Short covering, Europe rebound lifts Nifty in last leg

26 Feb 2009, 1735 hrs IST,

Indian equity benchmarks pared losses in the last half hour of trade Thursday to end higher as traders settled F&O February series.Positive opening of European markets and higher US index futures also boosted sentiments. Auto and oil&gas stocks led the upmove while banks and realty ended lower.

The indices failed to break psychological levels and retreated as profit booking set in. National Stock Exchange’s Nifty ended at 2785.65, up 23.15 points or 0.84 per cent. The broader index fell short of breaking the 2800 mark as it retreated from an intra-day high of 2797.80. It touched a low of 2731.90.

Bombay Stock Exchange’s Sensex ended at 8954.86, up 52.30 points or 0.59 per cent. The index failed to cross 9000 as it slipped after touching an intra-day high of 8998.31. The 30-share index hit a low of 8788.32 in the day.

“The spurt towards the close was mainly due to short covering due to expiry. Positive opening of European markets also helped. But there is a general feeling that markets may declined in March and so most traders have gone short. One should be cautious next month as the view is bearish,” said Rajesh Baheti, managing director, Crossseas Capital Services.

The BSE Midcap Index ended up 0.09 per cent but BSE Smallcap Index slipped 0.70 per cent.

Several scrips including largecaps reacted to newsflow. Ranbaxy Laboratories was under pressure after the US FDA said the company falsified data and test results in its drug applications, prompting it to take necessary actions. The US regulator said in a statement that it has taken "new regulatory action against Ranbaxy’s Paonta Sahib Plant in India" and has halted review of drug applications from plant due to evidence of falsified data.

HDFC has been on a decline ever since the mortgage giant decided to charge its customers up to 3% of the outstanding loan, if they decide the prepay their loans by switching over to another bank. The home loan giant’s move is aimed at discouraging customers from switching over to State Bank of India, which has recently launched a special scheme with an offer of 8% interest on all home loans for the first year.

Shares of Tata Motors shot up on reports the company will launch its most awaited low-cost car, Nano, in March. The launch, in Mumbai, is scheduled on March 23. The car drew global attention for being cheapest car at Rs 100,000.


The top Nifty gainers were Tata Motors (7.03%), Grasim (4.05%), Maruti (4.04%), Hero Honda (3.48%) and Cipla (2.97%).

Ranbaxy Laboratories (-18.05%), Punjab National Bank (-5.04%), ICICI Bank (-4.62%), Reliance Capital (-4.08%) and BPCL (-4.01%) were the major index losers.

Amongst non-index stocks, Hindustan Dorr-Oliver ended 7.57 per cent higher after the company received order worth Rs 441 crore from Uranium Corporation of India. The new order is significant, as the company’s existing order book is Rs 700 crore.

Seamec was locked at the 20 per cent upper circuit after the company posted a turnaround in earnings for the fourth quarter. The company Tuesday posted a net profit of Rs 54.57 crore for the December quarter of 2008, against a net loss of Rs 15.88 crore in the same quarter a year ago. The stock has surged 42.71 per cent in the past one week.

On the data front, Indian economy is forecast to have grown 6.2 per cent in October-December from a year earlier, according to media poll. Traders will keep an eye on GDP growth announcement Friday. The economy grew 7.6 per cent in the September quarter and 7.9 per cent in the June quarter.

Elsewhere, shares in Europe continued to move higher but were off early highs after markets welcomed UK government’s insurance scheme for banks' assets. At 5:15 pm IST, FTSE 100 was up 1.06 per cent, CAC 40 moved 0.76 per cent higher and DAX gained 1.01 per cent. US stock futures also indicated a positive opening. Dow Jones was up 1.02 per cent, S&P 500 higher by 1.16 per cent and Nasdaq futures were up 1.28 per cent.

via E.T