Short covering adds 359 points on Sensex at close

It was a spectacular session for Indian equities led by short covering across sectors and was a continuation of uptrend for the second consecutive day after a deep cut seen in previous five days. Sharp spike in heavyweights like Reliance Industries, Bharti, SBI, DLF, L&T and BHEL pulled the Nifty above 5500 - an important psychological level and supported the Sensex to add 359 points at close.

The Nifty could see a bounce back to levels of around 5600, at best 5650 before the correction again sets in, says Ambareesh Baliga of Karvy Stock Broking. Sustaining beyond that, however, he said would be a bit difficult because there is no follow through buying coming in as such.

"The markets are clearly in a bounce back mode and we could see a bounce back to levels of around 5600, at best 5650 before the correction again sets in and this is also aided by most of these FIIs based in Singapore who are not really there in the market today. So possibly because of that there is not much of selling. So this rally can continue for a while longer but it should be utilized to sell," he said.

With more optimistic view, Prakash Diwan of Networth Stock Broking believes that the market has more steam to go all the way up to above 5750, possibly 5800 levels. "There is some genuine value buying that has started emerging and we could possibly have a couple of dull boring days that is when the consolidation becomes more meaningful," he pointed out.

The 30-share BSE Sensex rallied 358.69 points or 1.98%, to end at 18,449.31 and the 50-share NSE Nifty surged 94.75 points or 1.74%, to settle at 5,526.75. The broader indices went up one percent each.

Only one share declined as against 29 shares advanced on Sensex and 44 shares gained as against six shares fell on Nifty.