Markets bounce back, Sensex at 9,283 points

The markets bounced back on Monday after a sharp correction in the previous two sessions. The Sensex shot up 197.3 points (2.17 per cent) to end the day at 9,283.2. On Monday's gains were the biggest recorded by the index since October 31, 2005 when it surged 207 points.

The S&P CNX Nifty rose 56.30 points (2 per cent) to settle at 2,805.90. The gains in key indices were led by upsides in leading Reliance counters "" Reliance Industries and Reliance Energy.

According to analysts, expectations of better liquidity and a bounce-back by index heavyweights led to the upswing in the markets. The fall in international oil prices below the $58-a-barrel mark also helped.

All the BSE indices appreciated, with the BSE oil and gas index gaining the most with 2.83 per cent. Other major gainers were BSE bankex (up 2.55 per cent), BSE capital goods index (up 2.39 per cent), BSE auto index (up 2.36 per cent) and BSE 100 (up 2.25 per cent).

Market participants feel that reports of a better liquidity position going forward was one reason for the rally. Manish Sonthalia, vice-president, equity strategy, Motilal Oswal Securities, says that the markets had fallen for two consecutive days due to reports of a liquidity squeeze. On Monday, short covering at higher levels also helped the markets to rise, according to Sonthalia.

Of the 30 Sensex stocks, 27 gained during the day. Reliance Industries and State Bank of India, which had a bearing on the market fall yesterday, bounced back on Monday. Reliance was up by 4.14 per cent to Rs 866.8. Apart from Reliance Industries, BHEL (up 4.10 per cent at Rs 1381.80) and Reliance Energy (up 4 per cent at Rs 601.20), Satyam (up 3.96 per cent at Rs 722.15) and Tata Motors (up 3.41 per cent at Rs 659.50) were the other big gainers.

According to Sonthalia, the announcement of a special trading session to enable price discovery of Reliance shares on January 18 helped improved sentiments. Reports that Reliance Industries has struck oil in one of its exploration blocks in the Krishna Godavari basin, off India's east coast, also helped the bounce-back.

Banking stocks were also among prominent gainers during the day. According to analysts, bank counters are witnessing renewed buying interest due to sound sector fundamentals. While ICICI Bank advanced 3.27 per cent to close at Rs 577.95, SBI went up 2.60 per cent to Rs 891.35.

However, HDFC Bank (down 0.08 per cent at Rs 708.85) was among the losers. Other Sensex losers were HDFC (down 0.34 per cent at Rs 1,168.95) and ONGC (down 0.32 per cent at Rs 1,181.85).

The market breadth was decidedly positive. Over 1,470 stocks appreciated on the BSE, while 700 declined. The BSE posted a turnover of Rs 2,907 crore, higher than Monday's Rs 2,533 crore.