India : Short covering helps Sensex, Nifty rebound after 2-day fall

Short covering helped the equity benchmarks rebound amid consolidation on Thursday after a 1.5 percent correction in previous two consecutive sessions. Investors waited for CPI inflation and factory data that will be announced on Friday evening.The 30-share BSE Sensex rose 84.72 points at 27859.60, and the 50-share NSE Nifty was up 16.85 points at 8592.15 after hovering in a range of 8601-8540. The broader markets underperformed benchmarks with the BSE Midcap ending flat.

The market has been getting strong support from FIIs, due to which it has not seen any major correction since March. However, domestic institutional investors have consistently been using this opportunity to book profits on fears of high valuations.

“Continued liquidity is keeping the market on the upper band of the trading cycle while the fear of premium valuation has kept DIIs on the selling side,” Vinod Nair of Geojit BNP Paribas Financial Services said.

According to him, CPI inflation is expected to inch up to 5.9 percent in July against 5.77 percent in June due to the pressure from food prices.

Industrial output for the month of June is likely to improve further to 2 percent from 1.2 percent in preceding month.

Lupin rebounded 2.3 percent after falling more than 8 percent in previous two consecutive sessions due to Q1 earnings. The pharma major yesterday has receives approval from the US Food and Drug Administration for generic Klor-Con extended-release tablets that are used to treat low blood levels of potassium.

Bank of Baroda, the biggest loser on the Nifty, plunged 9 percent after reporting a 60 percent fall in profit in Q1 YoY due to higher provisions, with slippages at Rs 5,527 crore.

State Bank of India (down 2 percent) and Sun Pharma (down 1 percent) were under pressure ahead of quarterly earnings due on Friday. A CNBC-TV18 poll expects SBI to show 32 percent degrowth in profit and Sun Pharma to report 4-fold jump in bottomline in Q1 YoY. Taro numbers also caused selling pressure in Sun Pharma.

Grasim plunged 6.4 percent ahead of June quarter earnings due later today and on fears of likely restructuring, which is expected to hurt shareholders.

ITC, TCS, HDFC, ICICI Bank and Reliance Industries were top five contributors to Sensex’s gains, rising 1-2 percent while Adani Ports and M&M fell nearly 2 percent.

The market breadth was in favour of declines. About 1517 shares gained against 1168 advancing shares on the Bombay Stock Exchange.