Sensex and Nifty, the key share market indices, hit a two-month high on Tuesday as the extreme pessimism due to the Covid-19 situation led to huge short positions, which are now getting covered. The mid and small-cap indices also closed strong near their annual high levels. The Sensex rose by 612 points or 1.24 per cent to close at 50,193 on Tuesday. The Nifty index gained 184 points or 1.24 per cent at 15,108.

Market experts are expecting the rally to continue as global markets remain buoyant. Looking at the Covid situation, traders had built huge shorts but are being forced to cover at higher levels as markets remain strong. Short-sellers earn when markets fall and cover if they see prices rising.

Change in options chain

“The Nifty broke out of the consolidation zone above 14,930, setting the stage for a move back to all-time highs,” said Rohit Srivastava, strategist, Indiacharts.

“Trade is shifting back to banks and financials, autos and discretionary consumer stocks away from defensives like pharma, FMCG and IT services. Hopefully, the easing of pressure on health infrastructure would give some elbow room for the ruling party to refocus on governance and push through the intended growth-oriented policies,” said Gaurav Dua, Senior V-P - Head Capital Market, Sharekhan.

European stock markets were trading higher on Tuesday and were buoyed by the promise of continued US Fed stimulus along with better- than-expected UK employment data.

“Falling new cases of Covid-19 and faster recoveries have raised hopes that the second wave is now on a decline mode and India shall soon be back on the normal growth path,” said Deepak Jassani, Head of Retail Research, HDFC Securities.

Related Topics
comment COMMENT NOW