Nifty ends with 62 points gains

Indian equity benchmarks rebounded on Wednesday led by short covering after a sharp sell-off seen in previous session on earthquake in Japan. The 50-share NSE Nifty clawed back above the 5500 level, with 62 points gains to close at 5,511, supported by 44 stocks out of 50. But there was some profit booking in late trade while European markets slipped in red, which could be because of rising crude oil prices again, reacting to Middle East tensions.

Huge short covering was seen in Asian markets. The Nikkei 225 Average bounced back with 5.7% gain today to close at 9,094 after consistent fall in previous three sessions - nearly 17% fall – due to massive earthquake & tsunami on Friday followed by blasts in various nuclear plants located in northern region of Japan.

Among other Asian markets Shanghai, Kospi and Taiwan gained 1-1.8%. Straits Times went up 0.9% and Hang Seng up marginally.

The 30-share BSE Sensex rallied 191 points, to end at 18,359. The broader indices too gained 1.3% each. However, European markets slipped in red after initial modest gains - France's CAC, Germany's DAX and Britain's FTSE went down 0.3-1%.

Sensex Northbound

The equity benchmarks recouped all their previous day's losses today on the back of recovery in global markets. But there was some profit booking at higher levels, which could be because of rise in crude oil prices again.

London Brent crude went up by USD 1.6 to USD 110.4 a barrel after Bahraini security forces attempted to clear protesters on Wednesday, rebounding from a three-week low near USD 107 earlier in the day. The Nymex crude was inching up towards USD 99 a barrel at 13:50 hours.

Financial, technology, telecom, infrastructure, oil & gas, metal, realty and cement companies' shares were leading the markets higher. However, HUL, GAIL and Hero Honda were the only losers on the Nifty. About four shares advanced as against one share declined on the National Stock Exchange.

The European markets too were quite supportive in the afternoon trade, after rebound in Asian and the US markets; Germany's DAX went up 1%. France's CAC and Britain's FTSE were flat with positive bias.

The 30-share BSE Sensex was trading at 18,401, up 233 points and the 50-share NSE Nifty gained 72 points at 5,522. The broader indices rallied 1.5% as well.

The news of massive earthquake in Japan followed by tsunami and blasts in nuclear plants, which had left the world markets trembling in previous sessions, seems to be discounted by the markets for the time being. The Japan's Nikkei 225 Average surged 5.7% at close; Shanghai, Kospi and Taiwan gained 1-1.7%.

Heavyweights like TCS, SBI, ICICI Bank and Bharti Airtel rallied 2.5-4%. Reliance Industries, Infosys and ONGC gained 0.7%.

NTPC, L&T, Axis Bank, Sun Pharma, Sterlite, Tata Steel, DLF and SAIL were up 1-2.5%.

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Short Covering

Indian equities benchmarks bounced back sharply on Wednesday morning on the back of short covering as shorts were built up yesterday amid weak global cues.

Recovery in global markets and especially in Japanese shares too led the support as it seems that sentimental effect due to massive 8.9 magnitude quake, tsunami and blasts in nuclear reactors eased for the time being.

Even crude cooled off in international markets on the back of likely lower demand in devastated Japan - world's third largest economy. London Brent crude was trading at below USD 108 a barrel and Nymex crude was below USD 97 a barrel.

Among frontliners, ONGC, IOC, Reliance Industries, Reliance Capital, Reliance Communications, Reliance Power, Reliance Infrastructure, BPCL, Sterlite, Tata Steel, Jaiprakash Associates, M&M, Tata Motors, Dr Reddy's Labs, Ranbaxy Labs, SBI, HDFC and ICICI Bank were supporting the markets.

However, Hero Honda was the only loser on Nifty.

50-share NSE Nifty rallied 54 points to 5,504 and the 30-share BSE Sensed gained 187 points at 18,355. The CNX Midcap went up 65 points to 7,598 and the Nifty Junior rose 99 points to 10,695. 693 shares advanced as against 138 shares declined on National Stock Exchange.

Asian Market panic on Steel shares

Shares of Indian steel companies including Tata Steel, Steel Authority of India, Jindal Steel & Power, JSW Steel and Bhushan Steel were down 1-4% Tuesday, tracking a global sell-off in commodity stocks, as investors fear the devastating earthquake in Japan will lead to a sharp drop in demand for products in the near-term.

However, these declines could in fact be a good buying opportunity for investors, some analysts say.

Several big companies including global automobile giant Toyota Motor and electronics major Sony have had to suspend production in Japan following the large-scale destruction due to the earthquake, which is expected to lead to a lower demand for commodities including steel, and is in turn driving the sell-off in share prices.

While some analysts expect there could be some more decline in steel shares, they advise accumulating the shares at lower levels.

The tragedy in Japan has led to a general sell-off in steel and other metal stocks. There could be some more sell-off in the next couple of sessions and don't invest right now.

Once Japan starts rebuilding projects, demand for steel will pick up, and Indian companies too will benefit, she said.

Indian steel firms are expected to benefit also from strong domestic demand from sectors like infrastructure and automobiles.