European markets received a boost on Thursday after China said that it would maintain part of its foreign reserve in Euro zone bonds.
This boost to the European markets, coupled with short covering of open positions in India pushed up the Sensex for the second day.
On Wednesday, the US market had fallen on fears that China will withdraw some of its funds invested in European sovereign bonds. But as China denied the rumours of withdrawing its funds and said that the Eurozone remains a good investment destination, the Asian markets which opened flat showed some buoyancy. The European market and the US futures also turned positive.
“The markets have rebounded from the oversold region and it is too early to say whether the markets have changed their direction. For Nifty, a close above the level 5025 will help us to take a decision on the market direction,” says Mr Alex Mathews equity head at Geojit BNP Paribas Financial Services.
The Nifty closed up 85.70 points at 5,003.10. The turnover on both the exchanges continued to rise at Rs 1,74,912 crore. The Sensex which opened negative quickly turned green and as the European markets opened on a strong note, it soared and closed at 16,666.40, up 278.56 points.
The bounce back of the markets should last for another day as Friday is the last trading day of the week.
“Whatever you may say,” said one analyst, the markets will go with the news flow from Europe and inflows by the financial institutions. The FIIs are said to be returning slowly to the Asian markets.