Markets recover on short covering, RIL leads

Markets recovered from their early losses amid shortcovering at lower levels in index heavyweight Reliance Industries and select financials after the sharp sell-off on Tuesday. Meanwhile, the weakening rupee continue to weigh on market sentiment.

At 1:07PM, the 30-share Sensex was down 30 points at 18,703 after hitting a low of 18,551 and the 50-share Nifty was down 9 points at 5,533 after hitting an intra-day low of 5,487 so far.

The rupee continues to remain weak in noon trades on Wednesday due to persistent dollar demand by importers. According to currency dealers, there is also dollar demand from foreign banks on behalf of Foreign Institutional Investors (FIIs) who are selling stocks.

The rupee was quoting at Rs 61.32 compared with previous close of Rs 60.77. It had opened at Rs 61.25.

In Asia, Japan's Nikkei average tumbled 4% on Wednesday, suffering the biggest one-day%age loss since mid-June as the dollar fell to a six-week low to the yen, while heavyweights were sold off ahead of Friday's options settlement. Except for Straits Times which was trading marginally higher, all major indices in the region were trading 0.7-1.5% down.

European shares also opened lower with the FTSE, CAC and DAX down 0.5-0.6% each ahead of the Bank of England's quarterly inflation report.

FMCG index was the top loser among the sectoral indices on the BSE down 1.1% followed by Auto, Capital Goods and IT. Meanwhile, realty shares rebounded after the recent carnage ans the Realty index was up 4.8% followed by Metals, Power, Oil and Gas indices.

Reliance Industries was up 2.7% at RS 863 while Bharti Airtel was up 2.1% at Rs 330.

In the banking space, SBI was up 3.6% at Rs 1,700 and ICICI Bank was up 0.6% at Rs 872.

HDFC was among the top Sensex losers along with ITC, TCS and Tata Motors.

Among other shares, Multi Commodity Exchange of India (MCX) is locked in lower circuit for fifth day in a row, down 10% at Rs 299 on BSE, despite of the company’s clarification that it has a strong debt-free balance sheet with a networth in excess of Rs 1,200 crore as on June 30, 2013.

Opto Circuits (India) has rallied 26% to Rs 23.45 in noon deals on back of heavy volumes on the bourses. The trading volumes on the counter almost doubled with a combined 7.52 million shares already changed hands on BSE and NSE till 1208 hours. The stock opened at Rs 19.20 and hit a low of Rs 18.25 on BSE.

In the broader market, the BSE Mid-cap was up 0.6% and the Small-cap index gained 0.8%.

Market breadth was positive with 1,069 gainers and 956 losers on the BSE.