Markets have recovered smartly from the selling pressure and volatility seen in mid-morning trades, helped by telecom and banking stocks.

The Sensex is trading higher by 81 points at 12300 at 01.10 PM.

The Nifty is now trading higher by 20 points at 3625.

Telecom is in focus today with most telecom stocks rallying ahead. VSNL has recovered from its early weakness and is the biggest gainer among index stocks with gains of close to 4 per cent.

Reliance Communication has added over 4 per cent while Bharti is trading with gains of nearly 3 per cent. MTNL is the only loser among major telecom stocks, trading more than a per cent lower.

PSU banks have also gained further on reports of hikes in lending rates. PNB is the biggest gainer among the banking pack with gains of over 3 per cent. OBC has added close to 3 per cent. SBI is trading more than 1.5 per cent higher.

Among the private sector banks, HDFC Bank has added over 2 per cent while ICICI Bank is trading with gains of over 1.5 per cent.

Oil marketing stocks continue to trade higher on reports of a fuel price hike. Agency reports indicate that petrol prices would be increased by Rs3 per litre. HPCL and BPCL are trading with gains of around 2 per cent each.

Cement stocks recovered after early weakness following a government clarification that cement manufacturers have only been urged to bring down prices. Gujarat Ambuja has added nearly 4 per cent while ACC has gained nearly a per cent. However, Grasim continues to trade lower by nearly 2 per cent.

Sun Pharma and Satyam Computers are among the other major gainers.

Zee Tele is the biggest loser among index stocks and is trading nearly 4.5 per cent lower.

Aluminium stocks have lost further ground as Hindalco has lost over 2.5 per cent. Nalco is trading nearly 2 per cent lower.

Tata Motors and Bajaj Auto are the losers among auto stocks, both trading more than 0.5 per cent lower.

HDFC, Dr Reddy and Gail are the other losers.

Mid-caps are also holding firm and were relatively more stable in today's session. The mid-cap index is trading with gains of around 0.6 per cent. Market breadth on the NSE remains positive.

Adani Exports, GMR Industries and Ceat are among the major gainers in mid-caps.

Mahindra Gesco, Alstom Projects and Orient Paper are among the