Sensex, Nifty recover after days of turmoil; short covering to drive markets now

Stock markets in India recovered today after days of mayhem with Sensex soaring 347 points as banking, pharma and FMCG stocks recovered. Sensex closed at 36,652.06, up by 347.04 points or 0.96 per cent. Notably, Sensex touched a high of 36,705.79 intra day. The recover was courtesy some welcome news from various sources.
 
First of all, insurance behemoth Life Insurance Corporation assured that it would do all it can to prevent the collapse of IL&FS led to marked improvement in the sentiment. All options, including increasing the equity holding in IL&FS, are open, assured  LIC chairman.
 
According to V K Sharma, Head PCG & Capital Markets Strategy at HDFC Securities, "IL&FS turmoil has sent shockwaves across financial markets and the consequent liquidity concerns have led to the hammering of several financials stocks in last three sessions."
 
Sharma added, "Market talk that RBI may look at cutting Cash Reserve Ratio (CRR) or open a separate line of credit for mutual funds helped markets recover its early losses and close with a flourish."
 
Nifty managed to survive low of 10866 and rebounded sharply to close at 11067 a gain of 100 points. Bank Nifty also recovered sharply on the back of short covering. 

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Looking forward, Sharma said, "September contracts of derivatives will expire this Thursday and short covering will drive the markets for the next two days."