Short covering drives Nifty above 5300 at end

It was a sigh of relief for the Indian equity benchmarks in last couple of hours of trade on Friday, especially after a drubbing seen in previous five sessions. Lots of shorts piled up in those sessions - particularly after breaking the 5400 level (the major support level) - that managed to get covered to some extent today.

The 50-share NSE Nifty saw the 5300-mark towards close today - for the first time since yesterday and settled the trade at 5,310, up 84.20 points or 1.61% as compared to previous close, after showing 132 points recovery from an intraday low with the feeling that worst may be over for the time being and markets looked priced in almost everything like rising inflation, likely rate tightening by RBI in next policy meet, rise in commodities prices, various scams and likely slowdown.

Alok Sama of Baer Capital feels the worst is probably over for India. "We have probably seen the worst run-up in oil prices. Also, I feel inflation fears here are probably over-done," he told CNBC-TV18.

However, he continues to believe that India is among the most expensive emerging markets where food price inflation remains a matter of key concern. "Also, the outflow from India is not very significant," he stated. Foreign institutional investors were net sellers this year with around Rs 6,500 crore worth of share being sold while they were net buyers in the year 2009 & 2010 with more than 2.25 lakh crore worth of shares being bought.

On the back of a fairly robust earnings growth, he feels 17,500-18,000 on the Sensex and 5,000 on the Nifty are reasonable levels to think of in terms of markets being well supported.

Financial, infrastructure, auto, Anil Dhirubhai Ambani Group and healthcare companies' shares led the support - mainly the most beaten down shares were seen huge buying interest. However, the selling remained in Bharti Airtel, Hindalco, ITC, HUL, Infosys, Tata Steel, Tata Power, TCS and BHEL but these stocks recovered from their day's low.