Sensex soars nearly 300 pts on short-covering, US markets recovery

Domestic equities bounced back sharply in early Thursday trade, with benchmark Sensex edging past the 25,700-mark and soared nearly 300 points mainly aided by strong buoyancy in the overnight US markets.

Recovery in broader market sentiment prompted investors to cover short positions in the recently beaten down stocks constituting banking, capital goods, realty and automobiles etc among others.

At 10.35 am, BSE 30-share S&P Sensex was at 25,708.81, up 255.25 points or 1 percent from previous close. Capitalising on a firm start, the index advanced sharply to touch a high of 25,745.46, up 291 points. The broader 50-share CNX Nifty was at 7,800.95, up 83.95 points, or 1.1 percent.

Market breadth was extremely positive with 1,477 stocks advancing against declines on BSE.

Key US indices ended with gains of over 1-2 percent after the recent slump. In Asia, while Chinese markets are shut for two sessions, Japan’s Nikkei rose for first time in four days and was up 1.4 percent.

Despite the consolidation, traders back home, however, do not want to take a bullish view in haste, as global markets uncertainty and sluggish Chinese economic growth coupled with the impending US rate hike are the key potential threat that could trigger further slide going ahead.

Concerns among the traders also stem from the fact that overseas investors continue to exit domestic equities, with FIIs having sold shares worth Rs 1,573 crore on Wednesday despite the government’s decision to exempt foreign investors from the Minimum Alternate Tax (MAT). In August, FIIs sold shares worth Rs 17,000 crore, its biggest pull-out of funds from local equities in a single month since 2008.

Among the star performers, shares of Tata Motors jumped 3.2 percent to Rs 335.85, Axis Bank advanced 2.3 percent to Rs 477.50, BHEL gained 2.2 percent to Rs 211.10, HDFC moved up 1.9 percent to Rs 1,147 and Tata Steel was up 1.8 percent at Rs 223.60.

Other gainers such as Maruti, Cipla, Wipro, L&T, Vedanta, Bajaj Auto, ONGC and Hindalco were up over 1 percent each.