Short covering does the trick

STOCK REPORT

Key indices recouped losses and ended marginally up on short covering and as expectations strengthened the US Federal Reserve may keep rates steady in its meet on interest rates later on Wednesday, dealers said.

"There was short covering towards close. Also, a report from Morgan Stanley that upgraded the banking sector improved sentiment. But until the results of Uttar Pradesh elections are out, we expect volatility to continue," a dealer said.

Earlier on Wednesday, indices fell nearly 1 per cent amid fears the ruling United Progressive Alliance had performed poorly in the elections in Uttar Pradesh after exit polls showed the state was headed for a hung assembly.

Investors fear that the ability of the government to implement hard-line economic policy measures may be hit if the ruling coalition does not come into power in Uttar Pradesh, dealers said.

The Bombay Stock Exchange's 30-share Sensex ended at 13781.51, up 16.05 points or 0.1 per cent from Tuesday. Intraday, it touched a low of 13612.04.

The National Stock Exchange's 50-share Nifty ended at 4079.30, up 2.30 points or 0.1 per cent after touching an intraday low of 4030.55.

Turnover on both the exchanges was roughly Rs 12,300 crore compared with Rs 13,780 crore on Tuesday.

The CNX Midcap Index was up 0.5 per cent and the S&P CNX 500 Index ended up 0.2 per cent. State Bank of India, up 4 per cent at Rs 1,126.5 , was the top Nifty gainer.

Morgan Stanley on Wednesday upgraded SBI to "overweight" on the back of its new management team that has been focusing on the bank's profitability rather than market share.

Hero Honda was up 3.7 per cent at Rs 705 on a newspaper report the company is negotiating with parent Honda for lower royalty on new models to offset higher interest rates and commodity prices.

Siemens India ended up 3 per cent at Rs 1,249 amid talk its Germany-based parent Siemens AG may buy back shares.

ICICI Bank ended up 1 per cent at Rs 850. In the foreign institutional segment, 1 million shares of the bank were bought at Rs 840 per share, reports said.

Maruti Udyog was up 0.3 per cent at Rs 803 after the government received bids for 35.9 million shares of the company against 29.7 million shares on offer.

Fortis Healthcare shares ended at Rs 100 on NSE. It debuted at Rs 106 on NSE and Rs 109 on BSE against issue price of Rs 108 .

Dena Bank ended up 7 per cent at Rs 37 on expectation of a favourable swap ratio on likely merger of the bank with Canara Bank.

Canara Bank was up 2 per cent at Rs 222.

GAIL India, down 4 per cent at Rs 281, was the worst performer during the day. GAIL on Wednesday said it might sell its 2.5 per cent stake in Oil and Natural Gas Corporation to partly fund its capital expenditure for the current financial year and 2008-2009 (Apr-Mar).

Oil and Natural Gas Corp declined 1 per cent to Rs 909 despite reports that a consortium led by its overseas arm, ONGC Videsh, had discovered oil in a block in the Persian Gulf.

Technology shares extended declines from previous sessions on worries a stronger rupee may eat into companies' profitability. The rupee has appreciated over 8 per cent since January this year.

Tata Consultancy Services was down 2 per cent at Rs 1,239.5 and HCL Technologies was down 1.5 per cent at Rs 327.

Cipla shares ended down 2 per cent at Rs 208. Brokerage UBS has downgraded Cipla to neutral and expects the stock to be range-bound for the next few months on no immediate catalyst.