Saturday, January 26, 2008

Record Gain by Sensex ends up 1140 Points

The markets rallied to their biggest single-day gains on Friday, in line with Asian exchanges, after the US government formulated a plan to boost economic growth.

The outlook for next week is uncertain as the US and European markets remained flat at the time of going to the press.

With yesterday’s gain, the widely tracked Sensitive Index of the Bombay Stock Exchange (BSE), which crashed 2,284 points (12 per cent) in the first two days of this week, has recovered 1,631.72 points in the last three days — a phenomenal turnaround given the sentiment just three days back.

On Friday, the Sensex climbed 1,139.92 points to 18,361.66 — still 2,514 points away from the all-time high close recorded on January 8. The broader S&P CNX Nifty added 350 points (6.95 per cent) to close the week at 5,383.35 points.

Foreign funds, which sold a net of Rs 23,013 crore in cash market this month, made net purchase of Rs 208 crore on Friday.

This is the first time they have made net purchases in the last nine days. Domestic institutions made purchases for Rs 248 crore in a thinly traded market.

Indian markets also tracked Asian indices which rallied smartly. The market breadth was positive on the BSE, with 1,558 stocks advancing against 1164 declines.

Real estate (the BSE Realty Index was up 10.41 per cent) stocks were the major gainers among sectoral indices. Metal and banking indices rallied 9.73 per cent and 7.53 per cent, respectively.

Amitabh Chakraborty, president (equity), Religare Enterprises said: “Though the market sentiment is quite bullish, F&O action is very limited. Positions have been reduced because of margin calls and the open interest position is very low. It makes a very strong case for a market rally next week as a rollover expiry is due on Thursday. Frontline stocks have come down significantly, so we saw good institutional interest for frontline stocks.”

He added that the Indian markets have bottomed out and although there is no downside at this point of time, “bad global news can disturb the momentum. It is a value-buy proposition now and frontline stocks look quite attractive.”

Almost all shares on the Sensex gained on Friday. Aditya Birla group’s Hindalco Industries was the largest gainer, rising 14.01 per cent to Rs 173.35. Reliance Energy climbed 11.81 per cent to Rs 2,030.25, ICICI Bank 11.16 per cent to Rs 1259.25 and NTPC 9.11 per cent to Rs 222.25.

Sandeep Jain, vice -president, private client group at Ambit Capital, said: “We are in an extremely oversold market as of now. After the huge fall, the market has tendency to move upwards for a couple of days. For the next one or two months, the markets will struggle and will move in a range between 4900 and 5500 Nifty levels. The market looks very attractive at 16 times March 09 P/E. The domestic capex story is very strong and we will see more upside in growth from cuts in interest rates and taxes.”

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