Short covering, bottom fishing lift sensex 939 pts

MUMBAI: Short covering, especially during the closing hours of Monday’s session, led to a smart reversal in sensex, which closed 939 points up at 75,503 points. The development came despite strong selling by foreign funds that offloaded shares worth Rs 9,366 crore, the second-highest singlesession net outflow figure so far this year.After days of sharp slides due to the war in West Asia, some buying at low levels also emerged and supported the market. The news about a gas tanker that passed through the Strait of Hormuz reaching an Indian port also added to the positive sentiment on Dalal Street, market players said.The day’s session started with sensex sliding about 150 points, falling to just below the 73,000 mark and then recovering slowly to remain in the green zone.

Short covering in the last 90 minutes took the index to an intra-day high at 75,805 points, and it closed a tad below that level.Nifty also followed a similar path to close at 23,409 points, up 258 points.According to Vinod Nair of Geojit Investments, the market’s late-session rebound was supported by value buying in domestically-oriented sectors such as auto, banking, and FMCG. However, he warned that near-term challenges persisted while valuations moderated, narrowing the premium valuation gap across several key sectors.

“In the near term, investor sentiment will hinge on developments in the Strait of Hormuz, where any easing of supply chain disruptions could provide further support. However, persistently elevated oil prices continue to weigh on broader market direction,” Nair said. “Globally, attention remains focused on the upcoming US Fed policy outcome.” Some market players pointed out that Monday’s rally was concentrated to blue chips and large caps while midand small-cap stocks mostly closed lower. Compared to a 1.3% up move in sensex, BSE’s mid-cap index closed 0.6% lower while the small-cap index was down 0.5%. Also, the advance-decline ratio—an indication of the vibrancy in the market—was skewed towards laggards. On BSE, while 2,910 stocks closed lower, 1,470 closed higher.

As a result, despite the strong sensex rally, addition to investors’ wealth during the day was limited at about Rs 75,000 crore.