Sensex gains 290 points as investors eye bargains in an oversold market

Amidst high bout of volatility, the Sensex gained 290.82 points or 1.13 per cent to close the day at 26,032.38 while the Nifty climbed 71.70 points or 0.92 per cent to end the day at 7,880.70. The rupee too recovered smartly from its two-year-low to close the session at 66.10 against the dollar as compared to its previous day’s close of 66.64.

However, the risk averse foreign portfolio investors (FPI) remained net sellers to the tune of Rs 2,080 crore on Tuesday after dumping equities worth over Rs 5,000 crore the previous day. “This was just a technical bounce back. The People’s Bank of China has slashed interest rates by 0.25 per cent to calm the markets, following which the key equity indices in Europe and US are trading higher. So the Indian markets could hold on to their gains till the expiry of August deri-vative series. However, foreign investors have created aggressive short positions in September Nifty futures, which suggest that the markets are likely to trade lower. This is a sell on rise market and we expect Nifty to hit 7,200 levels in the coming weeks. The fall will not be as steep as we saw on Monday, but a gradual one,” said Siddarth Bhamre, head of derivatives at Angel Broking.

“We will have to wait and see the impact of interest rate cut on the Chinese equity markets. It is likely that the Indian markets could make some gains for the next two or three days. However, the markets will require fresh positive triggers to sustain those gains,” said Uday Narayan Dubey, vice-president, institutional desk at R.K.Global.