The key benchmark indices regained strength in afternoon trade as reports of higher advance tax payment by top Indian firms and firm Asian stocks boosted sentiment. The market breadth was strong. IT, sugar and capital goods stocks rose. Infosys hit a record high. But, FMCG stocks declined. Index heavyweight Reliance Industries (RIL) pared gains. The BSE 30-share Sensex was up 144.40 points or 0.73%, up close to 110 points from the day's low and off close to 55 points from the day's high.

The barometer index BSE Sensex held the psychological 20,000, the level it has regained today, 21 December 2010. But, the 50-unit S&P CNX Nifty fell below the psychological 6,000 mark after regaining that level earlier in the day.

After a firm start triggered by higher Asian stocks, the market extended gains in morning trade. The market hit a fresh intraday high in mid-morning trade. The market pared gains in early afternoon trade. The market came off lows in afternoon trade.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was down 1.58% at 20.45. The index had risen 2.67% to 20.78 on Monday, 20 December 2010. The index had lost 5.51% to 20.24 on Thursday, 16 December 2010. The index had lost 0.19% to 21.42 on Wednesday, 15 December 2010. The index had lost 4.92% to 21.46 on Tuesday, 14 December 2010. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.

Foreign funds sold shares worth a net Rs 109.50 crore and domestic funds bought shares worth a net Rs 139.45 crore on Monday, 20 December 2010, as per the provisional data from the stock exchanges. Foreign funds have sold stocks worth a net Rs 4,031.60 crore this month, as per data from the stock exchanges. Domestic funds have boughtshares worth a net Rs 950.34 crore so far this month.

Advance tax payments by top 100 corporate taxpayers rose 18.7% to Rs 27,531 crore in Q3 December 2010 over Q3 December 2009, indicating better corporate performance in the third quarter this year. Advance tax is paid in four installments in June, September, December and March and is based on taxpayers' projected earnings, thus giving an indication of industry's performance in the months to come.

Asian stocks rose on Tuesday, 21 December 2010, as risk appetite improved after tensions eased on the Korean peninsula and on broad overnight gains on Wall Street. The key benchmark indices in Hong Kong, China, Japan, South Korea, Singapore, Taiwan, Malaysia and Indonesia were up by 0.54% to 1.79%.

Tension on the Korean peninsula eased as North Korea did not respond after a South Korean artillery drill on Monday, 20 December 2010. Investors had fears that the South Korean artillery test would draw a reprisal from North Korea. Instead, North Korea reportedly said on Monday that it wouldn't respond to the test and that it would allow United Nations nuclear inspectors back into the country.

Meanwhile, Japan's central bank kept its key interest rate unchanged at near zero amid a sluggish economic recovery. The unanimous decision to keep the overnight call rate target at zero to 0.1% was announced today, 21 December 2010, after a two-day meeting of the Bank of Japan's nine-member policy board. The central bank maintained its assessment of the country's economy, saying the moderate recovery appears to be pausing. Japan's economy has been battered by a strong yen and persistent deflation. A key central bank survey last week showed business sentiment is deteriorating.

Trading in US index futures indicated that the Dow could rise 44 points at the opening bell on Tuesday, 21 December 2010.

On the global front, the Organisation of Economic Co-operation and Development (OECD) on Monday said Spain should raise taxes further if its fiscal consolidation plan goes off course and reforms to pensions and banks are vital to boost an economy which will remain weak for years. The OECD in a report published on Monday said that Spain was broadly on track to meet its deficit target 2011 but risks, such as weaker than expected growth, remained which could force the government to take additional measures.

China Vice Premier Wang Qishan today, 21 December 2010, said at the opening of European Union-China trade talks that China supports the measures taken by European officials to stabilize markets hit by the sovereign debt crisis.

