FIIs buoy markets, Sensex up 417 pts

Dow slump signals more volatility, say some analysts.

Indian stocks rose most in about six months on robust buying by foreign institutional investors (FIIs) after Asian markets surged following US economic reports that growth was on track despite the sub-prime mortgage crisis.

The Sensex, which was the top gainer among the Asian indices, advanced 417.51 points, or 2.89 per cent, to close at 14,842.38 points while the Nifty was up 112.45 points, or 2.68 per cent, to close at 4,302.60 points. It is significant that this happened ahead of the futures and options expiry on Thursday.

The Dow Jones, however, did not share the optimism and was down 24.39 points at the time of going to press.

FIIs turned net buyers on Monday and bought shares worth Rs 695.35 crore. Local investors, in contrast, bought just Rs. 193.32 crore. 

OTHER MAJOR MARKETS TODAY
	Close 27/08	Change	% change
Dow Jones*	13,354.48	-24.39	0.18
Hang Seng	23,577.73	655.84	2.78
Jakarta Composite	2,175.35	32.24	1.49
Kospi	1,803.03	11.70	0.65
Nikkei 225	16,301.39	52.42	0.32
* Time: 11:30 (IST) Note: UK markets were closed owing to a bank holiday

Meanwhile, the market breadth was positive; 2,068 (76.09 per cent) shares advanced against declines of 604 (22.22 per cent) shares. The Bombay Stock Exchange's total market capitalisation increased Rs 1,19,000 crore to Rs 43,68000 crore.

Deven Choksey, MD of K R C Shares and Securities, said the markets might see renewed buying interest since some stocks looked attractive at this price, now that the troubles on the global and local fronts seemed to be abating.

Some analysts, however, said the Dow slump indicated more volatility to come. Maherboon Irani, equity analyst with Dharashaw & Co, said technical analysis pointed to a short rally but the markets were likely to face a liquidity crunch unless the FIIs remained buyers. "The markets have not bottomed out yet," he said.

All sectoral indices on the BSE closed in the green on Monday. The BSE Realty index was the top gainer (up 5.37 per cent), followed by the BSE Bankex (up 4.64 per cent) and the BSE Consumer Durable index (up 4.48 per cent).

Banking stocks led the charge with the State Bank of India moving up by 6.2 per cent or Rs 90 followed by ICICI Bank (up 5.93 per cent or Rs.49.50).

Among other gainers, Maruti Udyog was up 5.13 per cent or Rs.40.50, Hindalco was up 4.54 per cent or Rs.6.45, and Reliance Communication was up 4.45 per cent or Rs.22.20. Reliance Industries rose Rs 58.35, or 3.3 per cent, to Rs 1,832.85.