The markets are trading higher following a rally on Wall Street after the Citigroup bailout. The benchmark index Sensex is up over 2 per cent while the Nifty has jumped 57 points.
In the currency markets, the rupee is trading below 50 to a dollar.
“The markets are witnessing a short term rally and the Sensex could rebound to 9200-9600. There is still a lack of long term participation in equity markets and investors are looking to exit long positions using bounce,” said Deven Choksey, MD, K R Choksey Securities.
All sectoral indices on the BSE are trading in the green with metal, banking, consumer durables, realty and capital goods stocks leading the gainers.
The BSE metal index is trading 3.6 per cent higher and the banking index is up 3.5 per cent.
“The markets are mainly taking cues from Wall Street. The uptrend is on account of short covering and it is more of a relief rally,” said Seshadri Bharathan, Senior VP & Country Head Broking, Dawnay Day AV Financial Services.
Among the Sensex stocks, HDFC Bank leads the rally. It is up over 5 per cent. ICICI Bank, Satyam Computers and JP Associates are the other major gainers in the pack.
“The market trend is likely to remain on downside. Markets have been cautious till now with profit coming in at higher levels,” said Technical Analyst & Derivative Strategist, V K Doshi.
The US government's plan to bail out Citigroup sent Wall Street soaring on Monday for the second straight session as investors hoped that the worst of the financial industry's problems might finally be over.
The Dow rose 396.97, or 4.93 percent, to 8,443.39. Its last two-day advance was Oct. 30 and 31, along with the rest of the market.
Broader stock indicators also jumped. The Standard & Poor's 500 index advanced 51.78, or 6.47 percent, to 851.81, and the Nasdaq composite index rose 87.67, or 6.33 percent, to 1,472.02.
The Russell 2000 index of smaller companies rose 30.25, or 7.44 percent, to 436.79.
Most Asian indices are trading higher today. Japan's Nikkei, Hong Kong's Hang Seng and South Korea’s Kospi have gained more than 1.5 per cent each.
(With AP inputs)