The combined wealth of investors in the stock market, after declining for five straight days, increased on Monday. A host of reasons, mainly expectations of fresh steps by the government to infuse liquidity in the financial system, the recovery of markets across geographies and short-covering, helped the aggregate market capitalisation (M-cap) of the Bombay Stock Exchange (BSE) rise on Monday by a whopping Rs 1.96 lakh crore from Rs 33.79 lakh crore recorded on October 10. This is an increase of 5.8%. Ambaresh Baliga, vice president at Karvy Stock Broking, said, ?The government took steps to ease the sentiment and it is showing in the market. There was short-covering as well as value buying at the lower levels.?
Nimesh Shah, MD, Enam Securities, said, ?The market was oversold. Governments across the world are serious about the situation, and this is why the Sensex recovered.? He said valuations were looking cheap for a one-year horizon.
Among the sectors that showed significant growth in M-cap from last Friday are fertilisers, which jumped 12.7%, banks (10.6%), telecommunication (9.8%), electric equipment (8.9%), construction (7.7%), infomation technology (7.4 %), oil drilling and allied services (6.9%), power (6.9%), engineering (6.6%) and electronics (6.0%).
Data available with the Securities and Exchange Board of India (Sebi) show foreign institutional investors (FIIs) have withdrawn Rs 41,353 crore between January 1, this calendar year, and last Friday, October 10. Provisional figures show they have sold a net of Rs 1,060.60 crore on Monday also. FIIs have been net sellers continuously in the last three sessions. They were net sellers of Rs 1,055 crore on October 8 and Rs 2,513.74 crore on October 10.
Foreign funds have sold their stakes to meet their requirements in the US and other developed markets. This was responsible for the domestic market slipping into the red zone. The fund houses have taken advantage of this market meltdown. They were the net buyers at Rs 7,933.90 crore.
A senior fund manager from a domestic fund house said that the fund houses are investing money at lower levels of the equities as they can book profits during the market rally in the long run. The fund houses have mobilised more than Rs 5,000 crore during the corresponding period. They have also mobilised resources through systematic investment plans (SIPs) and other funds that has helped them to invest in the equity market.