Wed close: Bulls regain control, Sensex up 338
Sensex registers gains to settle above the 20,000-mark fuelled by short covering ahead of derivatives expiry, reports Vyas Mohan.business Updated: Dec 27, 2007 02:05 IST
The benchmark Sensex of the Bombay Stock Exchange registered gains for the fourth straight session on Wednesday to settle above the 20,000-mark, fuelled by short covering ahead of derivatives expiry.
While the Sensex gained 1.7 per cent or 338.40 points to close at 20,192.52, the 50-share Nifty of the National Stock Exchange ended at 6,070.75, up by 1.43 per cent or 85.65 points. Investors who had short sold shares or index futures ahead expecting a meltdown in December were forced to buy those back to close down their positions ahead of the derivatives expiry on Thursday, brokers said.
“A lot of retail investors had gone short in the market expecting heavy selling by foreign institutional investors (FIIs) in the current month. However, that did not happen and they are covering their positions now,” said Janak Thacker, CEO of Lalkar Securities.
FIIs have bought Indian paper worth Rs 1,073.70 crore in the current month so far, as per the data available with the Securities and Exchange Board of India. In the same period, mutual funds have bought shares worth Rs 1,709 crore.
However, analysts foresee uncertainty going forward and believe the recent upward rally was mainly due to short covering, besides many other factors that need watching.
“In the near term, developments in the US need to be watched closely. Increasing inflation seems to be the highest risk the US is tackling,” said Amitabh Chakraborty, president-equity of Religare Securities.
While DLF shares jumped 4.35 per cent to close at Rs 1,013.95, leading other gainers on the Sensex, including Hindalco, up 4.18 per cent at Rs 209.40. Shares of Reliance Industries gained 3.90 per cent or Rs 108.65 to end the day at Rs 2,896.70.