Despite three days of gains, and a strong rebound in commodities and foreign markets, its not yet clear which way the market is headed

Adding to the gains accrued in the previous session, the Indian market opened in the positive terrain influenced by optimism in the global arena. The Sensex added 80 points to open at 18,286 and the Nifty was up at 5502, 22 points higher from its previous close. The benchmark indices touched the day's highs in the first half hour itself at 18,374 and 5,528, respectively. The rise in food inflation numbers for the week ended 12th March led to some nervousness but investors shrugged it off and buying continued.

A bit of nervousness was noticed around 1.30pm dragged the indices to their intra-day lows with the Sensex falling to 18,269 and the Nifty at 5,496. Thereafter the market was range-bound till around 3pm. A fresh round of buying in the last half hour resulted in the market closing in the green for the third day in a row. The Sensex closed 145 points higher at 18,350 and the Nifty settled at 5,522, up 42 points higher than its previous close. The advance-decline ratio on the National Stock Exchange was a positive 997:668.

The broader indices were also in sync with the Sensex as the BSE Mid-cap index closed 0.78% higher and the BSE Small-cap index gained 0.67%.

Barring the oil & gas and health sectors, all other sectoral gauges closed in the positive terrain.  BSE Realty (up 2.83%), BSE Auto (up 1.40%), BSE Capital Goods (up 1.27%), BSE Consumer Goods (up 1.25%) and BSE IT (up 1.07%) were the top gainers. On the other hand, BSE Oil & Gas (down 0.25%) and BSE Healthcare (down 0.09%) were the losers in the sectoral space.

Hindalco Industries (up 4.25%), Mahindra & Mahindra (up 2.88%), BHEL (up 2.82%), TCS (up 2.76%) and Jaiprakash Associates (up 2%) were the major gainers on the Sensex. Maruti Suzuki (down 0.60%), Bajaj Auto (down 0.42%), Hindustan Unilever (down 0.30%), Reliance Industries (down 0.25%) and DLF (down 0.13%) settled at the bottom of the list.

Food inflation was back in double digits at 10.05% for the week ended 12th March after a fortnight-long gap. Food inflation, which has been showing a declining trend for the last three weeks, stood at 9.42% in the week ended 5th March. The rate of price rise in food items, which accounts for over 14% of overall inflation, may prompt the Reserve Bank of India to hike key policy rates.

Most markets in Asia closed in the green on higher commodity prices and on news that factories in Japan are planning to restart production after factories came to a standstill following the earthquake earlier this month. However, concerns about the radiation levels and damage to the economy kept the Nikkei lower in trade.

The Hang Seng gained 0.39%, the Jakarta Composite surged 1.56%, the KLSE Composite advanced 0.12%, the Straits Times rose 0.69%, the Seoul Composite climbed 1.22% and the Taiwan Weighted was up 0.37%. On the other hand, the Shanghai Composite shed 0.06% and the Nikkei 225 ended 0.15% lower.

Back home, institutional investors-both foreign and domestic-were net buyers in the equities segment on Wednesday. Foreign institutional investors pooled in fund worth Rs312.10 crore and domestic institutional investors pumped in Rs1,111.68 crore.

Tractor and SUV major Mahindra and Mahindra (M&M) (up 2.88%) will set up a tractor manufacturing unit at its existing facility at Zaheerabad in Medak district of Andhra Pradesh. M&M will invest Rs300 crore on the tractor manufacturing facility over the next three years and provide direct employment to about 2,000 people and indirect employment to another 5,000 persons.

The proposed facility, Mahindra's first in south India, is intended to manufacture 90,000 tractors per year and also 3 and 4-wheeler commercial vehicles.

Pipavav Shipyard (up 1.02%) has received clearance from Foreign Investment Promotion Board (FIPB) for building warships for defence sector. The clearance would allow the company to bid for construction of submarines, destroyers, frigates, LPD, corvettes and aircraft carriers.

In November, 2010, the company had said it received a licence to build warships for Indian Navy after securing clearances from ministries like home and defence and other related agencies.

Dhunseri Petrochem and Tea (up 0.86%) will start construction of its PET resin manufacturing unit in Egypt by June. The company had put on hold plans to start construction because of the political instability after an uprising in that country, which put an end to the 30-year-old rule of Hosni Mubarak.

The plant will be built with an investment of about $160 million and will have the capacity of about 420,000 tonnes per annum (TPA).