MUMBAI: Markets ended a five-week losing streak with Nifty and Sensex climbing nearly 3% each on the back of a short-covering rally across global markets after China cut a key interest rate to spur home demand. The Nifty closed up 456.75 points at 16266.15 and the Sensex rose a whopping 1534 points to 54326.39 on Friday in hopes of China’s boost to its ailing economy raising demand for metals and other commodities, which have been battered by central bank rate tightening. However, FIIs continued to be sellers, offloading shares worth a provisional Rs 1,265 crore even as DIIs purchased shares worth Rs 2149 crore. So far this fiscal through May 19, FIIs have sold Indian shares worth Rs 52,281 crore or $ 6.8 bn.
They cut their net short positions on index futures contracts to 38,378 from 75,387 contacts on May 19. It was this short covering mainly that drove up the Nifty and to a lesser extent the Bank Nifty. A fall in open interest accompanied by price rise signals short covering. Friday’s rise was led by RIL, which gained 6%, Dr Reddy’s Lab (7.6%), Adani Ports (5.3%), JSW Steel (5.11%) and Tata Motors (4.85%). Shree Cement and UPL were the only Nifty losers. Despite Friday’s sharp bounce, market analysts feel the bottom has not yet been made. “We seem to be hovering over the March low of 15671 and bouncing from there,” said Hormuz Maloo, director, AFco Investments. “Unless that level is tested, we might still not have made the bottom.”
Markets snap losing spree with big gains
Nifty closed up 456.75 points at 16,266.15 and the Sensex rose a whopping 1,534 points to 54,326.39 on Friday on hopes of China’s boost to its ailing economy raising demand for metals and other commodities, which have been battered by central bank rate tightening