Sensex snaps early losses, up over 100 pts led by banking shares

Domestic equities staged a smart bounce back at noon trade after correcting more than 260 points in early trade, as investors resorted to short-covering in banking and realty shares. The turnaround in local indices comes even as other Asian markets continue to reel in negative territory while European gauges rendered steep losses in early trade.

With the F&O expiry scheduled on Thursday, investors seemed to be covering some shorts positions in banking sector in anticipation of a rate cut by the central bank in next week’s credit policy announcement.

Hence, the Sensex jumped 104 points to touch a high of 25,756.09. At 1.05 pm, the 30-share BSE S&P Sensex was at 25,741.25, up 89.41 points, or 0.3 percent. The broader 50-stock CNX Nifty was at 7,820.10, up 8.10 points, or 0.1 percent.

Market breadth turned positive with 1,224 stocks advancing against 1,118 declines on BSE.

In other Asian markets, key Chinese indices Hang Seng dropped nearly 3 percent to 21,161.44 and Shanghai Composite fell 2.3 percent to 3,113.33, after the dismal September PMI data triggered the downfall.

Amid the worsening global economic climate, Chinese data announced earlier today showed that its preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics slowed to 47.0 in September, missing the median estimate of 47.5 in a Bloomberg survey. A reading below 50 suggests slowing growth.

Among the European indices, DAX fell the most, tumbling nearly 4 percent, while CAC shed 3.4 percent and FTSE dropped nearly 3 percent in their early trades.

However, several frontline stocks in the Sensex pack rebounded on renewed optimism. Among the gainers, shares of ITC rose 1.6 percent to Rs 317, Coal India advanced 1.3 percent to Rs 328.20, HDFC Bank gained 1.2 percent to Rs 1,040, ICICI Bank rose 0.6 percent to Rs 272.15 and Dr Reddy’s was up 0.5 percent at Rs 3,948.