Sensex gains 195 points

The markets flared up on positive poll results

Key indices on both bourses were trading quite strong led by poll results and short covering. Huge shorts were piled up on the previous session that resulted in 249 points fall on Sensex, those shorts were getting covered this day.

Global cues were mixed with European and US index futures trading firm while Asian equities ended mixed. All the sectoral indices were in the green.  The market reversed an initial fall in volatile trade after assembly poll results reportedly showed the Congress party and its coalition is set to come in power in most of the states, helping allay fears of a political uncertainty.

Analysts don't expect the state elections to change the trajectory of the markets as they said this day's rally was purely driven by short covering. High inflation, interest rates and high raw material prices will continue to weigh on the markets. In this context, Navneet Daga, Derivative Analyst from KR Choksey Securities said,

“This rally will be short lived as lots of shorts were built up in the system, elections results were a surprise and the traders had to buy to cover up the shorts.”

The BSE Sensex was up 195 points to close at 18,531points. The Index had surged 389 points at the day's high of 18,724.54 in mid-afternoon trade. The S&P CNX Nifty was up 55 points to settle at 5,544.75 points at close.

Broader indices wise, the BSE Mid-Cap index rose 0.85 per cent and the BSE Small-Cap index rose 0.39 per cent. The market breadth, indicating the overall health of the market, was positive with as many 1,619 shares on BSE gained while 1201 shares declined and a total of 137 shares remained unchanged.
The total turnover on BSE amounted to Rs 2,567 crore.

During the day, European shares edged higher with sentiment improving on some strong corporate results and data showed German gross domestic product grew faster than expected in the first quarter. The key benchmark indices in France, Germany and UK rose by between 0.27 to 0.67 per cent.

Asian shares were mixed after China's federal bank increased banks' reserve requirements by 50 basis points, the 8th time since October in an attempt to ease inflationary pressures.