Shares on domestic bourses eked out marginal gains from an early slump, on the back of huge short covering and around one per cent gain in European markets.
The BSE Sensex recovered over 250 points from the day’s low and closed 0.13 per cent, or 19.96 points, higher at 15,935.61. Sixteen of its components gained. The S&P CNX Nifty of the National Stock Exchange (NSE) rose 0.07 per cent, or 3.15 points, to close at 4,760.40.
“Huge short covering has happened in the market in the past couple of trading sessions. Also, the worry that the Euro region countries may face huge defaults seems to have cooled off. In fact, the early market fall today was completely unexpected. However, in the coming days the markets can move in a range,” said Divyesh Shah, chief executive officer of Indiabulls Securities.
The government forecast the economy would grow 7.2 per cent in the current fiscal year that ends in March, picking up from a six-year low in the previous year and reinforcing market expectations of strong industrial growth.
The rebound could prepare the ground for a roll-back in stimulus incentives when the Union Budget is unveiled on February 26 and hasten an increase in interest rates to tame inflation pressures.
For the time being, however, investors will be watching the debt problems in Europe, traders said.
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“The market will continue to be volatile in near term, until the global picture has some clarity,” said Vaibhav Sanghavi, Director of Ambit Capital. “The worries in the Euro zone will weigh.”
While Bharti Airtel, India’s leading telecom operator, rose 2.70 per cent to Rs 308.30, rival Reliance Communication climbed 2.21 per cent to Rs 168.70. ONGC gained 1.82 per cent at Rs 1,114.45. Among others that rose over a per cent included Hindustan Unilever, State Bank of India and Mahindra & Mahindra.
The BSE Mid-cap and Small-cap indexes were down marginally 0.09 and 0.08 per cent respectively. The BSE Metal index was the top loser, with a 1.38 per cent fall. Among the benchmark metal scrips, while Tata Steel fell 4.46 per cent to Rs 5,33.80, Hindalco Industries declined 3.75 per cent to Rs 136.10.
As per BSE provisional data, FIIs were net sellers to the tune of Rs 935.55 crore.