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Short-covering, value buying buoy equity markets

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  12 April 2016 12:00 AM GMT

Mumbai, April 11: Short-covering, along with value buying and positive global cues, buoyed the Indian equity markets on Monday. Consequently, key indices of the Indian equity markets closed in the green.

The wider 50-scrip Nifty of the tiol Stock Exchange (NSE) ended the day’s trade higher by 116.20 points or 1.54 percent, to 7,671.40 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 24,789.40 points, ended the day’s trade at 25,022.16 points — up 348.32 points or 1.41 percent from the previous close at 24,673.84 points.

The Sensex touched a high of 25,049.92 points and a low of 24,523.20 points during the intra-day trade. The BSE market breadth was tilted in favour of bulls — with 1,489 advances and 1,097 declines.

The barometer index had closed flat on Friday. It inched down by 12 points or 0.05 percent. On Monday, both the key indices opened on a firm note, on the back of a rebound in global crude oil prices and positive Chinese markets. Further, value buying triggered short-covering after last week’s correction lifted prices.

Last week, the barometer index had plunged by 596 points or 2.35 percent. Similarly, the NSE Nifty had receded by 157.85 points or 2.04 percent.

However, the initial gains were ceded as unwinding of long positions ahead of the fourth quarter (Q4) results season dented sentiments.

The Q4 results season started from April 8. Infosys is expected to be the first bluechip firm to come out with its results on April 15.

Besides, caution ahead of key global and domestic macro-economic data deterred investors’ from chasing prices. The week ahead will disclose global macro-economic data, such as the March inflation figures from Chi, European countries and the US.

In addition, the domestic macro-economic data will start from April 12, with the release of the Index of Industrial Production (IIP) and retail inflation (Consumer Price Index) figures.

Notwithstanding, the equity market staged a sharp recovery in the second half of the trading session after a mild decline.

“Value buying ahead of the Q4 results, had triggered short-covering which lifted prices. Firm global crude oil prices and positive European and Chinese indices, too, supported the equity markets’ rise,” And James, chief market strategist, Geojit BNP Paribas Fincial Services, told IANS. “However, caution ahead of the Q4 results and the macro-economic data dented sentiments.” According to James, the shortened ture of the week, also played its part in expanding the trading ranges.

The equity markets will be closed on account of Dr.Baba Saheb Ambedkar Jayanti on April 14 and Ram vami on April 15.

Vaibhav Agarwal, vice president and research head at Angel Broking, cited that positive opening in the European indices resulted in a sharp rise in the domestic markets.

“Telecom stocks were major gainers today, as Bharti and Idea traded significantly higher. We expect markets to continue to consolidate at current levels in the absence of any major triggers,” Agarwal told IANS.

“Earnings would act as the next catalyst for the markets on the domestic front while global cues could remain volatile considering the FOMC (federal open market committee) meeting later this month.”

Nitasha Shankar, senior vice president for research with YES Securities informed that broader markets also made healthy gains in line with the headline indices.

“All major sectorial indices ended in the green. Bank index outperformed with gains of 1.6 percent and PSU bank index was up by three percent. Metal, IT, reality and auto sectors were top gainers followed by media and pharma indices,” Shankar noted. Both foreign institutiol investors (FIIs) and domestic institutiol investors (DIIs) were net buyers during the day’s trade.

Data with stock exchanges showed that FIIs invested Rs.107.23 crore, and the DIIs purchased scrip worth Rs.303.88 crore. Sector-wise, all the 19 subs-indices of the BSE, witnessed healthy buying activity. Stocks of automobile, banking, capital goods, IT (information technology) and consumer durables sectors ended in the green.

The S&P BSE automobile index surged by 348.98 points, followed by the banking index, which augmented by 294.74 points; the capital goods index increased by 217.94 points, the IT index gained by 212.42 points; and the consumer durables index rose by 199.38 points.

Major Sensex gainers during the day’s trade were Adani Ports, up 4.54 percent at Rs.228.90; Bharti Airtel, up 4.20 percent at Rs.348.35; BHEL, up 4.00 percent at Rs.127.35; Tata Motors, up 3.67 percent at Rs.385.85; and Wipro, up 3.36 percent at Rs.565.25. Major Sensex losers during the day’s trade were Lupin, down 1.51 percent at Rs.1,517.50; Cipla, down 0.58 percent at Rs.502.60; Dr.Reddy’s Lab, down 0.24 percent at Rs.3,028.60; and Mahindra and Mahindra (M&M), down 0.04 percent at Rs.1,232.55. (IANS)

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