The Bombay Stock Exchange (BSE) benchmark Sensex recovered yesterday’s 370-point fall by rising 401 points, or 3.65 per cent, on the back of frenzied short covering by bear traders and buying by foreign institutional investors. The index closed the day at 11,403 and the rise was in line with other Asian peers, as US consumer spending data showed signs of improvement.
The broader index S&P CNX Nifty of the National Stock Exchange (NSE) rose 111 points or 3.32 per cent at 3,473. The domestic equity bourses have been the best performers in the world this month.
Foreign institutional investors (FIIs) have pumped in more than $1.4 billion since April 1, 2009, in domestic equity markets. The rally was also powered by expectations that India’s economy will pick up later this year. Provisional figures showed that FIIs were net buyers of Rs 365 crore in the cash segment and domestic institutional investors sold stocks worth Rs 403 crore.
Yesterday, markets around the world had developed cracks, as investors booked profits after US media reported that US financial giants would still need to raise a huge amount of funds to overcome the sub-prime-induced financial mess.
Worries that the spread of swine flu would slow economic recovery also dampened sentiment.
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US GDP data released today also showed some positive signs. Consumer spending added 1.5 percentage points to GDP, compared to a contraction of 2.99 percentage points in the fourth quarter.
Though the broader indication was that the US economy contracted at a faster pace than expected in the first quarter, analysts were of the view that the recovery could be much faster. “Markets have risen quicker than expected so people should trade cautiously now since some correction is expected in the next month after the election results,” said Deven Choksey, Managing Director of K R Choksey Shares and Securities.
Choksey is of the view that any level above 3,600 could be difficult for sustain in the short run as political uncertainties may come back to hunt the markets before election results are declared.
The market is closed on Thursday as Mumbai votes in the national elections and for a local holiday on Friday.
The ICICI Bank share was the top gainer up 8.74 per cent at Rs 477. Jaiprakash Associates was up 6.85 per cent to Rs 138.80. Sterlite Industries was up 6.75 per cent to Rs 409. Index heavyweight Reliance Industries gained 3.80 per cent to Rs 1,802.
In the broader market 1,436 shares advanced and1,031 shares declined on an average volume of 419.6 million shares.