Short-coverings propel markets, Sensex gains 71 points

Short-coverings, coupled with hopes for monetary easing by the Reserve Bank of India propelled Indian equity markets during the late-afternoon trade session on Friday.

This led to a barometer index of the Indian equity markets to gain 71 points.

Initially, both the bellwether indices of the Indian equity markets opened in the red, due to lack of participation coupled with disappointing macro data that prompted some investors to book profits at lower levels.

Besides, investors were seen cautious regarding the upcoming macro data of purchasing mangers' index (PMI) slated to be released on Monday and the third-quarter earnings season which starts from January 14.

However, bellwether indices soon pared their losses on the back of short-coverings and hopes that the Reserve Bank of India (RBI) will reduce key lending rates after Thursday's disappointing macro data points.

Even the expectations that Nifty would breach the 8,000-level mark and minor value buying at the lower levels pushed up prices.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was trading higher by 71 points, or 0.27 percent.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) made gains during the late-afternoon session. It rose 24 points, or 0.30 percent, at 7,970.20 points.

The Sensex of the S&P BSE, which opened at 26,101.50 points, was trading at 26,188.92 points (at 2.30 p.m.) - up 71.38 points or 0.27 percent from the previous day's close at 26,117.54 points.

The Sensex has so far touched a high of 26,191.07 points and a low of 26,008.20 points in intra-day trade.

The Sensex closed the previous session on December 31, up 158 points, or 0.61 percent, while the Nifty was higher by 50 points, or 0.63 percent.

"Short-coverings and the large build-up in bank Nifty supported the minor relief rally," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

"The disappointing macro data points which were released yesterday gave hope to some investors that the RBI may ease monetary policy in its review slated for February."

Vaibhav Agarwal, vice president and research head with Angel Broking, elaborated that benchmarks continue to trade in a narrow range in the absence of any major trigger.

"Broader markets however, continue to outperform with both the BSE midcap and small cap indices gaining nearly a percent and market breadth firmly in favour of the advances," said Agarwal.

"Global markets are shut today for the new year holiday leading to lower volumes. We expect some volumes to pick up from the next week and expect the third quarter earnings and economic data to provide further cues."