Share Prices Recover On Short Covering By Institutions

After an initial setback, the Sensex recovered smartly and closed at its intra-day high of 3,905.51 on the Bombay Stock Exchange (BSE) yesterday in the wake of late shortcovering by operators and buying by financial institutions and foreign funds in a select few scrips.

Initially, share prices encountered selling pressure on prevailing tension in border areas following heavy shelling by Pakistani troops killing some civilians, bringing the BSE sensitive index down to 3,848.15. But buying support at the pre-close by local operators and select purchases by foreign funds and institutions lifted the index to close at 3,905.51 as against previous close of 3,902.03, showing a small gain of 3.48 points.

However, the BSE-100 index dipped further by 6.58 points to 1,693.16 from its last close of 1,692.32. While FIIs made some purchases in HLL and Reckitt & Colman, institutions like UTI and LIC were buying in SBI-new, Tata Steel, Tata Power, Tata Hydro, Oriental Bank and IPCL.

ITC remained in the limelight with further good gains as operators continued to cover their short positions in this key scrip. Bajaj Auto, Glaxo, HLL, RIL, BPCL and Hero Honda recorded handsome gains.

The market was very dull and speculators were awaiting the SEBIs decision on implementation of the much-awaited modified badla system recommended by the Verma Committee, market sources said. The Sebi is meeting on October 3 to discuss this issue. Meanwhile, a leading dealer said it was unlikely that the decision on badla would be taken in this meeting.

The BSE-200 and the Dollex were quoted fractionally up at 379.04 and 174.47 compared with previous close of 378.66 and 174.25 respectively.

Reliance Ind was the most active scrip with a turnover of 196.26 crore of the total volume of business of Rs 752.07 crore. Other active scrips were ITC (Rs 196.04 crore), Tata Tea (Rs 88.96 crore), SBI-new (Rs 71.48 crore) and Castrol (Rs 22.73 crore).