Back home, the Reserve Bank of India (RBI) on Thursday, 16 December 2010 announced measures to ease liquidity crunch in the banking system while keeping the key policy rates unchanged after a mid-quarter policy review. The RBI reduced the statutory liquidity ratio (SLR) of scheduled commercial banks (SCBs) from 25% of net demand and time liabilities (NDTL) to 24%, with effect from 18 December 2010. The central bank also said it will conduct open market operation (OMO) auctions for purchase of government securities for an aggregate amount of Rs 48000 crore in the next one month. These two measures are expected to inject liquidity on an enduring basis of the order of Rs 48000 crore, the RBI said after the mid-quarter policy review.

The RBI said the underlying growth momentum of the Indian economy remains strong. Even as inflation has moderated, it remains significantly above the comfort level of the RBI, the RBI said in a statement. Moreover, risks to inflation remain on the upside, both from domestic demand and higher global commodity prices, the RBI said. There is, therefore, a need for continued vigilance on the inflation front against the build-up of demand side pressures. The RBI had earlier projected 5.5% inflation by March 2011.

A major challenge for the RBI in the recent period has been liquidity management. It is the RBI's endeavour to alleviate the liquidity pressure in a manner consistent with the monetary policy stance of containing inflation and anchoring inflationary expectations, the RBI statement said.

The RBI said its latest measures will release sizable primary liquidity into the system. These measures will reduce the liquidity deficit in the system close to the comfort zone of the Reserve Bank of India , it said. The liquidity easing measures will help stabilise interest rates in the overnight inter-bank market closer to the operative policy rate of the Reserve Bank of India, it said.

At 13:20 IST, the BSE 30-share Sensex was up 144.40 points or 0.73% to 20,033.33. The Sensex rose 201.96 points at the day's high of 20,090.84 in mid-morning trade, its highest level since 6 December 2010. The index rose 36.88 points at the day's low of 19,925.76 in early trade.

The S&P CNX Nifty was up 43.85 points or 0.74% to 5,990.90. The Nifty a hit a high of 6,006.70 in mid-morning trade, its highest since its highest since 6 December 2010.

The BSE Mid-Cap index rose 0.64% and the BSE Small-Cap index rose 0.85%.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,725 shares rose while 985 shares declined. A total of 120 shares remained unchanged.

Among the 30-member Sensex pack, 22 rose while the rest declined. Hindalco Industries, ICICI Bank and Wipro rose by between 2.64% to 3.18%. Hero Honda Motors, Bharti Airtel and NTPC fell by between 0.6% to 2.36%.

Index heavyweight Reliance Industries (RIL) was up 0.57% to Rs 1063.50 on reports of higher advance tax payment. But, the stock came off the day's high of Rs 1067.90. RIL's advance tax payment surged 42.8% to Rs 1191 crore in Q3 December 2010 over Q3 December 2009

Capital goods stocks gained on renewed buying. BEML, Larsen & Toubro, Bhel, Siemens and Praj Industries advanced 0.23% to 1.63%.

FMCG stocks declined on profit taking. ITC, Hindustan Unilever and Marico fell by between 0.42% to 2.02%.

IT stocks rose on recent positive economic data in the US, the key market for Indian IT firms. India's third largest IT exporter by sales Wipro rose 2.3%, with the stock gaining for the fifth straight day. The company said on 10 December 2010, that it won a 5-year outsourcing contract from Vasan Eye Care. Financial details of the contract were not disclosed.

India's second largest software company by sales Infosys rose 0.3%. The stock hit record high of Rs 3,370 today.

But, India's largest software company by sales TCS lost 0.45%. The stock hit record high of Rs 1174.50 on Monday, 20 December 2010. The company announced on 16 December 2010 that Indian Bank selected the company for its financial inclusion solution project.

Sugar stocks gained as domestic sugar prices hardened by Rs 50 per quintal in the national capital on Monday on hectic buying, influenced by reports of fresh government steps to allow export of the sweetener. Bajaj Hindusthan, Balrampur Chini and Shree Renuka Sugars rose by between 0.09% to 2.21%.