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Indian equities markets recover to end flat on short covering

Web posted at: 9/17/2008 0:54:2

Source ::: IANS

Mumbai • Indian equities markets yesterday seemed to have weathered the financial tsunami following the collapse of
Lehman Bros. and buy out of Merrill Lynch on Monday to end the day more or less flat after opening very weak.

The recovery clearly showed signs of short covering, analysts said. The 30-share benchmark Sensitive Index
(Sensex) of the Bombay Stock Exchange (BSE) ended the day at 13,518.80, down just 12.47 points or 0.09 percent
from its previous closing Monday at 13,531.27. The Sensex had, however, opened with a fall of nearly 500 points.

“This early fall gave bears with short positions a chance to book profits as over Friday, Monday and early yesterday
there was a total fall of about 1,500 points,” said Jagannadham Thunuguntla, equity head of Delhi-based NEXGEN
Capitals Ltd. Nexgen is the securities arm of the fourth largest share brokerage house in the country the SMC Group.

The National Stock Exchange saw a similar trend. It opened very weak, down more than 125 points, but again began
to recover on short covering by bears and some bottom fishing. After two short dips during the day, it finally
recovered enough to end the day with a marginal gain.

The broader based 50-share S&P Nifty of the NSE ended the day at 4,074.90, a marginal gain of 2 points or 0.05
percent over its previous close on Monday. The BSE midcap ended at 5,217.25, down 71.34 points or 1.35 percent.

The BSE small cap index ended at 6,289.41, down 91.06 points or 1.43 percent. “With good news expected out of the
world’s largest economy the US later today, bears booked profits as the markets may start moving up again
Wednesday,” Thunuguntla said.

He was referring to the fact that the US central bank is expected to cut a key short-term interest rate by 25 to 50 basis
points from its current 2 percent.

“Given the current situation, they really have no choice but to inject liquidity even if it means adding a bit to inflation,”
he said. The world’s largest and second largest investment banks Goldman Sachs and Morgan Stanley are also
expected to report earnings soon. All this may push up markets today onwards which led to the short covering,
Thunuguntla said.

Sectorally, realty, consumer durables, health care and metal stocks were the biggest losers. Oil and gas, banks,
public sector units and fast moving consumer goods stocks were in the black. State Bank of India (SBI), Sterlite
Industries, Reliance Industries and HDFC Bank were the biggest gainers.

SBI moved up Rs96.60 or 6.49 percent to Rs1,585.50 from its previous close on Monday of Rs1,488.90. Sterlite
Industries gained Rs12.40 or 2.66 percent to close at Rs477.70 up from Rs465.30.

Reliance Industries moved up Rs44.35 or 2.35 percent to finish at Rs1,928.45 up from Rs1,884.10. HDFC Bank rose
Rs26 or 2.16 percent to close at Rs1,230.05 up from its previous close on Monday of Rs1,204.05.

The top losers were ICICI Bank, Jaiprakash Associates, Maruti Suzuki and Ranbaxy Laboratories. ICICI Bank lost
Rs36.55 or 5.82 percent to finish at Rs591.35 down from Rs627.90. Jaiprakash lost Rs7.50 or 5.09 percent to end at
Rs139.80 against its previous close on Monday of Rs147.30.
Maruti Suzuki shed Rs25.65 or 3.55 percent to close at Rs697.75 down from Rs723.40. Ranbaxy Laboratories ended
the day at Rs405.90 down Rs13.55 or 3.23 percent against its previous close of Rs419.45. The market sentiment
was negative with 1,752 shares declining, 886 advancing and 73 remaining unchanged.