New buyback norms cheer market; Sensex up 51 points

Our Markets Bureau

Mumbai, Oct 17: The sentiment got a further boost on Wednesday on news that the Union cabinet had cleared a proposal to allow companies to buy back up to 10 per cent of their shares with board approval. The upbeat mood pushed the Sensex up 51.39 points to close at 3043.85 points.

The already upbeat mood, on back of sustained buying by foreign institutional investors, got a shot in the arm, which helped the rally to extend and the Sensex gained 278.48 points or over 10 per cent in the last seven consecutive trading sessions.

In the early afternoon session, the Sensex hit the day’s high of 3050.07 points after opening at 2998.86, which was also its day’s low. On the NSE, the S&P CNX Nifty closed at 986.25 level, up 15 points after opening at 971.95 points. The Nifty’s day high was 989.05 points.

Wednesday’s rally was lead by frontline pharmaceutical stocks on perception that these companies will get orders from the US for Ciproflaxcin, the medicine used to cure anthrax which is causing a scare.

Cipla closed up Rs 54.55 at 1,140.65, Ranbaxy up Rs 16 at 670.40 and Dr Reddy’ up Rs 33.4 at Rs 970.4. Shares of Tata Power rallied sharply on news that the company’s net profit for the second quarter has jumped 74 per cent to Rs 242 crore. Tata Power closed up Rs 9.65 at 106.30.

HLL closed down Rs 0.90 at Rs 226.45. Analysts see tough time ahead for the company in the coming quarters with the topline seen under pressure following the slowdown. The company on Tuesday announced its third quarter results with sales rising 7 per cent and net profit 14 per cent.

JF Asset Management director UR Bhatt said: "Market is basically enthused with strong results posted by Infosys, but a sustained rally will depend upon how other frontline software companies and other sectors unveil their earnings number."

However, technical analysts said: "If the Sensex closes above the 3,050 levels, then we can expect market to add another 100-150 points." "The long-streched rally is seen sustaining up to Friday. A correction is expected any movement, as the mark has streched too far, too fast without any big surprises coming from the economy front," they added.