Markets buoy on short covering, sector-specific buying

Mumbai, Aug 29 (IANS) Ignoring negative global cues and a weak rupee, Indian equity markets were on Monday lifted by short covering and sector-specific buying after a volatile day of trading.

Both the key indices, after oscillating around the flat line for most of the day, witnessed a sudden spurt of buying activity during the last hour of trade to close in the green.

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

The wider 51-scrip Nifty of the National Stock Exchange (NSE) edged up 34.90 points, or 0.41 per cent to 8,607.45 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 27,827.26 points, closed at 27,902.66 points -- up 120.41 points, or 0.43 per cent from the previous close at 27,782.25 points.

The Sensex touched a high of 27,952.85 points and a low of 27,698.71 points during the intra-day trade.

However, the BSE market breadth was tilted in favour of the bears -- with 1,472 declines and 1,221 advances.

"Support came from sector-specific buying which led the markets to rise after a flat trading session," Manish Hathiramani, Proprietary Trader and Technical Analyst at Deen Dayal Investments, told IANS.

"Good buying was seen in automobile sectors, with Tata Motors leading, providing support to both the Sensex and the Nifty."

On Friday, both the key Indian indices had closed in the red, due to caution ahead of the US Fed Reserve Chair's speech and lower crude oil prices.

The barometer index had slipped by 53.66 points, or 0.19 per cent, while the NSE Nifty edged down 19.65 points, or 0.23 per cent.

Initially on Monday, the benchmark indices opened on a flat note prompted by mixed global markets.

The US and European markets dragged lower after Federal Reserve Chairwoman Janet Yellen in her speech last Friday signalled the possibility of a rate-hike later this year.

A hike in interest rates can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India.

Moreover, investors traded with caution ahead of key domestic macro-economic data, such as Gross Domestic Product (GDP) and eight core industrial output data, which are due for release on Wednesday.

Besides, lower crude oil prices and a weak rupee added to the downward trajectory.

The rupee depreciated by 11 paise to 67.17 against a US dollar from its previous close of 67.06 on last Friday.

Nevertheless, short covering and buying activity seen in specific sectors such as automobile gave a fillip to investors' sentiments and pushed the equity markets higher.

"Markets had started on a negative note due to uncertainty over the timing of FED interest rate hike. Globally, European and American markets were weak," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.

"However, Indian markets rallied in the last hour by 0.7 per cent from the day's low, largely due to short covering in sectors like auto and other stock specific action."

In terms of investments, provisional data with exchanges showed that the Foreign Institutional Investors (FIIs) purchased stocks worth Rs 286.52 crore and the Domestic Institutional Investors (DIIs) bought scrips worth Rs 17.49 crore.

Sector-wise, the Samp;P BSE automobile index augmented by 305.43 points, followed by the capital goods index, which surged by 172.19 points, and the metal index gained 105.57 points.

On the other hand, the Samp;P BSE information technology (IT) index plunged by 92.64 points, the healthcare index declined by 47.22 points, and the technology, entertainment and media (TECK) index fell by 33.90 points.

Major Sensex gainers during Monday's trade were: Tata Motors, up 4.18 per cent at Rs 524.70; Reliance Industries, up 2.85 per cent at Rs 1,057; Hero MotoCorp, up 2.68 per cent at Rs 3,405.75; ICICI Bank, up 2.10 per cent at Rs 250.40; and Larsen and Toubro (Lamp;T), up 1.99 per cent at Rs 1,456.20.

Major Sensex losers were: Wipro, down 2.33 per cent at Rs 478.55; Lupin, down 2.15 per cent at Rs 1,479.80; HDFC Bank, down 1.55 per cent at Rs 1,238.35; Tata Consultancy Services, down 1.09 per cent at Rs 2,501.60; and Asian Paints, down 1.06 per cent at Rs 1,111.20.

--IANS

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