Nifty closes higher for 3rd consecutive day; SBI, ITC lead

The benchmark Nifty closed higher the for third consecutive day on positive European cues. The indices were consolidated in the first half of trade due to lack of Asian and US cues while in the second half of trade, they strengthened on European cues.

Financial (barring HDFC Bank), telecom (was loser in first half of trade), FMCG, auto and select technology companies' shares helped the Nifty to stay above 5100 and the Sensex above 17100 levels. However, selling in metal companies' shares along with ONGC, HDFC Bank, BHEL, Ambuja Cements, Kotak Mahindra Bank, Tata Power and Unitech capped the gains.

Portfolio Manager PN Vijay said the Nifty would trade in the 5,200-5,250 range. ''We are seeing the unwinding of very big short positions that had been taken in the market in the last two weeks. With volatility coming down a wee bit globally, these shorts have to be covered because they have extremely high positions. That would take this market probably back to a base level or a normal level on fundamentals of about probably 5,200 or 5,250.''

Indices fell once in the last eight sessions and closed this week around 1.5% higher. Sanjay Shah, MD and Co-Head, Institutional Equity, India, Morgan Stanley said that they were bullish on the Indian outlook.

Shah said that confidence in India was boosted by the macro story while more inflow of funds from both domestic and overseas investors was likely to continue till the global economy improves. India had already seen an overseas flow of USD 14 million in the last six to eight months while an additional USD 4 million had come in as domestic funds via insurance companies and mutual funds.

The 30-share BSE Sensex closed at 17,117.69, up 95.36 points or 0.56% and the 50-share NSE Nifty rose 25 points or 0.49% to settle at 5135.50. However, the Nifty June future ended at 19 points discount, as per provisional data.