But the rally can't be sustained, market players say.
The Bombay Stock Exchange Sensitive Index or BSE Sensex rose sharply on positive cues from global markets and sustained buying from foreign institutional investors (FIIs) in the last two weeks.
There was optimism that the $1 trillion stimulus package for the financial sector, announced by US Federal Reserve, would ease the credit crisis and revive global economic growth. FIIs have also pumped in Rs 1,080 crore since March 9. The gain, the biggest since December 10, was led by banking, oil and gas and metals.
The Sensex closed 5.10 per cent or 457.34 points up, at 9,424.02 points. The CNX Nifty climbed 132.85 points or 4.73 per cent, to close at 2,939.90 points. Even on Monday, FIIs were net buyers of Rs 376 crore and domestic institutional investors (DIIs) were net buyers of Rs 377 crore, according to provisional data from BSE on Monday.
In the past two weeks, the Sensex has gained 15.48 per cent, after hitting a 52-week closing low of 8,160.40 points on March 9. The Dow Jones Industrial Average gained continuously for two weeks, a first in almost a year (April-May 2008), even after losing 122.42 points last Friday.
However, market players are not confident that the recent rally can be sustained. “Bear market rallies sometimes go higher than expected, but we are close to the bottom. I won’t be surprised if global markets come down again, including India,” said Andrew Holland, chief executive officer (institutional sales), Ambit Holdings.
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Market players are more worried about the uncertainties regarding the political scenario, corporate performance and global factors. “There will be intermittent rallies, but a clear direction will only come after these uncertainties are over,” said a chief investment officer of a mutual fund.
Deven Choksey, managing director, K R Choksey Shares, said: “The recent rally was due to short covering by foreign institutional investors (FIIs) because of the weakening dollar.” The rupee has also strengthened 3 per cent in the same period. Holland added that a combination of continued strength in commodity prices due to a weakening dollar and global factors contributed to this rally.
| Other Markets | |
| % Chg* | |
| Dow Jones# | 4.02 |
| FTSE 100 | 2.86 |
| Nikkei 225 | 3.39 |
| Hang Seng | 4.78 |
| # at midnight (IST) | |
The other Asian markets also closed in the positive on Monday.
| Price (Rs) | % Chg* | |
| Top Sensex gainers | ||
| Ranbaxy Labs | 161.05 | 10.80 |
| Tata Steel | 194.40 | 10.39 |
| Reliance Infras | 530.60 | 9.88 |
| Hindalco | 52.05 | 9.35 |
| HDFC | 1528.80 | 8.44 |
| Reliance Ind | 1439.80 | 7.56 |
| ICICI Bank | 346.65 | 7.36 |
| SBI | 1023.45 | 7.33 |
| Reliance Comm | 168.15 | 6.19 |
| HDFC Bank Sensex losers | 884.65 | 5.60 |
| DLF | 167.40 | -2.16 |
| * over previous close | ||
The BSE Bankex index was top sectoral gainer, up 6.66 percent on Monday, followed by oil & gas (6.40 per cent) and metals (6.31 per cent).