Sensex up 302 pts, day's gain biggest since 2004

Riding on high demand for the shares of Infosys Technologies and its technology peers, the Sensex rose 2.69 per cent to 11,539.68 points, almost erasing the 3 per cent loss it suffered last week. Strong results from Gujarat Ambuja and two banks ""HDFC Bank and UTI Bank ""indicating that the economy was well on track.

Led by the BSE IT Index, which went up 6 per cent, the Sensex put on 302 points, while the Nifty went up 2.38 per cent to 3,345. In absolute terms, today's gain of 302 points was the biggest intra-day jump in nearly two years, since May 18, 2004

Infosys Technologies rose nearly 7 per cent to Rs 3,230.30 after it reported on Friday a 21 per cent rise in quarterly net profit and forecast better earnings ahead. Tata Consultancy Services climbed nearly 6 per cent to Rs 1,903.60 just ahead of its robust financial results.

The recovery was, however, much less pronounced in the smaller stocks, with the BSE Mid Cap and Small Cap indices giving up some of the gains they had made during the later part of the day.

The Mid Cap Index was up just 1.9 per cent, less than the 2.7 per cent gain in the Sensex, while the Small Cap Index moved down from a euphoric 1.9 per cent gain in early trading to a sober 1.57 by the end of trading.

Brokers pointed out that Infosys' better-than-expected guidance had reassured investors about the future earnings for the sector itself, which had witnessed a major selloff last week on reports of negative outlook by foreign investment firms.

"The reports were that technology companies are going to do badly in the first quarter of this year and, to some extent, throughout in the new year. This was dispelled by the Infosys guidance and today was the day to buy back the shares people had sold over the last few days," pointed out Vivek Mahajan, head of advisory and dealing, IL&FS Investsmart.

Besides Infosys, other IT biggies like TCS (up 6 per cent to Rs 1,903.60) and Wipro (up 4.9 per cent to Rs 540) too showed big gains on the day.

A spate of rate increases in the metal sector too led to increased interest in stocks like Nalco (up 7.9 per cent to Rs 314.60) and Jindal Steel (up 6 per cent to Rs 1,956.20.) Indeed the metal-index on the BSE put on nearly 4.36 per cent today, second only to the IT-sectoral index.

Among other stocks, Biocon gained more than 3 per cent to Rs 453.70, Bharat Electronics rose 4.2 per cent to Rs 1,302.35, UTI Bank gained 5 per cent to Rs 334.90, National Aluminium rose nearly 8 per cent to Rs 314.60.

It was an overall positive market today, with nearly 65 per cent of the stocks on the BSE advancing and 33 per cent declining. Mirroring the Large Cap and technology-bias of today's rally, the advances were significantly higher in the "A" group stocks with nearly 81 per cent of them making gains while the figure dropped to 74 per cent and 61 per cent for the B1 and B2 categories, respectively.

It was however, not clear who were today's major buyers, as dealers gave conflicting reports with some saying the FIIs had not reversed their week-long selling spree and others saying it was a "balanced market" with both Indian and foreign purchases adding to the run-up.

According to the exchanges, the FIIs showed net buys of around Rs 93 crore on the BSE and NSE today. This is against net sales of Rs 946 crore on Thursday and Rs 808 crores on Wednesday and total sales of nearly Rs 2,800 crore this month in the spot market alone, compared to an average inflow of around Rs 5,000 crore a month for the last three months.

FIIs have abandoned positions worth around Rs 7,000 crore during the last five trading days. According to the latest data, they further trimmed their exposure to the futures market by more than Rs 2,100 crore on Thursday, the highest sell-off so far this month.

Domestic mutual funds pumped in nearly Rs 521.52 crore today, their second highest investment in more than four months.