The Bombay Stock Exchange Sensitive Index rebounded from sharp early losses on Thursday, as domestic insurance companies stepped in to counter heavy selling by hedge funds and participatory note (P-note) holders. But the outlook remained shaky on deepening global financial woes.
The Sensex touched a low of 12,558.14 points in the first hour of trading but made a stunning recovery and closed at 13,315.6 points, up 0.4 per cent, or 52.7 points. The S&P CNX Nifty-50 closed at 4,038.15 points, up 0.75 per cent.
The recovery also followed a turnaround in European markets after leading central banks unveiled concerted action to ease acute money market stress and helped shore up investor confidence.
The US Federal Reserve, the European Central Bank and the Bank of Japan on Thursday joined with their counterparts around the world to pump dollars into the financial system on concern more banks will follow Lehman Brothers Holdings Inc into bankruptcy. Commercial banks in each country will be able to access the funds.
Banking stocks shot up immediately after Chidambaram's statement. The BSE Bankex closed at 6,769.63 points, up 2.68 per cent or 176.67 points.
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The top gainers in the market on Thursday were Sterlite Industries (up 3.46 per cent to Rs 454.5 a share), HDFC Bank (up 3.17 per cent to Rs 1222 a share) and Reliance Industries (up 3.16 per cent to Rs 1932.85 a share).
| GAINERS & LOSERS | ||
| Top gainers | ||
| Sep 18 | % Chg* | |
| Sterlite Ind | 454.50 | 3.46 |
| HDFC Bank | 1222.00 | 3.17 |
| Reliance Ind | 1932.85 | 3.16 |
| NTPC | 174.00 | 3.05 |
| ICICI Bank | 575.85 | 2.78 |
| Top losers | ||
| Ranbaxy Labs | 340.95 | -10.06 |
| Jaiprakash Asso | 127.40 | -6.73 |
| Satyam Computer | 335.00 | -4.16 |
| Infosys Techn | 1523.50 | -3.33 |
| Tata Steel | 459.35 | -3.29 |
| * over previous close Share price in Rs | ||
"There has been massive buying of equity in the cash segment by top insurance firms. A lot of investors covered their short positions on Thursday," said Deven Choksey, managing director at K R Choksey Shares and Securities.
Total turnover in the cash segment of the BSE and NSE together was Rs 23,361 crore while in the derivatives segment it was Rs 74,111 crore. Domestic institutional investors (DIIs) bought equities worth Rs 1192 crore while foreign institutional investors sold stocks worth Rs 1201 crore, according to provisional data from the BSE.
The wholesale price index (WPI)data that was released on Thursday indicates that inflation rose marginally to 12.4 per cent as on September 6 from 12.1 per cent recorded a week earlier.
Still, investors were not convinced they had the seen the worst of the global financial turmoil and the BSE index, which has lost more than 34 per cent so far this year, has bottomed out. Half of the index components ended down.
Market analysts said foreign funds are still net sellers and there are concerns that the financial crisis will spread to other sectors dampening corporate profits.
However, some analysts said Indian markets may surge next week because the market looks oversold at the moment. "Foreign institutional outflows are a major concern but it has eveyrthing to do with what is happening in the West. In a fortnight, markets may recover," said Sudip Bandyopadhyay, director and chief executive officer, Reliance Money.
ICICI Bank on Thursday recouped 2.8 per cent to Rs 575.85 after a top official said the bank's exposure to foreign markets were small and the bank would post healthy profits. The stock had tumbled 14 per cent over the previous three sessions on concerns its exposure to the credit turmoil could erode earnings. On Tuesday, the bank said it had exposure to $81 million of Lehman senior bonds.