Short covering buoys equity markets

Mumbai, May 27 (IANS) Short covering, along with healthy quarterly results and an appreciation in rupee’s value, buoyed the Indian equity markets on Friday.

Consequently, the key indices made gains during the mid-afternoon trade session, as healthy buying was witnessed in healthcare, oil and gas, and automobile stocks.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) traded at its new six month high above 8,100 level. It edged up by 75.55 points or 0.94 percent, at 8,145.20 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 26,415.93 points, traded at 26,594.49 points (at 2.10 p.m.) — up 227.81 points or 0.86 percent from the previous close at 26,366.68 points.

The Sensex has so far touched a high of 26,662.64 points and a low of 26,405.28 points during the intra-day trade.

The BSE market breadth was tilted in favour of the bulls — with 1,391 advances and 1,049 declines.

The key indices had touched their highest levels in 2016 during the previous trade session on Thursday.

The barometer index had surged by 485.51 points or 1.88 percent, while the NSE Nifty had risen by 134.75 points or 1.70 percent.

In terms of the broader markets, the midcap index rose 1.41 percent, while the smallcap index gained 0.61 percent.

Initially on Friday, the key indices opened on a higher note, in-sync with their Asian peers and continued buying activity by the investors.

Besides, short covering and a strong rupee helped domestic indices surge. Even the improved fourth quarter earnings of firms accelerated the rise.

However, gains were capped due to weak global crude oil prices.

In addition, caution prevailed ahead of the upcoming global events like speech of the US Fed chairperson and the release of the US GDP (gross domestic product) data.

Investors were also seen recluctant to chase prices ahead of SBI’s (State Bank of India’s) quarterly results that might indicate the level of slippages that the PSB (public sector bank) has sufferred.

“Short covering, healthy quarterly results and a strong rupee aided the equity markets to rise,” Anand James, chief market strategist at Geojit BNP Paribas Financial Services, told IANS.

Dhruv Desai, director and chief operating officer of Tradebulls, pointed out that follow up buying was seen on the first day of the fresh June series.

“Fresh long position followed up by short covering have propelled the market to break its resistance of 8,000 and Nifty50 is comfortably trading above that level,” Desai said.



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