Short-covering, coupled with value-buying and positive global indices, supported the rise of the Indian equity markets on Friday.Consequently, Indian markets snapped a three-day losing streak, just ahead of the union budget which will be presented on Monday. This led the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) to close the day's trade higher by 178 points or 0.78 percent.Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day's trade in the green. Nifty managed to close above the psychological important level of 7,000 points mark.It ended higher by 59.15 points, or 0.85 percent, at 7,029.75 points.
The Sensex, which opened at 23,141.08 points, closed at 23,154.30 points, up 178.30 points or 0.78 percent from the previous day's close at 22,976 points.During the intra-day trade, the Sensex touched a high of 23,227.91 points and a low of 23,021.94 points.In contrast, the BSE market breadth was marginally tilted in favour of bears -- with 1,481 declines and 1,005 advances.Initially, the Indian equity markets opened on a positive note, on the back of bullish Asian indices and Thursday's 1.29 percent gain at a key US bourse.But a weak rupee kept investors unnerved and capped gains through out the day's trade. However, The rupee strengthened by nine paise to close at 68.62 to a US dollar from its previous close of 68.71 to a greenback on Thursday. It touched an intra-day low of 68.79 to a US dollar.
On Thursday, the rupee crashed to a fresh 30-month closing low of 68.71 to the US dollar."Central banks interventions might have saved the rupee. The rupee had fallen to 68.90-95 levels at the overseas markets," Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS."Market remains a bit nervous going into the Union Budget. Just released Economic Survey has talked about fiscal consolidation in the new Budget."Further, caution prevailed over the two-day long G20 finance ministers' meet which began in Shanghai, China. Besides, softening of crude oil prices to $33 a barrel deterred investors from chasing stock prices higher.Notwithstanding the brief downward movement, hopes of more reform announcements during the budget session swelled the equity markets.
The equity markets were buoyed by value-buying and short-covering. These were triggered on hopes of positive budgetary announcements.The Sensex had lost 813 points, while Nifty declined by 264 points during the last three trade sessions. According to analysts declines in the last three session prompted value buying.Short-coverings were evoked by market participants hopes that the central government may increase expenditure, announce tax concessions and pave the way to reduce the NPAs (non-performing assets) levels of the banking sector.In addition, healthy growth forecast by the Economic Survey for 2015-16 tabled in parliament on Friday cheered investors.The survey authored by Chief Economic Advisor in the Finance Ministry Arvind Subramanian said: "Despite volatility in global financial markets, the Indian equity market has been relatively resilient during this period compared to the other major emerging market economies.""The market has rebounded time and time again."It expects India to become the leading investment destination, once the global financial system settles down.
"Positive Asian markets and short-covering over positive budgetary announcements supported markets' rise," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS."Value buying was seen after three day's of slide. However, weak rupee and flat crude oil prices dented sentiments."Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that markets saw a short covering rally as traders closed position ahead of the budget. "Global cues were supportive with Asia and Europe in the green. The market breadth however continued to remain in the favour of declines with an advance decline ratio of 2:3 on the BSE," Agarwal cited.
"Market expectations from the budget continue to remain low with the fiscal deficit being a key monitorable. We expect infra and rural stocks to remain in focus ahead of the budget."Nitasha Shankar, vice president for research with YES Securities, pointed out that broader markets, underperformed the headline indices, terminating session in the red. "Bank index fuelled today’s rally with gains of 2 percent. Auto and pharma indices ended slightly in the red; while FMCG (fast moving consumer goods), IT (information technology), metal, reality and energy indices ended in the green," Shankar noted.Furthermore, the FIIs were net sellers during the day's trade, while the domestic institutional investors (DIIs) bought stocks.
The data with stock exchanges showed that FIIs divested Rs.695.37 crore, while the DIIs bought stocks worth Rs.784.14 crore.Sector-wise, S&P BSE banking index augmented by 232.54 points, capital goods index zoomed by 127.01 points and metal index gained by 110.35 points.In contrast, the S&P BSE healthcare index plummet by 47.91 points, consumer durables index receded by 17.54 points and automobile index declined by 13.44 points.Major Sensex gainers during Friday's trade were Coal India, up 3.96 percent at Rs.311.35; State Bank of India (SBI), up 2.86 percent at Rs.156.25, NTPC, down 2.41 percent at Rs.121.35; Larsen and Toubro (L&T), down 2.19 percent at Rs.1,110.70 and Axis Bank, down 1.81 percent at Rs.386.05.Major Sensex losers during the day's trade were Bajaj Auto, down 3.49 percent at Rs.2,236.85; Hero MotoCorp, down 2.52 percent at Rs.2,557.15; Lupin, down 1.73 percent at Rs.1,727.65; Bhari Airtel, down 1.47 percent at Rs.318.50; and Gail, down 0.44 percent at Rs.303.60.