Short covering lifts equity markets

Mumbai, Aug 5 (IANS) Short covering, along with positive global indices and a firm rupee lifted the Indian equity markets during the late-afternoon trade session on Friday.

Healthy buying was witnessed in automobile, banking and capital goods stocks.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) surged by 111.25 points, or 1.30 per cent, to 8,662.35 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 27,810.55 points, traded at 28,033.81 points (at 3.00 p.m.) — up 319.44 points, or 1.15 per cent, from the previous close at 27,714.37 points.

The Sensex has so far touched a high of 28,039.91 points and a low of 27,795.74 points during intra-day trade.

The BSE market breadth was skewed in favour of the bulls — with 1,784 advances and 873 declines.

On Thursday, both the indices had ended on a flat note due to a fresh bout of buying support and short covering during the last hour of the trading session.

The barometer index had risen by 16.86 points or 0.06 per cent, while the NSE Nifty inched up 6.25 points or 0.07 per cent.

Initially on Friday, the benchmark indices opened on a higher note, in sync with Asian markets.

The domestic markets took positive cues from global indices which traded on a firm note, a day after the Bank of England (BoE) decided to ease its monetary policy.

Besides, value buying and short covering after last two days of corrections lifted the equity markets.

The upward trend was also supported by a steady rupee and above average monsoon rains.

However, lower crude oil prices, concern over the future passage and implementation of the GST (Goods and Services Tax) bill capped gains.

In addition, caution ahead of major global events risks such as the US jobs data hampered the upward trajectory.

“Short covering after last two days of correction lifted the equity markets. The upward trend was also supported by BoE’s (Bank of England) decision of monetary policy easing,” Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, CNX Nifty and Bank Nifty traded firm.

“IT sector stocks faced profit booking at higher levels, whereas pharma and auto stocks held their gains,” Desai noted.

“However, sugar stocks were volatile due to profit booking. Bearish sentiments in USD/INR futures prices are likely to support the firm sentiments in Nifty.”

–IANS

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