Short covering push markets higher; Nifty above 11,100

Indian markets witnessed a short-covering bounce in the last 90 minutes of trade on July 31 which pushed the Nifty50 back above 11,100 levels but still below its 200-days moving average placed at 11,148.

The final tally on D-Street: the S&P BSE Sensex up 83 points and the Nifty50 higher by 32 points at 11,118.

Sentiment eased as investors brace for a dovish policy from the US Federal Reserve, which led to some bit of short covering in the Indian markets. Considering the fact we were trading near crucial support levels, some bounce back was on the cards.

“Market reversed after testing the psychological level of 11,000-mark supported by short-covering in banks and auto after recent days of fall and prospects of dovish FED policy,” Vinod Nair, head of research at Geojit Financial Services Ltd, told .

“Investors’ appetite for mid & small caps is yet to find confidence despite consolidation, as lacklustre earnings and high beta impacted the sentiment. A decisive up move will depend on ease in liquidity crunch and improvement in fundamentals,” he added.

In terms of sectors, the S&P BSE Metal index rose 2.4 percent followed by the S&P BSE Auto index which was up 1.2 percent and the S&P BSE Oil & Gas index rose 1.06 percent.

Recovery was seen in the broader market space as well. The S&P BSE Smallcap index rose 0.34 percent, while the S&P BSE Midcap index was up 0.72 percent.

Experts feel that the market is expected to remain weak in the near term, and is likely to face selling pressure at higher levels. On technical charts, Nifty formed a bullish candle but as long as it trades below 200-day exponential moving average (DMA) and 11,200 levels, weakness could stretch towards 11,000-10,950.

“We expect that weak domestic sentiments may continue to have a negative bearing on the Indian markets. Further, muted corporate earnings and challenging outlook provided by the corporates is also weighing on the markets,” Ajit Mishra, Vice President, Research, Religare Broking Ltd, said.

“We recommend investors should stick to stock-specific approach, taking cues from the earnings, and traders should avoid highly leveraged positions,” he said.

Top Nifty50 gainers include IOC, IndusInd Bank and YES Bank which were up 4-5 percent. On the losing side were Axis Bank and ZEE Entertainment which lost 4-5 percent.

Stocks in News

Auto major Hero MotoCorp ended 4 percent higher on July 31 after the company posted a whopping 38.3 percent YoY increase in Q1 FY20 profit on account of one-time gain with respect to reversal of a calamity fund.

Shares of Cox & Kings closed 5 percent lower after the company defaulted on payment towards commercial papers. The company was repay Rs 10 crore on July 29. There were pending sell orders of 2,925,753 shares, with no buyers available.

Shares of Gujarat Gas ended over 4 percent higher after the company reported strong numbers for the quarter ended June 2019.

Coffee Day Enterprises shed another 20 percent after founder VG Siddhartha’s body was found near the Netravathi River in Mangaluru. There were pending sell orders of 2,494,013 shares, with no buyers available.

Indian Oil Corporation (IOC) closed the session 4 percent lower after it posted 41 percent fall in its June quarter standalone net profit at Rs 3,596.11 against Rs 6,099.3 crore in the quarter ended March 2019.

Global update

Stocks in Asia ended lower, as investors waited for the Fed Reserve announcement on interest rates.

The Nikkei slipped 0.86 percent to close at 21,521.53. The Topix also fell 0.66 percent to end its trading day at 1,565.14. Shanghai composite shed 0.67 percent to 2,932.51 and the Shenzhen component fell 0.77 percent to 9,326.61.

The Shenzhen composite also declined 0.681 percent to 1,571.30. Hang Seng fell 1.31 percent to 27,777.75.