, with 1,826 gainers and 989 losers on the BSE.
