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The equity market in India behaved in a volatile manner today with the Sensex closing marginally higher by around 20 points (up 0.1%). NSE-Nifty, on the other hand, edged higher by a slender 6 points. BSE Mid Cap closed marginally lower whereas BSE Small Cap index ended marginally on the higher side. Nearly three stocks closed lower on the Sensex for every two that gained.

While most Asian indices closed higher today, Europe too is trading mostly in the positive currently. The rupee was poised at Rs 55.7 to the dollar at the time of writing.

India's poor economic performance coupled with uncertainty in the European region is really leading to a lot of volatility in the markets and making life difficult for investors. However, we believe that this is just an issue of sentiments and over the long term, Indian markets do remain attractive. Thus, one should ignore the volatility and try and start building a portfolio of fundamentally good stocks run by an honest management team.

Gas authiority of India Ltd. (GAIL), India's largest gas transmission company, closed flat on the bourses today. As per reports, the firm is in the process of setting up a 1,000 MW power plant in the state of Punjab. The plant, to be set up in collaboration with the Punjab Government, will have three units of 330 MW each and will receive assured gas supply from the Dadri Nangal pipeline. GAIL, which had earlier reached a 52-week low on account of the regulatory uncertainty prevailing in the sector, has recovered somewhat and looks well set to add to its market cap in the times to come.

Major PSU banks like Punjab National Bank, State Bank of India (SBI) and Corporation Bank closed with decent amount of gains today. The optimism seemed to be on account of expectations that India's central bank would implement twin cuts in the repo rate as well as the cash reserve ratio at the RBI's upcoming monetary policy review meeting on June 18, 2012. These measures are likely to boost credit flow and help give impetus to the economy. Although inflation is yet to reach RBI's comfort levels, the slowdown in the economy is likely to force the hand of the central bank in making money cheaper.

Source: India Markets Wednesday Wrap-Up: Volatility Takes Centre Stage