Market swings 575 pts, shrugs off metal blues

Sensex up 52 points; FM says no meltdown.

After a rollercoaster ride for three consecutive days, losing 790 points, the BSE Sensex rediscovered its winning streak today, triggered by the recovery of metal prices on the London Metal Exchange (LME) and buying at lower levels.

Indian shares overcame weak markets across Asia and bounced back to gaining 51.53 points in a day, marked by violent mood swings.

The Sensex saw an intra-day swing of over 575 points. After plunging 443 points from Monday's closing level to 11,378 points, the Sensex climbed back to 11,873.73, gaining 0.44 per cent. The move was mirrored by the Nifty, which went down to 3,382.40 but closed at 3,523.30 "" a gain of 20 points.

"While the volatility was expected after yesterday's loss, the low-valuations which were reached after the initial correction today seemed to have proved too enticing for mutual funds," said Janish Shah, head of research, Networth Stock Broking.

"Once the levels were stabilised by institutional buying, the market also got fresh impetus as traders, who had gone short in expectation of a further fall in prices, started buying to square off their positions," he added, explaining the spurt in the last minutes of trading.

Almost all Asian markets, barring the Philippines, were in the red. The Nikkei in Tokyo fell for a sixth session to its lowest close in two months, while Hang Seng dropped 0.6 per cent and Seoul slid 2.2 per cent, nearly wiping out the year's gains.

The market sentiment improved in the afternoon after Finance Minister P Chidambaram dismissed talks of any meltdown. The finance minister had termed the steep fall in the stock market as a correction triggered by factors, including a fall in metal prices.

With other markets in the neighbourhood continuing to radiate negative cues, nobody is yet taking any bets on any halt in the correction as the net correction for most of the indices is still to the extent of 6 per cent from their all-time highs reached last week.

"The market will continue to be volatile as it will take a couple of sessions for the volatility to even out," a big-time broker pointed out.

Reliance Industries (2.2 per cent), BHEL (3.35 per cent), Bajaj Auto (2.75 per cent) and Hindustan Lever (2.25 per cent) played a key role in lifting the market to higher levels.

Hindalco, the most prominent loser yesterday, managed to force its way back into the positive territory despite struggling for most of the time during the day and closed with a gain of 2.24 per cent to Rs 214.85.

Cement stocks, which were among the first to bounce back into the positive territory this morning, lost their way under intense selling pressure around late forenoon, but came back strongly into the reckoning in afternoon trade.

Gujarat Ambuja Cements topped the list of Sensex gainers, recording a handsome rise of 7.58 per cent to Rs 108.55.

ACC gained 4.84 per cent to Rs 903.55 and Grasim Industries went up 2.65 per cent to Rs 2182.20.

The BSE small-cap and mid-cap indices continued their southward march as they went down by 1.79 per cent and 1.32 per cent, respectively.

Yesterday, the BSE mid-cap index plunged 3.36 per cent, while the small-cap index plunged 3.10 per cent. While the BSE FMCG index gained 1.13 per cent today, BSE bankex, BSE consumer durables, BSE consumer goods and BSE healthcare lost around one per cent each.

Though the Sensex managed to end on a positive note, the market breadth continued to remain negative. Of the 2,538 stocks traded on the BSE today, only 670 managed to finish on the positive side with 1,832 posting losses and 36 remaining unchanged from their previous closing levels.