A strong pull-back in the share prices of Reliance Industries Ltd (RIL) and ITC Ltd today saw the domestic equity markets reverse losses and close higher. The 30-share BSE Sensex rose 0.4 per cent to close at 16,718, while the Nifty also rose 0.4 per cent at 5,068.
Analysts say share prices could still move up in the coming days as the key equity index closed above the 200-day moving average (DMA), a crucial resistance level. A bout of short-covering is expected when key indices break the 200-DMA in an upward cycle.
The Sensex had touched a low of 16,485 and Nifty had declined to 4,995 due to weakness in the rupee and poor global cues. Investors were seen booking profits earlier during the day, as the Sensex had rallied 800 points in two sessions from its lows. However, buying in RIL, the scrip with the heaviest weightage in the Sensex, during the last one hour of trading, changed the market sentiment.
Instances when Nifty traded above 200-DMA
|Sep 17, ‘04
|Jul 25, ‘06
|Apr 29, ‘09
|Jun 10, ‘10
|Mar 29, ‘11
|Jan 31, ‘12
|Jun 8, ‘12
|* Number of trading days when Nifty stayed above the
200-DMA after crossing 200-DMA
Source: Bloomberg Compiled by BS Research Bureau
RIL rose 1.2 per cent after chairman Mukesh Ambani said at the annual general meeting (AGM) it would double operating profit in four to five years. Though the stock rose today, analysts say they will wait and watch before taking a call on it.
Meanwhile, the ITC stock rose 1.3 per cent at Rs 239.