Value buying, short covering slightly buoy equity markets (Roundup)

Value buying, coupled with short covering and increased chances of a rate cut by the country's apex bank marginally buoyed the Indian equity markets on Wednesday.

The equity markets pared their initial losses which were caused due to profit booking, heightened chances of a US rate hike and a weak rupee.

Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed the day's trade flat.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended marginally in the green. It inched up by two points, or 0.02 percent, at 7,716.50 points.

The Sensex, which opened at 25,322.10 points, closed at 25,337.56 points -- up 7.07 points or 0.03 percent from the previous day's close at 25,330.49 points.

The Sensex touched a high of 25,367.81 points and a low of 25,156.82 points during the intra-day trade.

The BSE market breadth slightly favoured the bears -- with 1,308 declines and 1,285 advances.

Market analysts pointed out that value buying triggered after price correction helped markets pare their initial losses.

Furthermore, increased chances of an interest rate cut by the Reserve Bank of India (RBI) restored investors' confidence.

In contrast to the flat closing, the equity markets remained in the negative territory throughout the day's trade as profit booking dented sentiments.

Initially, both the key indices of the Indian equity markets opened on a flat note, in sync with their Asian peers. Global markets dipped after terror attacks struck Brussels on Tuesday.

In addition, investors were seen hesitant to chase prices higher due to the heightened chances of a US rate hike next month.

A hike in the US interest rates is expected to lead away Foreign Portfolio Investors (FPIs) from emerging markets such as India.

"Value buying, short covering ahead of the derivatives expiry and increased potential of a rate cut by the RBI helped equity markets to pare their losses at the end of the day's trade," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services told IANS.

Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that: "Indian markets opened marginally down tracking sluggish Asian markets and continued to trade in a narrow range."

"However, markets recovered from the lows of the day after European markets opened positive. We expect some selling pressure ahead of the F&O (futures and options) expiry next week. However, the directional trend continues to remain positive, in the hope of 25 bps (basis points) rate cut in the upcoming credit policy."

Nitasha Shankar, senior vice president for research with YES Securities said: "Indian markets ended trade on a flat note led by sharp recovery in late trade. Further, headline index Nifty closed beyond the psychological mark of 7,700 indicating strong upward momentum dominant in our markets."

"Volumes picked up in the late buying affirming the short term bullishness. Broader markets ended on a mixed note. Metal, auto, FMCG and IT ended the session in the green led by late buying. Energy and bank indices witnessed profit booking terminating in the red," Shankar noted.

Furthermore, foreign institutional investors (FIIs) were net buyers during the day's trade, while the domestic institutional investors (DIIs) sold stocks.

The data with stock exchanges showed that FIIs invested Rs.976.91 crore, while the DIIs sold stocks worth Rs.1,022.58 crore.

Sector-wise, healthy buying was witnessed in metal, automobile and IT (information technology), where as scrip of consumer durables, oil and gas, and banking came under selling pressure.

The S&P BSE metal index augmented by 128.51 points, followed by automobile index which edged up by 98.66 points and the IT index rose by 68.02 points.

In contrast, the S&P BSE consumer durables index receded by 117.02 points, the oil and gas index fell by 100.98 points and the banking index dipped by 43.24 points.

Major Sensex gainers during Wednesday's trade were Tata Steel, up 2.31 percent at Rs.316.60; Bharti Airtel, up 2.06 percent at Rs.358.55 ; Bajaj Auto, up 1.94 percent at Rs.2,354.45; Infosys, up 1.50 percent at Rs.1,207.75; and Coal India, up 1.05 percent at Rs.297.60.

Major Sensex losers during the day's trade were Reliance, down 1.83 percent at Rs.1,029.35; Lupin, down 1.63 percent at Rs.1,524.50; Gail, down 1.56 percent at Rs.356.10; NTPC, down 0.82 percent at Rs.127.35 and ONGC, down 0.81 percent at Rs.214.55.