Down 40 points in early trades, the 30-share BSE Sensitive Index (Sensex) eventually ended with a smart gain of 79.97 points, or 1.93 per cent, at 4,231.69. The NSE S&P CNX Nifty Index gained 25.30 points on Tuesday to end at 1,328.20. The FE FEfty also gained 45 points as it closed at 1546.01 on Tuesday.
As per data released by the Securities and Exchange Board of India (Sebi), for the first time, the total outstanding position of FIIs on Monday was nearly Rs 2,300 crore or almost 30 per cent of the total open interest position of around Rs 8,000 crore in the segment.
Of this, FIIs trading in index F&O accounted for about Rs 400 crore while their exposure in individual stock F&O was nearly Rs 1,900 crore.
Sharad Shukla, portfolio manager, IL&FS Investsmart said, Though todays recovery is being attributed to short covering in the derivatives segment, it is also to be noted that there is fresh inflow of funds, especially by FIIs. Most of the long-term players are taking this opportunity to reconstruct their portfolios when the bourses are in a correction mode.
Dealers said that a fresh bout of buying largely on account of short covering lifted the market higher. Old economy counters like automobile, power, steel and cement - stock rose on short covering in the derivatives segment, dealers said.
On the basis of large arbitrage positions that have been built derivatives experts opine that looking at the low cost of carry, a major part of these positions may not be rolled over to the October series, and may be unwound.
It is simply the phenomena of cost and carry where you buy in cash market and sell in futures. And when both are at par, you reverse positions. Therefore, a similar amount of positions could be unwound in the cash market. explained a derivatives analyst. Sustained foreign fund inflows helped the market to a certain extent after the recent fall. Foreign funds put in a net Rs 157.30 crore on Monday, September 22.
SBI settled at Rs 417.35, up 4.47 per cent over its previous close. Other heavyweights HLL (up 3.72 per cent to Rs 181.10), Reliance Industries (up 2.76 per cent to Rs 414) and ITC (up 1.58 per cent to Rs 792.50) also contributed to the gains of the Sensex, with a better part of the gains coming in the last one hour.
Among tech majors Satyam Computer settled at Rs 242.65, up 2.84 per cent over its previous close. HCL Technologies (down 1.74 per cent to Rs 158.10) and Infosys Tech (down 1.31 per cent to Rs 4,314.70) ended lower on selective buying at the lower levels towards the close of the session.