Nifty ends below 7850 ahead of F&O expiry, Sensex up 171pts

Moneycontrol Bureau3:30 pm Market closing: Late surge helped market recovered yesterday's losses partially. The Sensex ended up 171.15 points or 0.7 percent at 25822.99. The Nifty below 7850 ahead of September F&O expiry tomorrow. The 50-share index slipped 33.95 points or 0.4 percent at 7845.95. About 1533 shares advanced, 1139 shares declined and 105 shares were unchanged. Lupin, M&M, Vedanta, HDFC Bank and ITC were top gainers while Tata Motors, Bharti Airtel, BHEL, Bajaj Auto and Sun Pharma.3:10 pm RBI: Though the Reserve Bank of India (RBI) is expected to cut interest rates next week by a quarter percent to a four-year low, officials say concerns over prices make it likely to resist political pressure for significant easing in the coming months.

In growing contrast with the government, which is desperate to accelerate a sluggish recovery, an increasingly independent RBI under governor Raghuram Rajan remains focused on a long-term inflation target of 4 percent and ending decades of damaging price volatility.

"The inflation outlook is still uncertain, and that is why the governor wants to be cautious," said one official familiar with the RBI's thinking.

3:00 pm Volkswagen's woes: Volkswagen CEO Martin Winterkorn faced a reckoning with his board on, summoned to explain how the company falsified US emissions tests in the biggest scandal in the 78-year history of the world's largest car maker.

Senior figures on the board's five-member executive committee grilled Winterkorn on Wednesday at the meeting at the company's headquarters in Wolfsburg, Germany.

Martin Winterkorn is due to have his contract extended at the end of this week and has so far shown no sign of resigning over the affair, after pledging “utmost transparency” in ongoing investigations. The board must decide by Friday whether to extend the 68-year-old executive's contract.

2:50 pm Europe Update: France's CAC, Germany's DAX and Britain's FTSE gained 1 percent each amid renewed fears over the health of the Chinese economy and continued fallout from the Volkswagen emissions scandal.In Asia, equities slid deeper into the red today, after a preliminary reading of activity in China's mammoth manufacturing sector fell to a six-and-a-half-year low of 47.0 in September, rekindling worries over the world's second-largest economy.2:40 pm GDP growth: India does not need further fiscal stimulus to revive the economy, despite GDP growth seen at the lower end of an 8.1 percent to 8.5 percent target in the current financial year, the government's chief economic adviser Arvind Subramanian said today.

"I don't think extra stimulus at this stage is necessary," Arvind Subramanian told agency in an interview, adding that the government "will and must" meet a fiscal deficit target of 3.9 percent of GDP in the current fiscal year.

Arvind Subramanian was instrumental in Finance Minister Arun Jaitley's decision in February to soften the target from an initial 3.6 percent to free up resources for a growth-boosting public spending stimulus.2:20 pm FII View: Speaking on the impact of weak Chinese PMI on global markets, Jonathan Schiessl of Ashburton, says China still has plenty of firepower to stabilse their economy. Although manufacturing sector seems to be going through pain, there are some sectors that are showing revival like the property sector, so it is not all bad news, says Schiessl in an interview to CNBC-TV18.  However, markets continue to focus on bad data and so they are correcting, he says.With regards to emerging markets, India continues to retain its unique position although currently it has been wrapped up in the global risk-off environment, says Schiessl.India has been  impacted by the overall withdrawals seen in the EM space but the house continues to dribble cash into counters where valuations are good, he adds. However, they haven't put all the cash to work because they expect market to test August lows before having a good final quarter.According to him, India has some catalyst which other EMs are lacking and is hoping for a rate cut from RBI in the upcoming policy meet.Also read - No need for extra stimulus, India to hit around 8% GDP: CEA2:00 pm Market Check

The market gained strength in afternoon trade with the Sensex rising 199.26 points to 25851.10 and the Nifty climbing 43.85 points to 7855.85. The broader markets too traded in line with benchmarks; the BSE Midcap and Smallcap advanced 0.4-0.6 percent.

The market breadth was positive as about 1390 shares have advanced against 1070 shares declined on the Bombay Stock Exchange.

Nandan Chakraborty of Axis Capital said markets traded lower than long term average valuations. He advised long term investors to allocate fresh money through the SIP route.

Globally, Asian markets close lower on renewed China woes. A preliminary reading of China's mammoth manufacturing sector fell to a six-and-half-year low of 47 in September, rekindling worries over the world's second-largest economy. IDBI gained 12 percent. MD and CEO Kishor Kharat told CNBC-TV18 that while he hasn't heard any news of an Axis Bank like structure for IDBI Bank, but it would certainly be a welcome move. Dishman Pharma gained 8 percent after the company announced a tie-up that makes them exclusive supplier of the API for Janssen's tuberculosis drug - Sirturo.