Markets advanced 2% on back of short covering ahead of derivatives expiry, and buying in IT and auto shares. The Nifty ended up 70 points; at 5,015 and the Sensex surged 252 points, at 16,698.
Earlier in the day, the Sensex opened in the red and succumbed to selling pressure due to nervousness over Euro-zone bail-out plan. The index changed tracks and rallied in the second half of the day due to short covering and expectations of positive news from Europe. The Nifty touched a high of 5,034 in the last leg of the trade, just before the announcement by Germany on the bailout vote.
After markets shut, the German parliament backed the extension of Euro-zone rescue fund, with 523 votes for and 85 against,which would help Greece avoid a bail out.
Ashish Chaturmohta from IIFL Wealth said, “The Greece news has led to short covering and there may be some amount of Net Asset Value propping also as the September quarter ends. Nifty will see a strong resistance around 5,150 levels going forward.”
In Asia, the markets ended mixed as cautiousness prevailed ahead of the crucial German vote. The Japan’s Nikkei Stock Average advanced 1% and the Shanghai Composite Index ended down, over 1%. European markets continued to remain sluggish, the FTSE 100 slipped 0.5%, the DAX was trading flat and CAC 40 advanced 0.5%.
Back in India, the food price index surged to 9.13% in the year to September 17 as vegetables and meat turned expensive, stoking expectations of further tightening by the Reserve Bank of India. Finance Minister, Pranab Mukherjee said that inflation continued to remain a “grave concern.”
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Among the Sensex stocks, Infosys, HDFC Bank and IT surged almost 3% each, helping the Sensex recover. The three heavyweights pulled the index up by over 100 points. Only seven components on the Sensex were trading in the red, Larsen & Tourbo fell over 2%, followed by Sterlite Industries and Coal India, down over 1% each.
BSE IT and auto indices were the top gainers, up over 2% each. Financial Technologies zoomed 4%, Mphasis and HCL Technologies added over 1% each.
Among the auto stocks, Tata Motors zoomed 3%, Mahindra & Mahindra and Maruti Suzuki, added 3% each.
BSE Consumer Durables index was the top loser, down over 1%. Prominent losers were VIP Industries, down 4% followed by Rajesh Exports and Videocon Industries, down over 2% each.
The midcap and the smallcap indices ended flat.
Market breadth was negative;1507 stocks declined for 1265 stocks which advanced.