DNA Money Edit: Market rally a breather, but concerns stay

On a day when a perceived rift between the Reserve Bank of India (RBI) and the central government gave wings to a series of rumours, Sensex gave a 718-point salute. RBI's plan of buying Rs 40,000 crore of government bonds, aimed at injecting liquidity into the system, came as a breather for the markets, bruised and battered in the past one month. Though still nervous about the liquidity crunch in the wake of defaults by IL&FS, markets seem to be finding some support at these levels.

What has stemmed the rise on Monday is the easing of oil prices, among other factors. Brent crude oil futures were down 31 cents to $77.31 a barrel amid concerns of slowing demand owing to weak economic growth. The market is expecting an increased supply from Saudi Arabia as it has promised to keep the oil market adequately supplied.

Another crucial support was provided by the second quarter results by India Inc, a mixed bag so far. Stock markets are hoping that the season would end on a positive note. Tata Power's 85% jump in Q2 net profit on the back of booming renewable energy business underlines the confidence in the market as close to 800 companies are set to post their earnings this week.

After a month-long volatility, are the markets moving in a steady direction now? That may be too early to conclude.