Sensex back on growth path, up 127 points

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Mumbai: ’Sanity’ returned to the Indian equity markets on Tuesday, after a day of 'emotion' lead selling following the Budget 2009-10 announcement. The 30-share Sensex of the Bombay Stock Exchange (BSE) opened the day at 14103.65 points, touched a high of 14251.88 and eventually closed at 14170.45, amidst huge volatility throughout the trading session, but finally closing ‘above the dotted line’ or opening price. Through the day Sensex added 127.05 points or 0.90%. Strong cues from the European markets coupled with intense buying from the domestic institutional investors (DII) led the market to end the day in green.

The broader S&P CNX Nifty of National Stock Exchange (NSE) gained 36.45 points or 0.88% to close the day at 4,202.15 points, setting aside fears of an across the board sell off. According to Amitabh Chakraborty, president-equity at Religare Capital Markets, “After a dip of over 800 points, markets were bound to bounce-back. Apart from that, I don’t think the situation is as bad. Markets were waiting for the budget to get over. I think now markets are likely to move in a range in the coming days. However at the moment everything depends on monsoon and quarter numbers which will start coming in by next week.”

The markets opened the day with positive gap, taking cues from the US markets and traded in green throughout the trading session. Dealers in the market also added that, huge buying was seen in the Auto and FMCG sector stocks. Overseas investors like Goldman Sachs and others actually welcomed the budget announcement and Macquarie Group reaffirmed its target for the benchmark index saying that the market overreacted to the government budget yesterday and that there were in fact significant positives from a policy perspective.

However, huge selling was witnessed by the foreign institutional investors (FII), while DIIs continued with their buying activity. As per provisional figures furnished by BSE, FII were net sellers at Rs 921.39 crore and DII net buyers at Rs 790.16 crore.

“In the coming days we might also see some ‘profit booking’ from the FII’s. There are chances that Nifty might drop to 4,000 levels in the next few days which could lead to market activity and followed by an upward rally in the markets,” added Chakraborty.