Markets bounce back on short covering

Short covering, coupled with value buying in blue-chip stocks, pulled stock market indices up today. While investors bought recently battered automobile and metal stocks, selling pressure continued in select technology and pharmaceutical company stocks.

On a highly volatile trading day, the benchmark Bombay Stock Exchange Sensex opened at 6,169, hit an intra-day high of 6,259.28, before closing 108.88 points or 1.77 per cent higher at 6,243.74. The Nifty ended 20.30 points higher to close at 1929.70.

Foreign institutional investors (FIIs) are said to have bought some stocks, though the exact figures will be known tomorrow. They have been net sellers of Indian equity.

On Wednesday, FIIs were net sellers, offloading Rs 124 crore worth of shares. In last three trading sessions, FIIs sold equity worth Rs 1,155 crore.

The breadth of the market was positive, with only four of the 30 share BSE Sensex basket stocks ending in negative territory. The traded volume, too, was slightly higher and accounted for Rs 2,060 crore on the BSE today, up from Rs 1,930.13 crore on Tuesday.

Most technology stocks rose, the exception being Tata Consultancy Services. The TCS stock was hammered for the second consecutive trading session after the company's disappointing quarterly results.

The TCS scrip lost another 7.78 per cent to close at Rs 1,115.65. However, the shares of other IT majors like Infosys Technologies, Satyam and Wipro bucked the negative trend on value buying at lower levels.

The Wipro stock gained 3.22 per cent to Rs 594.90, the Satyam Computer scrip was up 2.6 per cent to Rs 377.40, while the Infosys scrip gained 1.76 per cent to Rs 1,953.

The BSE automobile index was the second-best performer on the back of strong gains in frontline automobile stocks. The Tata Motors scrip was up 4 per cent to Rs 433.70, the Maruti Udyog scrip was up 3.89 per cent to Rs 429.15, the Hero Honda scrip gained 5.17 per cent to Rs 515 and the Bajaj Auto scrip ended 1.8 per cent higher to close at Rs 1,081. The BSE metal index was up 2.96 per cent on value buying.

Among the Sensex stocks, the Tata Power scrip's price was up 5,14 per cent to Rs 354.15, the Tata Steel scrip gained 4.74 per cent to Rs 363.40, the Zee Telefilms scrip gained 3.22 per cent to Rs 134.50, the Reliance Industries scrip gained 3.13 per cent to Rs 530.20 and the Hindustan Lever scrip ended 2.74 per cent higher at Rs 131.05.

Brokers are divided on the course the markets will take. Vikram Kotak, president of broking firm Techno Shares, said, "After a sharp correction in the past few days, the markets are fairly valued and one should look to investing 20 per cent of one's portfolio at these levels."

But a leading BSE broker said: "The market still lacks conviction and there may be a correction as jittery investors might book profits at very higher levels. Even the lack of inflows from foreign funds will dampen the sentiment."

Value buying

The breadth Was positive, with only four of the 30 share BSE Sensex basket stocks ending in negative territory

The volume Slightly higher, and accounted for Rs 2,060 crore on the BSE, up from Rs 1,930.13 crore on Tuesday

Hot picks Most technology and automobile stocks