Abhay Aima, country head, HDFC Private Banking Group, said: Markets were overbought post the 4100 levels and thus profit booking was an expected move. However, the news of the blast triggered off panic selling, which resulted in the market shaving off over 120 points. After the initial panic, that brought about a knee jerk reaction in the market, things seem to be under control now.
The trend reversed on Tuesday and the bullishness was maintained throughout the week with the BSE Sensex scaling a 30-month high when it crossed the psychological barrier of 4,200 points on Wednesday. The BSE Sensex reached a high of 4,222 which was the highest the market had reached since March 2001 when the Sensex had ended at 4,272.
Trading continued on on a positive note and market players, primarily the institutional investors showed confidence in the Indian equity markets.
Said a BSE broker, Even the blasts could not deter the FIIs and thus the markets may not be affected majorly going forward from here. As for FII action, they will constantly churn their portfolio, and thus we might see some volatility in their activity. The good thing about the rally this time is that there are a new set of foreign players in the market which confirms the fact that they remain bullish about Indias position in the emerging markets.
Foreign institutional investors (FIIs) were in the forefront during the week ended August 29, 2003. Some of the stocks that were in the limelight include blue chips like Reliance, ITC, Satyam Computers and Infosys Technologies. Oil and gas, steel, information technology and pharmaceutical stocks also saw buying interest from local funds and FIIs alike.
Banking stocks that have been posting good gains stumbled a bit towards the end of the week on the news of a relook at the Securitisation Act.
Reliance crossed the 400 mark on Friday to close at Rs 398.55 after touching the days high of Rs 404.75 on BSE.
The Reserve Bank of Indias bullish annual report that stated that the GDP growth would be in excess of 6 per cent also boosted sentiments.
Market analysts are of the opinion that while the undertone of the markets is bullish there would be temporary corrections and the bull run would continue till November.
Said AK Sridhar, president, department of funds management, UTI Mutual Fund, The market has already discounted factors such as the GDP growth, good monsoons and low inflation. However, it is the political and socio-economic conditions that would have an impact on the way the market would move as overall there is no concern on the macro-economic fundamentals of the economy.