Short covering, GST expectations buoy equity markets

Mumbai, July 25 (IANS) Short covering, coupled with expectations of major economic legislation getting parliament's approval, lifted two key Indian indices to their new 11-month intra-day high on Monday.

The two benchmark indices made gains during the mid-afternoon session as healthy buying was witnessed in banking, automobile and consumer durables stocks.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) surged by 80.65 points or 0.94 per cent to 8,621.85 points.

The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 27,753.96 points, traded at 28,058.72 points (at 2.15 p.m.) -- up 255.48 points or 0.92 per cent from the previous close at 27,803.24 points.

The Sensex has touched a high of 28,086.87 points and a low of 27,736.51 points during the intra-day trade so far.

The BSE market breadth was skewed in favour of the bulls -- with 1,713 advances and 879 declines.

On Friday, the benchmark indices were lifted by positive domestic cues and continued inflow of foreign funds.

The barometer index rose by 92.72 points or 0.33 per cent, while the NSE Nifty edged up by 31.10 points or 0.37 per cent.

Initially on Monday, the benchmark indices opened on a flat-to-positive note, in sync with their Asian peers.

Besides, the equity markets were pushed up by higher European indices, healthy quarterly earnings and above average monsoon rain falls.

In addition, hopes on the passage of the GST (Goods and Services Tax) Bill during parliament's ongoing monsoon session supported prices.

Further, investors' expect US Fed to maintain its key lending rates during the upcoming FOMC (Federal Open Market Committee) meet.

A hike in the US interest rates can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India.

"Influx of liquidity has triggered short covering which pushed up prices," Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.

"Investors are hopeful of a breakthrough on the GST bill issue and the passage of the bill."

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls,
Nifty traded on a firm note owing to fresh buying support.

"IT and banking sector stocks recovered well from lower levels. Most sugar sector stocks traded firm on strong fundamentals. Biocon continued its upswing on healthy quarterly results," Desai noted.