Markets rebound on short-covering

Stock markets staged a comeback in the last one hour and ended in the positive zone as market players covered their short positions on the September series derivatives expiry on Thursday. The markets opened on a weak note taking cues from the global markets and remained lacklustre for the most part of the day. However, they rebounded as players squared up their pending futures positions in the derivatives segment.

Mixed signals from the Asian markets partly influenced the sentiment. The Hang Seng slipped 544.79 points. On the other hand, the Shanghai Composite ended 10.83 points higher and the Nikkei rose 173.68 points. In the US, Dow Jones slipped 81.32 points while Nasdaq Composite was down 14.88 points.

The Bombay Stock Exchange Sensitive Index, or Sensex, opened 85.42 points lower. It further slipped 224.58 points within the first hour of opening trade to touch its intra-day low. The index exhibited lacklustre movement till late-noon trades. However, it bounced back in the final hour of trade and climbed 339.83 points from the day’s low owing to a sharp recovery in select frontliners like Housing Development Finance Corp (HDFC), ICICI Bank and SBI.

The Sensex finally ended at 16,781.43, up 61.93 points.

The National Stock Exchange Nifty closed 16.60 points up at 4,986.55. The index briefly reclaimed its 5,000 mark on late buying. It touched an intra-day high of 5,016.70 and a low of 4,904.05.

Among sectoral indices, the BSE IT index declined the most as Infosys shed 3.40 per cent. Select financial and realty stocks also aided the rally. HDFC surged 3.39 per cent, ICICI Bank rose 1.74 per cent while Jaiprakash Associates added 1.28 per cent.

Other major gainers were HDFC Bank (3.39 per cent), Wipro (2.21 per cent), Reliance Communications (2.14 per cent), NTPC (1.97 per cent), Bharti Airtel 1.42 per cent). SBI and Reliance gained marginally.

The market breadth turned positive with 1,466 stocks advancing and 1,289 stocks falling out of a total of 2,840 stocks.

Hindalco declined 3.98 per cent. Maruti Suzuki and Hero Honda were down 1.17 per cent and 1.59 per cent, respectively.

Amitabh Chakraborty, head (equities), Religare Securities, said, “Markets started in the red on weak cues from the global markets. However, short-covering led them to gain amid volatility. Futures & options expiry were in line with expectations. Rollovers were quite decent and volumes were high.” Chakraborty expects October to be a volatile month with the Nifty trading at 4,800-5,200 levels.