Despite the rally today, it is not clear which way the market will move

The Indian market opened flat, tracking the weak Asian markets in the aftermath of the huge earthquake that struck the north-eastern region of Japan on Friday. Concerns over the Reserve Bank of India's (RBI) move on interest rates in its mid-quarter policy review on Thursday also kept investors on the sidelines. Metal, oil & gas and banking counters witnessed decent demand pushing the indices higher in mid-morning trade.

The marginal rise in headline inflation for February resulted in the market paring some of the earlier gains and trading was range-bound thereafter. The indices touched intra-day highs in late trade, on all-round buying support that began post-noon. The market closed a tad below the day's high.

Both the Sensex and the Nifty opened with a negative gap at 18,167 and 5,437, respectively. However, immediately thereafter, the market raced higher. There was some hesitation for a while, but eventually the indices headed higher and closed near the highs of the day at 18,439 and 5,532 respectively. The Sensex (up 1.46% or 266 points) and Nifty (up 1.58% or 86 points) closed at their best levels in eight days, both in terms of percentage and points. The advance-decline ratio on the National Stock Exchange was 913:752.

Today, the market was trading close to its extreme levels, after which there is a strong probability of a reversal.

The market breadth on the Sensex and Nifty was positive. The Sensex ended with 25 gainers and four losers, while one stock remained unchanged, and the Nifty had 46 advancing stocks and four in the declining list. The broader markets under-performed the Sensex with the BSE Mid-cap index gaining 0.49% and the BSE Small-cap index adding 0.26%.

All sectoral gauges settled in the green with the BSE Oil & Gas (up 2.24%) emerging the top gainer. Other major gainers were BSE Metal (up 2.01%), BSE IT (up 1.48%), BSE Bankex (up 1.36%) and BSE Power (up 1.27%).

Reliance Communications (up 4.36%), Tata Power (up 3.72%), Reliance Infrastructure (up 3.48%), Tata Steel (up 3.27%) and Jaiprakash Associates (up 2.68%) were the top performers on the Sensex, while Bharti Airtel (down 0.40%), Hindustan Unilever (down 0.16%), ONGC (down 0.14%) and Hero Honda (down 0.06%) ended at the bottom of the list.

India's headline inflation rose marginally to 8.31% in February, driven by high food and fuel prices, which may prompt the Reserve Bank of India (RBI) to hike interest rates when it reviews the monetary policy later this week. The inflation rate stood at 8.23% in January this year, whereas it was 9.42% in February last year.

Finance minister Pranab Mukherjee has expressed the hope that inflation should come down to 7% by the month-end. He pointed out that monthly fluctuations in inflation do not give a correct picture.

Markets in Asia settled mixed with the Nikkei 225 suffering its biggest single-day decline in two years, dipping to its lowest level since November 2010. Japanese automobile, electronics and oil refining companies led the index lower, as most facilities have shut down after the tragedy that has destroyed infrastructure in the northeast region.

Other markets in the region were stable, implying that the earthquake will not have an immediate effect in neighbouring economies. The South Korean market was lifted on speculation that steelmakers would have to cope up with increased demand from Japan.

The Nikkei 225 sank 6.18%, the KLSE Composite shed 0.02%, the Straits Times declined 0.26% and the Taiwan Weighted lost 0.56%. The Shanghai Composite gained 0.17%, the Hang Seng rose 0.41%, the Jakarta Composite advanced 0.78% and the Seoul Composite surged 0.80%.

Back home, foreign institutional investors were net sellers of equities worth Rs243.58 crore on Friday, whereas domestic institutional investors were net buyers of stocks worth Rs112.24 crore.

Diamond Power Infrastructure (down 1.35%) has bagged an order worth Rs85.37 crore from Power Grid Corporation of India to supply 3,216km of 400KV HV DC line overhead conductors associated with transmission systems for Krishnapatnam UMPP (Part A). The company has also secured an order from Gayatri Projects for supply of equipment for the MPPKVVCL project. The revised order book of the company stands at Rs1,650 crore.

Educomp EduReach, the ICT division of Educomp Solutions (up 1.43%) has received a letter of intent (LoI) from the government of Maharashtra for implementation of ICT Schools Project-Phase 2 in the Nashik and Latur regions, covering 540 secondary and higher secondary schools from class V to XII. The order is worth Rs67.93 crore and it will be implemented on a build, own, operate and transfer (BOOT) model over a period of five years.

Fortis Healthcare (up 0.88%) has signed a partnership pact with TotipotentRX Cell Therapy, a leading provider of cutting- edge technologies in the stem cell and regenerative medicine market to set up centres of excellence offering cellular therapies and stem cell clinical trials, across selected Fortis hospitals. The centres will undertake stem cell clinical research relating to diabetes, cancer, cardiovascular disease and hospitals for processing stem cells before transplantation.