The stock market on Tuesday consolidated above the psychologically-important 10,000 level with the Sensex posting a smart gain of 460 points. The rise is mainly attributed to the Securities and Exchange Board of India’s (Sebi’s) warning against lending and borrowing of Indian securities by foreign institutional investors (FIIs) in overseas markets.
While the Bombay Stock Exchange (BSE) barometer ended the day at 10,683.39, higher by 460.30 points, or 4.50 per cent, its counterpart on the National Stock Exchange (NSE) advanced by 112.10 points, or 3.59 per cent, to close at 3,234.90 points.
Market participants said the regulator’s warning to FIIs registered in India against overseas lending and borrowing of Indian securities triggered speculation that Sebi may impose curbs on short selling.
Brokers said market sentiment was also boosted by positive trends in European markets in early trade and the Reserve Bank of India’s (RBI’s) decision to cut repo rate by 100 basis points.
As per Sebi data, FIIs had lent equities worth Rs 348 crore to overseas entities for the purpose of short selling between October 10 and 14.
Marketmen said investors covered short positions after Sebi disapproved of overseas lending/borrowing activity of FIIs and the consequent selling pressure in the cash market.
More From This Section
Analysts, however, said the market consolidation was a part of the positive response to the encouraging second quarter corporate results, which had started flowing in.
FIIs, however, remained net sellers last week, having pulled out Rs 4,651 crore, taking the total capital outflows to nearly $12 billion from the equity market so far in the current calendar year.
The consumer durables index, which gained 8.95 per cent, was by far the best performer in sector indices on Tuesday.