Sensex recovers 400 pts from day's low, Nifty above 7900

Moneycontrol Bureau11:45 am Rate cut possible: In the wake of PBoC’s rate cut move, pressure is likely to mount on the Indian central bank to follow suit, said DBS Group.Minutes of the RBI Technical advisory committee out yesterday saw four of the seven members suggest that rates be cut back in August (with one suggesting a steep 50bp cut). Governor Raghuram Rajan however left rates unchanged, instead highlighting risks that could disrupt the on-going disinflationary phase.

But DBS Group suspects that the RBI is unlikely to act in haste, just as most domestic factors favour rate cuts at this juncture. "The bigger wildcard are externals, particularly worries over the Chinese economy (and its shaky financial markets), weak demand-driven fall in commodity prices and US Fed’s policy direction. There are bound to be concerns that lower rates might increase the downside pressure on the respective currencies," it reasoned.DBS Group said for the time being, the shakeout in the EM currency and equity markets (including US) have pushed back Fed rate hike expectations for September. It remains to be seen if calmer market conditions that prevailed yesterday will extend in the near-term or lose steam. If sentiments stabilise in the run-up to next month’s review and the US Fed pushes back rate hikes into next year, a window for the RBI to lower rates is likely to re-emerge, it added.11:30 am L&T bags order: The power transmission and distribution business of L&T Construction has won a prestigious order in the middle east market from their reputed customer and key stakeholder, Qatar General Electricity & water Corporation KAHRAMAA for its ongoing Qatar Electricity Transmission Network Expansion plan-phase XII. The order encompasses the engineering, procurement & construction of two substation packages.Before this, the company has won orders worth Rs 1563 crore in both the international and domestic market in July and August 2015.11:15 am Expert on China volatility: China is currently undergoing a major shift from its investment-led, export-driven economic model to one led by domestic consumption and this transition has implications for global capital, commodities as well as the broader world economy, believes noted economist Sanjeev Sanyal.In an interview to CNBC-TV18, Deutsche Bank Global Strategist and Managing Director Sanyal said the latest crisis in the world's second largest economy is resulting from the above-mentioned shift and it is going to alter global dynamics in a major way."China will continue to slow down [during the transition], capital will flood out and will have to go elsewhere. It remains to be seen if countries such as the US or India can absorb this excess capital [that will flow out of China]," he said, adding that moves such as interest rate cuts by the Chinese central bank will only help smoothen the transition.The development is significant from India's standpoint as it could use cheap global capital to build capacities and overhaul its infrastructure, as well as benefit from what may be a broken commodity market for years."But it will require leadership reform. Cost of capital has to come down structurally. Bank reforms have to take place," Sanyal said.11:00 am Market Check

The market recouped all its early losses amid consolidation. The Sensex recovered nearly 400 points from day's low, to trade at 26082.20, up 49.82 points. The Nifty rose 27.55 points to 7908.25.

The broader markets like BSE Midcap and Smallcap gained 0.5-1 percent. About 1322 shares have advanced, 784 shares declined, and 71 shares are unchanged on the Bombay Stock Exchange.

Asian markets mood was lifted by the liquidity easing measures by China despite negative handover from US. Nikkei and Shanghai gained nearly 3 percent.

Lupin gained 3 percent as it received USFDA nod for anti-inflammatory drug Diclofenac Sodium. Additionally, Credit Suisse said that Lupin has raised prices in its branded us portfolio by 10 to 100 percent on Antara, Alinia and Suprax, which can add 2 percent to FY17 EPS.

Infosys rebounded, up 0.8 percent as Jefferies upgraded stock to a buy from underperform and raised target price to 1,260 from Rs 900 as it expects FY16 revenue growth at the higher end of guidance and EBIT could be closer to the top end of 24-26 percent range.

BHEL dropped 2 percent after Goldman Sachs downgraded stock to sell from neutral earlier with a target of Rs 207 per share as it believes that the new ordering momentum is unsustainable.

In new listings today, Power Mech Projects has a subdued listing, but recovered 10 percent from day's low. Management told CNBC-TV18 that they expect revenue growth of 25 percent to Rs 1,600 crore in FY16.