Short covering to the fore

STOCK REPORT

Indices closed up for the second straight session today driven by short covering in the December derivatives contract due for expiry Thursday.

According to dealers, the near 400-point fall in the Sensex early this week also helped bring valuations to reasonable levels and attract some fresh institutional investment over the past two sessions.

The Bombay Stock Exchange's Sensex ended at 13,472, up 87 points or 0.6%, while the National Stock Exchange's Nifty closed at 3,871, up 38 points or nearly 1 per cent.

Intraday, the indices moved in a tight range. The Sensex touched high and low of 13,494 and 13,362, respectively, while Nifty moved between 3,880 and 3,823.

Among second line indices, CNX Midcap Index ended nearly 1 per cent up at 5,017. On the BSE, the 'A' group comprising frontliners saw 67 per cent of shares gaining.

However, the trend between the second line indices was not very impressive with only a little over 50 per cent of shares in both 'B1' and 'B2' rising.

"I believe the Sensex will continue to remain fairly valued with enough scope for additional investment only if it stays below the 14,000 mark for another 2-3 months," Rajen Shah, chief investment officer at Angel Broking, said.

Among key corporate developments today, British telecom major Vodafone confirmed its interest in buying a stake in Hutchison Essar, the fourth biggest mobile operator in India.

Bharti Airtel, in which Vodafone holds a 10 per cent stake, ended marginally up at Rs 615 after briefly shedding around 1 per cent on worries Vodafone may cut stake while bidding for Hutchison.

HDFC Bank was also in the news today for hiking its prime lending rate by 150 basis points to 13 per cent in reaction to a 50 basis points hike in the cash reserve ratio by the Reserve Bank of India earlier this month.