Sensex rebounds from early lows to end 150 pts higher on bargain buying

Indian shares recouped their lost ground in mid-morning trade to post strong gains in a highly volatile trading session on Monday, as bargain buying in frontline and mid-cap stocks after the recent rout drove key benchmark indices higher. [caption id=“attachment_2508564” align=“alignleft” width=“380”] Reuters[/caption] Market experts also said the steady flow of negative news in the form of disappointing corporate earnings and weak economic data in recent weeks were mostly priced in and attractive valuations after the recent slide would further prompt investors to resort to more bargain buying in next few sessions. After gyrating more than 400 points intra-day, the 30-share BSE S&P Sensex ended the session at 25,760.10, up 149.57 points, or 0.6 percent from previous close. Markets once again felt the heat in early trade as weak global cues pulled down the Sensex to the day’s low of 25,451.42, down 160 points. However, equities soon bounced back with renewed optimism helped the benchmark index scale a high of 25,866.42, up 255 points. The broader 50-stock CNX Nifty, too, closed higher at 7,806.60, up 44.35 points, or 0.6 percent. Market breadth ended firm with 1,374 stocks advancing against 1,259 declines on BSE. In fact, Indian stock outperformed other Asian peers, with Japan’s Nikkei ending over 1 percent after data showed its economy slipped back into recession in the July-September quarter. Similarly, China’s Hang Seng index tumbled 1.7 percent even as Shanghai Composite gained 0.7 percent at close. In contrast, all the key European equity gauges rebounded from early weakness and posted modest gains in their mid-day trade. “Most of the negative news emanating from global and domestic markets have been priced in. With corporate earnings season almost coming to an end and valuations becoming attractive after the recent fall, today’s session saw lot of bargain buying from investors. We may see this trend to continue in few more sessions, as the only worry markets could be looking at is the possible US Fed rate hike next month,” said G Chokkalingam, founder & managing director, Equinomics Research & Advisory. The gauge lost over 256 points in the previous session on bearish macroeconomic data with industrial production falling to a four-month low of 3.6 percent in September and retail inflation touching 5 percent in October, a PTI report said. Amid bargain buying, shares of Gail surged 4.6 percent to Rs 294.65, Tata Steel rose 3.4 percent to Rs 229.80, Dr Reddy’s jumped 3.4 percent to Rs 3,500.50, SBI gained 3.2 percent to Rs 247.95, Vedanta moved up 2.7 percent to Rs 89.65 and ITC was up 2.7 percent at Rs 338.30. Investors continued to lap up second-rung stocks, with BSE Mid-cap index 0.2 percent higher and BSE Small-cap index rising 0.5 percent. Shares of fragrance maker SH Kelkar and Co made a strong debut on the bourses with the stock ending 15 percent higher at Rs 207.30 a share on BSE. Intra-day, the stock shot up 24 percent before trimming some gains at close. Nearly 55 lakh shares changed hands today.