Date:24/05/2006 URL: http://www.thehindu.com/2006/05/24/stories/2006052405891600.htm

Business

Stocks bounce back on buying support

Special Correspondent

Sensex and mid-cap stocks in limelight

MUMBAI: The efforts of the Finance Minister and regulators to restore calm on stock exchanges

succeeded with the benchmark stock index, BSE Sensex, bouncing back by 341.01 points on Tuesday, after sinking for three straight sessions and its historic intra-day fall of 1111.70 points on Monday.

While some brokers continued the salvaging operation by liquidating over-leveraged positions as traders came under margin pressure, institutions, including domestic and foreign, made heavy purchases.

After a roller-coaster trading in the early sessions of the day, the market stabilised post mid-session and the Bombay Stock Exchange 30-share sensitive index spurted by 341.01 points or 3.25 per cent to close the trading at 10,822.78. The Sensex gyrated over 673.72 points between the intra-day high of 10,859.20 and a low of 10,185.48.

The Sensex had fallen by 1,736 points or 14.21 per cent in the last three sessions. It had dipped from an all-time high of 12,671.11 on May 11 to the intra-day low of 9,826.91 on May 22, a drop of 2844.20 points or 22.4 per cent.

Continued buying by FIIs

The National Stock Exchange's (NSE) S&P CNX Nifty jumped by 118 points to 3,199.35 from previous close of 3,081.35.

FIIs were continued buyers in the Futures & Options and they bought for Rs. 1,914.57 crore in June Futures on Monday but pulled out about Rs. 872 crore from the cash segment.

Buying was seen in the index heavyweight stocks along with mid-cap stocks. However, fresh buying in metal stocks also boosted the sentiment on bourses. Market participants bought shares of sectors such as oil, consumer durables, capital goods, power, metal, technology, auto and cement. The index shares BHEL, Infosys, Reliance, Reliance Energy and Hindalco lifted the Sensex.

Allaying fears of market participants, the Finance Minister, P. Chidambaram, on Tuesday told Rajya Sabha that the capital markets remained well-regulated and India was the best performing emerging market in the world. Separately, he also stated that the Government has no plans to change tax regime for overseas investors. He was referring to a notification of Central Board of Direct Taxes (CBDT), which proposed to tax short-term trading participants, but not long term investors.

The market breadth was positive. Among 2,460 stocks traded on the BSE 1,424 stocks advanced, 985 declined and 51 ended unchanged. All the sectoral indices were back in action and moved up sharply. The BSE Metal Index was the major gainer and rose 7.35 per cent. The BSE CD (consumer durables) Index jumped 4.95 per cent, the BSE CG (capital goods) Index added 4.11 per cent, the BSE PSU Index gained 4.13 per cent and the BSE Teck Index was up 3.29 per cent.

Among major gainers, Reliance flared up 4 per cent at Rs. 969, Grasim 9 per cent at Rs. 1,917, Wipro 7.5 per cent at Rs. 473, Tata Steel up 7.87 per cent at Rs 510 and Tata Power 7.93 per cent at Rs 550. Maruti Udyog was up 5.92 per cent at Rs. 803, Reliance Energy 6.30 per cent at Rs .549, Hindalco 6.29 per cent at Rs. 191 and Gujarat Ambuja Cement 5 per cent at Rs. 96.

Other front-line stocks (Index stocks) also moved up by 2-4 per cent each. However, Hero Honda dropped 2.7 per cent at Rs. 793 and Dr. Reddys' shed 1.4 per cent at Rs. 1,421. Metal stocks were in the limelight as most of these stocks moved up substantially.