Attractive valuations buoy markets; Sensex up 215 points

Attractive valuations and bargain hunting propelled a barometer index of the Indian equities to gain 216 points or 0.84 percent during the mid-afternoon trade session on Wednesday.

The gains came a day after the barometer 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) plunged 541 points or 2.07 percent at 25,651.84 points on Tuesday.

On Tuesday, weak European cues, dwindling rupee value coupled with anxiety over the upcoming derivatives expiry eroded investors' confidence at the Indian equity markets.

The Indian markets again came under pressure during the initial trade on Wednesday, as weak Asian cues emanating out of a below-expected Chinese PMI (purchasing managers' index) data spooked investors.

However, attractive valuations in banking, consumer durables and information technology (IT) sectors helped the markets pare its initial losses.

Furthermore, value buying was observed at the wider 50-scrip Nifty of the National Stock Exchange (NSE). It gained by 37.30 points or 0.48 percent at 7,849.30 points.

The S&P BSE Sensex, which opened at 25,526.53 points, was trading at 25,868.33 points (at 1.45 p.m.), up 216.49 points or 0.84 percent from the previous day's close at 25,651.84 points.

The Sensex touched a high of 25,869.57 points and a low of 25,386.48 points in the intra-day trade so far.

Market observers pointed out that the sharp downward corrections on Tuesday due to weak European cues have cheapened stocks and prompted value buying.

"Tuesday's correction due to the European market sell-offs and the early morning fall today due to weak Chinese PMI data, made valuations very attractive for bargain hunting," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

"Banks, consumer durables and other sectors have led the ongoing recovery."

Sector-wise, banking, consumer durables, capital goods, information technology (IT) and healthcare stocks supported the market recovery.

Notwithstanding the positive trend, automobile and power sectors came under intense selling pressure.

The S&P BSE banking index augmented by 236.46 points, consumer durables index gained by 133.28 points, capital goods index increased by 94.37 points, IT index rose by 79.73 points, and healthcare index was higher by 74.57 points.

The S&P BSE automobile index receded by 15.71 points and power index fell by 2.73 points.