Markets upbeat on FIIs' re-entry

With foreign investors back in the secondary market, key indices have held on to their gains for the first time in the last one month after crossing crucial levels.

The Sensex, which slid back by nearly 400 points over three days the last time it crossed the 12,000 mark two weeks ago, has instead put on almost 300 points since ending above the level on Saturday.

The FIIs, who had been hesitant in their investments since the bouts of correction began nearly a month ago, too were also back in Wednesday's market with a net purchases of Rs 460 crore, reminiscent of their pre-April purchases.

"The market is much firmer than anyone expected," says Ramdeo Agarwal, MD of Motilal Oswal, "there was a strong, though short-lived correction of 500 points which may have shaken off the weak-hands immediately after the SEBI action. With the current momentum and the strong corporate results, we should not be surprised by an upswing of around 600 points."

Unlike previous run-ups during the last one month, when each substantial rally was also followed by a strong correction due to lack of institutional support at high levels, purchases by FIIs and local funds have resulted in the Sensex breaking two milestones, the 12,200 and the 12,300 level on Wednesday and yesterday.