BSE Sensex closes 40 points higher, IT stocks rise

The benchmark Bombay Stock Exchange (BSE) Sensex provisionally closed flat on Thursday, despite attractive valuations due to short coverings.

The barometer 30-scrip sensitive index (S&P Sensex) closed at 25,863.50, higher by 40.51 points or 0.16 per cent.

The Sensex touched a high of 25,949.90 points and a low of 25,670.96 points in the intra-day trade.

On similar lines, the National Stock Exchange (NSE) Nifty closed 22.55 points higher at 7,868.50.

The Indian equity markets opened on a lower note on Thursday, following a sharp downward correction in Japan's Nikkei.

The Asian markets fell after sharp correction in Nikkei index, which opened after two days of trading holiday. Nikkei index fell by 2.76 points. Hong Kong's Hang Seng dropped by 0.97 per cent. However, China's Shanghai Composite Index inched up by 0.54 per cent.

The Indian equity markets pared their initial losses due to bargain hunting which was prompted by attractive valuations.

Stock prices got attractive due to "short-coverings" as investors unravelled their investment positions on the expiry day of the September derivatives series.

Market observers pointed out that short coverings made valuations attractive and lifted sentiments and prompted value buying.

"The markets opened lower on the back of sharp correction in Nikkei. However, it rose steadily due to short coverings on the expiry day of September series. Short coverings lifted prices," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

Vaibhav Agrawal, Vice President, Research, Angel Broking, told IANS that the markets closed flat, reflecting a lack of direction in the absence of any major domestic triggers and continued uncertainty over the possibility of a US Fed's rate hike later in the year.

"We expect markets to start trading with a positive bias over the next couple of sessions led by the end of September F&O (futures and options) series and expectations of a rate cut in the RBI policy later this month," Agrawal told IANS.

The Reserve Bank of India (RBI) will decide on whether or not to ease the key lending rates during its upcoming monetary policy review slated for September 29.

Sector-wise, information technology (IT), consumer durables, healthcare, technology, entertainment and media (TECK) and fast moving consumer goods (FMCG) stocks supported the market recovery.

Notwithstanding the positive trend, capital goods, metal, banking and oil and gas sectors came under intense selling pressure.