Led by a rally in metal stocks, the Sensex is trading in the green in the early deals. The advance is supported by Wall Street gains on Tuesday as US stocks brushed off more bad economic news to finish with a moderate advance.
Most of the Asian markets are also trading in the green, with Japan’s Nikkei is up over 1.5 per cent.
The Sensex is up 66 points to 10,402 while Nifty is up 12 points to 3,124.
Among the Sensex stocks, metal stocks lead the gainers, with Sterlite Ind, up over 5.5 per cent. Tata Steel is up over close to 5 per cent while Hindalco is up over 4 per cent.
Cement stocks continue their good run today. JP Associates is up over 4 per cent while Grasim has advanced over 2 per cent.
“The market has factored in most of the negative news in terms of the third quarter earnings. Risk-taking is coming back. I think the first six months of this year will be best time for investors to build a medium- to long-term portfolio. Given the slew of monetary measures announced, we will see a slow recovery from this point and it will extend to the whole year,” said Sandeep Sabharwal, CIO of JM Financial Mutual Fund.
On Tuesday, Wall Street brushed off more bad economic news to finish with a moderate advance that left broad stock indexes at their highest levels in two months.
Stocks gained after stumbling in the early going because of mixed readings on the service sector, factory orders and pending home sales. While investors expected the data would show further deterioration, they were hoping the pace of the declines would slow. The market is eager for signs that the US recession will end this year.
Stocks recovered in mid-afternoon trading after the Federal Reserve released the minutes from its December meeting, providing insight into the central bank's historic decision to ratchet down its key interest rate to near zero to revive the economy.
Investors hopeful for an economic recovery moved out of sectors like consumer staples and health care that are seen as safe havens during recessions and put money into consumer discretionary names and beaten down financial stocks. Proposals by President-elect Barack Obama to help stimulate economic growth by spending on infrastructure and pushing for tax breaks helped sectors expected to benefit from a stronger consumer.
"I think people are cautiously optimistic," said Ben Halliburton, chief investment officer at Tradition Capital Management. "They are hopeful that the Obama administration is going to get the economy back on track. But I think the speed at which they get things back on track might be slower than the current consensus believes."
The Dow Jones industrial average rose 62.21, or 0.69 percent, to 9,015.10.