Sensex snaps three-session slide show

After strong opening, quickly reclaimed 31k mark

The Sensex snapped its three-session losing streak by recovering 23 points to close at 30,857.32 on short-covering from operators on June series F&O (future & options) expiry coupled with caution ahead of the rollout of the goods and services tax (GST). The gauge, after a strong opening, quickly reclaimed the 31,000-mark to hit a high of 31,097.92, as investors cheered the Cabinet’s decision to approve divestment of the loss-making Air India.

The Sensex had lost 456.42 points in three straight sessions. The Nifty opened higher on Thursday at 9,522.95 and traded in the range of 9,493.80-9,575.80, before closing at 9,504.10, up 0.14 per cent from previous close.

Private lender Axis Bank rose 4.1 per cent after saying about 80 per cent of its insolvent loans had been secured. The S&P BSE Metals Index and a gauge of consumer goods stocks were among top gainers.

Global cues were higher with other Asian markets rebounding and European shares remaining mixed in their late morning deals, reflecting overnight gains on the US markets, which influenced sentiments here.

“We saw short-covering on the expiry day as markets across Asia have rallied in line with the strong US stocks,” said G Chokkalingam, managing director and founder of Mumbai-based Equinomics Research & Advisory. “We expect the benchmark index to remain resilient in the face of a market correction.”

Markets regulator Sebi’s proposal to relax entry norms for foreign portfolio investors willing to invest in Indian stock markets went down well with investors. However, offloading of positions following the expiry of June securities led the index to a low of 30,794.61, before it ended at 30,857.52.

“The market failed to sustain the initial acceleration supported by short-covering on the day of expiry. Wary investors started booking profit with an expectation of consolidation in the market as a transition to GST may cause disruptions in the coming quarters,” Vinod Nair, head of research at Geojit Financial Services, said.

The roll cost, or the price traders pay to replace current month futures with July securities, was 41 basis points in Mumbai on expiry, compared with the three-month mean of 29 basis points, data compiled by Bloomberg showed. Higher cost implies investors are prepared to pay more to buy new contracts on the NSE Nifty 50 Index.