Short-covering on global cues pushes markets higher

Don't want to miss the best from Business Standard?

Positive global indices, coupled with firm crude oil prices and a stable rupee, supported the upward movement of the Indian equity markets during late-afternoon trade session on Monday.

Consequently, a barometer index of the Indian equity markets gained 52 points.

Initially, both the bellwether indices opened on a positive note in sync with their Asian peers. Even the firm closing of the domestic and the US markets last week supported the upward trajectory.

Moreover, the short-covering rally was supported by firm oil prices and a stable rupee. It gained eight paise at the opening. It started the week at 67.55 to a US dollar from its previous close of 67.63 to a greenback.

Further, expectations of an additional stimulus from the ECB (European Central Bank) by March this year boosted investors confidence.

However, gains were capped by profit bookings and caution over the upcoming rate setting meeting of the FOMC (Federal Open Market Committee) scheduled for January 27-28.

The FOMC assumes significance as higher interest rates in the US are expected to lead away FPIs (Foreign Portfolio Investors) from emerging markets such as India.

In addition, selling pressure was witnessed on account of the F&O (Futures and Options) expiry slated for Thursday.

The 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) gained 52 points or 0.21 percent.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) was trading flat. It inched up by 14 points or 0.18 percent to 7,436.05 points.

The S&P BSE Sensex, which opened at 24,540.97 points, was trading at 24,487.48 points (3.00 p.m.), up 51.82 points or 0.21 percent from the previous day's close at 24,435.66 points.

The Sensex touched a high of 24,650.57 points and a low of 24,433.67 points in the intra-day trade.

The S&P BSE market breadth favoured the bulls with an advance decline ratio of nearly 2:1. There were 1,673 advances and 900 declines.

"Firm closing from last week and positive Asian markets today supported the Indian market gains. Even the positive sentiments eminating out of last week's Chinese macro-data and ECB's announcements restored the risk taking appetite of investors," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

"Rupee and oil, both being on a firm note have boosted sentiments."

Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that profit booking at higher levels and weak opening in Europe has resulted in markets giving up early gains.

"The broader markets however continue to remain positive with the small cap index up significantly higher than the benchmarks," Agarwal explained.

"In the absence of any major trigger, we expect markets to continue to react to global cues with some selling pressure ahead of the F&O expiry."

Nitasha Shankar, vice president for research with YES Securities, cited healthy buying activity in high beta stocks.

"Banking stocks continue to see short covering rally. Barring the FMCG (fast moving consumer goods) index, all major indices are trading higher with decent gains. Metal, pharma and reality stocks are outperforming," Shankar noted.