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Short covering, foreign funds inflow lift equity markets

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  29 Sep 2016 12:00 AM GMT

Mumbai, Sept 28: Short covering, along with value buying and fresh inflow of foreign funds, lifted the Indian equity markets on Wednesday.

The key indices started the day’s trade on a benign note. They made substantial gains during the second half of the session due to a bout of short covering.

The wider 51-scrip Nifty of the tiol Stock Exchange (NSE) edged up 38.75 points or 0.45 per cent to 8,745.15 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 28,198.88 points, closed at 28,292.81 points — up 69.11 points or 0.24 per cent from the previous close at 28,223.70 points.

The Sensex touched a high of 28,348.12 points and a low of 28,198.30 points during the intra-day trade.

The BSE market breadth was tilted in favour of the bulls — with 1,644 advances and 1,003 declines.

The broader market outperformed the BSE Sensex, with the BSE midcap and smallcap indices registering gains of around a per cent each.

On Tuesday, the key indices were pulled lower by a decline in global crude oil prices and foreign fund outflows.

The barometer index had receded by 70.58 points or 0.25 per cent, while the NSE Nifty edged down 16.65 points or 0.19 per cent.

Initially on Wednesday, the benchmark indices opened on a lower note in sync with their Asian peers.

However, value buying and short covering ahead of the upcoming futures and options (F&O) expiry kept the equity markets buoyed.

Besides, positive European markets, inflow of foreign funds and an appreciating rupee uplifted the investors’ sentiments.

The Indian rupee strengthened by three paise to 66.46 against a US dollar from its previous close of 66.49 to a greenback.

Some gains were capped ahead of the outcome of the ongoing meet of the Organisation of the Petroleum Exporting Countries (OPEC) producers in Algeria, and upcoming speeches from the Federal Reserve and the European Central Bank (ECB).

“Short covering and value buying after last couple of day’s falls pulled the equity markets up. Banking sector, especially the public sector banks, led the recovery,” And James, Chief Market Strategist at Geojit BNP Paribas Fincial Services, told IANS.

“Positive European markets and a firm rupee also supported the upward movement.”

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the CNX Nifty traded with firm sentiments throughout the session due to short covering.

“IT stocks traded with mixed sentiments. Banking stocks witnessed good buying in the second half of the session,” Desai said.

“Auto, textile and oil-gas stocks traded with firm sentiments. Aviation stocks traded with volatile sentiments due to profit booking at higher levels.”

In terms of investments, provisiol data with exchanges showed that the foreign institutiol investors (FIIs) purchased stocks worth Rs 73.83 crore, whereas the domestic institutiol investors (DIIs) divested scrip worth Rs 69.53 crore.

Sector-wise, the S&P BSE automobile index surged by 274.37 points, followed by the metal index, which rose by 187.56 points, and the banking index gained 164.18 points.

On the other hand, the S&P IT index edged down 27.07 points and the energy index fell by 13.50 points.

Major Sensex gainers during Wednesday’s trade were: Tata Steel, up 3.25 per cent at Rs 379.80; Bharti Airtel, up 2.42 per cent at Rs 321.60; Adani Ports, up 2.27 per cent at Rs 270.50; State Bank of India (SBI), up 1.83 per cent at Rs 253.50; and ONGC, up 1.66 per cent at Rs 251.60. Major Sensex losers were: Reliance Industries, down 1.87 per cent at Rs 1,089.70; Coal India, down 0.99 per cent at Rs 328.70; Hindustan Unilever (HUL), down 0.97 per cent at Rs 887.20; Sun Pharmaceuticals, down 0.53 per cent at Rs 766.45; and Cipla, down 0.35 per cent at Rs 605.30. (IANS)

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