Markets trade firm on buying in bank stocks

Mumbai stock market rises on blue-chip buying, foreign fund inflows; small caps face correction, large caps to bounce back.

Equity benchmark indices climbed in early trade on March 12 amid buying in blue-chip stocks like HDFC Bank and ICICI Bank along with sustained foreign fund inflows.

After a firm beginning, the 30-share BSE Sensex climbed 376.38 points to 73,879.02 in early trade. The Nifty went up 85.55 points to 22,418.20.

Among the Sensex firms, TCS, HDFC Bank, Reliance Industries, Axis Bank, ICICI Bank, IndusInd Bank, Infosys, Larsen & Toubro and Bharti Airtel were the major gainers.

"The dominant near-term trend in the market now is the correction in the broader market, particularly the small caps. The small cap index is 7.8% down from the peak and this correction is likely to continue since the valuations are even now excessive.

"The regulator Sebi has sent a clear message about the frothy valuations in the small-cap segment and, therefore, regulatory actions are likely, going forward.

"There can be redemptions from small-cap funds adding to the downside. Quality large caps will bounce back after a correction, but small caps are unlikely to bounce back in the near term. PSE stocks that have run up too fast also are likely to face selling pressure," V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

ITC, Nestle, JSW Steel, UltraTech Cement, NTPC, and Tata Steel were among the laggards.