Short covering pushes Sensex above 39k ahead of FO expiry

Bulls are back! Supported by short covering ahead of F&O expiry, Sensex snapped a 3-day losing streak and recouped most of the losses made in the last two sessions but we are still far off from record highs.

Nifty50 is back above 11,700 which is a positive sign. Ease in crude oil prices also helped the sentiment, but it is still trading near 2019 highs.

The broader markets underperformed the benchmark with BSE Midcap and Smallcap ending with gains of 0.4 percent each.

On the sector front, barring auto, which ended with losses of 0.3 percent, all the other sectoral indices ended with healthy gains of over 1 percent. The S&P BSE Oil & Gas index rose 2.3 percent, followed by the telecom index which was up 1.8 percent, and IT index which rose 1.3 percent.

Investors are advised to wait for a breakout above 11,856 before initiating any fresh positions in the index, but any correction in quality large or midcap companies with strong growth prospects are great buying opportunities on dips, suggest experts.

“We saw short covering rally in the last 1-1/2 hours of the trade ahead of the expiry on Thursday after being rangebound or dull in the first half of the session. The rally was led by short covering rally in most of the largecaps stocks across the sector such as RIL, HDFC twins, TCS, Infosys, and ICICI Bank,” Yogesh Mehta, Vice-president, Motilal Oswal Financial Services told Moneycontrol.

“The interest in the market remains very high especially from FIIs ahead of elections which have poured in over Rs 35000 crore in March, and they are net buyers in April as well. Wednesday’s rally was largely a technical bounce and there is no nervousness ahead of elections,” he said.

Mehta further added that the only factor which is negative for Indian markets is crude and its impact on the currency. But, we are comfortable with crude hovering around $ 75-80/bbl.

Stocks in news

Maruti Suzuki falls for 4th straight day to hit a 3-week low ahead of results. The biggest car maker in India is likely to report a weak set of earnings on Thursday for March quarter on a year-on-year basis, dented by weak volumes and competition.

UltraTech Cement rallied over 5% after the company reported a 108 percent jump in its fourth quarter (Q4FY19) standalone net profit at Rs 1,017.5 crore on the back of better operating performance.

Shares of ACC fell 3 percent despite company reported better numbers for the quarter ended March 2019.

Indiabulls Real estate rose 10% as the Company decided to sell its London property for Rs 1800 crore to the promoters. “With this, Indiabulls Real Estate will be able to reduce debt on its books and concentrate solely on its NCR and Mumbai properties as Brexit related issues are creating sluggish demand,” Umesh Mehta, Head of Research, Samco Securities Ltd said.

Global Update:

Asian markets ended mostly lower on Wednesday despite S&P 500 and Nasdaq Composite ended at record-high overnight.

Nikkei shed 0.27% at 22,200, while Kospi fell 0.88% at 2,201.03. Shanghai Composite ended flat at 3,201.61, while Hang Seng was down 0.53% at 29,805.83.

European markets are trading mixed as market participants keenly watching corporate earnings.