Indices Gain Sharply On Short Covering

Led by the tobacco major, ITC, share prices rallied smartly to close at 3,887.56, gaining 61.65 points in the Sensex on the Bombay Stock Exchange (BSE) yesterday on hectic short covering and fresh selective purchases by local financial institutions as well as foreign funds.

ITC was in the limelight having scored impressive gains. Bear operators, who were trapped with short positions in this scrip last weekend attracting higher backwardation charges of over Rs 19, preferred to cover their positions before the current account came to an end today.

About 16 scrips had attracted backwardation charges at end of last settlement indicating short positions of bears and short sellers could not afford to continue such situation for this settlement also as bulls receive the benefit of the `ulta badla, market sources said. Foreign institutional investors (FIIs) also made good purchases in this scrip, as also MTNL. UTI and the LIC bought shares of SBI (new), Tata Power and Telco.

The BSE-100 index also advanced by 23.68 points to 1,690.31 from previous close of 1,666.63. RIL recorded a smart rise on sizeable informed buying. Other heavy weighted scrips like Tata Steel, Telco, HLL, MTNL and SBI-new showed handsome gains.

Commenting on the prices rally, a leading dealer said Shares will not move fast but gradually improve further pushing the Sensex by another 50 points. However, brokers were not sure that the market would sustain the rally for some more time.

The BSE-200 and Dollex were quoted up at 377.28 and 173.37 compared with Wednesdays close of 373.22 and 171.23 respectively. The total volume of business improved substantially to Rs 866.27 crore from the previous Rs 697.64 crore.