Sensex bounces back with a vengeance

Written by Markets Bureau | Mumbai, Jul 2 | Updated: Jul 3 2008, 05:36am hrs
Share prices bounced back on Wednesday, snapping a four-day losing streak. The relief rally, which indicated that stocks were oversold in the previous four days, was backed by huge short-covering both in the cash and in the derivatives segments.

The 30-share Sensex of the Bombay Stock Exchange (BSE) gained 702.94 points, or 4.42%, to settle at 13,664.62 points while the broader S&P CNX Nifty of the National Stock Exchange (NSE) rose 196.60 points, or 5.05%, to end the day at 4,093.35. The gains in Sensex and Nifty were, respectively, the third and fifth highest in terms of percentage in 2008.

The market capitalisation of the companies listed on the BSE, which dipped below the $1-trillion mark due to sustained fall in the last few days, once again crossed that crucial level to close at Rs 43,71,985.57 crore, as the Indian rupee closed at 43.17 a dollar.

Experts attribute Wednesdays rally to huge short-covering in the beaten down sectors of realty, banking and metals coupled with some value-picking on the back of positive cues from the US markets, which ended on a positive note on Tuesday and the positive opening by the European markets.

The Skindia GDR Index also gained 0.63% at 5 pm IST on Wednesday over with the eight GDRs in the index rising an average 4.50%. Seven of the eight GDRs in the index gained, and Grasim Industries was the only loser, paring 3.03%.

Hitesh Agarwal, who heads research at Angel Broking, said, It is really difficult to say that the markets are bottomed out with such intermittent rally, which is backed by short-covering. Even though the concerns of inflation and rising crude prices still remain, the markets are becoming more and more compelling and investors with long-term strategy can definitely enter into the markets. It will still take some time for the markets to stabilise and consolidate from here.

Foreign institutional investors continued to withdraw money from Indian equities and on Wednesday, according to the provisional figures from the stock exchanges , they were net sellers of Rs 668.43 crore while the domestic institutional investors bought equity worth Rs 421.01 crore.