Ignoring fears of impending sanctions, stock indices staged a sharp recovery yesterday. Market sources attributed the rally to buying support from local FIs, coupled with rumours of a buyback ordinance being promulgated. The sensex closed at 3,897.94, up 115.18 points, and the NSE-50 at 1,118.65, up 24.55 points. The BSE-100 closed at 1,719.26, up 53.94 points and the NSE midcap index closed at 1,555.85, up 64.15 points.
The depreciating rupee initially pushed the sensex to the days low of 3,748.63. However, anticipation of fresh purchases because of the stronger dollar and a perception that the market had bottomed out improved sentiment. Market sources said FIIs were buying selectively yesterday.
Indian GDRs, after coming under pressure over the past two days, ruled steady with buying being witnessed at some counters, reports from London said. At 20:00 IST, Reliance was quoted at $8.28, SBI at $16.5, MTNL at $13.85, VSNL at $11.35 and ITC at $23.15. Buying was witnessed in ITC, ICICI and MTNL while two-way movement was witnessed in L& T and BSES, a source said. The Skindia GDR index was ruling at 833.82, down 0.86 per cent from the previous close.
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Sentiment remained firm on the kerb, with pivotals quoting about Re 1 higher than their close levels, though volumes were thin.
The market now expects soft measures in the budget which could also include buyback of shares and cutback on duties. Sanctions... are expected to have an impact on new projects and not existing ones. Technically, the market had bottomed out and this induced a fresh bout of purchases, said Kapil Krishnan, head of research of BSE brokerage Prabhudas Lilladher.
ITC led the rally, fuelled by unconfirmed reports of FII purchases. Morgan Stanley was reported to be an aggressive buyer , including two off-market deals of nearly 5 lakh shares.On the BSE, ITC touched an intra-day high of Rs 801.75 before closing at Rs 801, up Rs 46. Software scrips too looked up with key stocks edging near the upper end of the circuit filter. On the BSE, Pentafour closed at Rs 834.25 (Rs 795.25) and BFL Software at Rs 309.60(Rs 281). The UTI off shore fund was reported to have been a major buyer in key infotech stocks.
Total margins collected by the BSE, NSE, DSE, Ahmedabad Security Exchange and CSE during Tuesday and Wednesday were around Rs 800 crore. The exchanges reviewed the position of brokers who had made losses of Rs 10 lakh or more and were satisfied that the losses were adequately covered by the margins.