Talk of a euro zone rescue plan lifted stock markets around the world on Tuesday. The BSE benchmark Sensex rose 472 points or 2.95 per cent to close at 16,524 as experts said a bottom for share prices was near. The broader S&P CNX Nifty of the National Stock Exchange gained 135 points or 2.81 per cent to close at 4,971.
The outline of a large and ambitious euro zone rescue plan was taking shape, reports from the International Monetary Fund (IMF) in Washington suggested. It was expected to involve a 50 per cent write-down of Greece’s massive government debt, international media reports said. European governments hope to have the measures agreed on in five to six weeks.
Domestic institutional investors net bought stocks worthRs 270 crore on Tuesday. Foreign institutional investors pumped inRs 34 crore, as per provisional figures. From a recent high of 17,099.28 on September 20, the Sensex had slumped 1,048 points or 6.12 in four trading sessions to settle at 16,051 on September 26.
| MAJOR INDICES | ||
| 27-Sep | % chg* | |
| America (2355 Hrs IST) | ||
| Dow Jones | 11,361.00 | 2.87 |
| Nasdaq Composite | 2,588.37 | 2.85 |
| Europe (2355 Hrs IST) | ||
| DAX | 5,628.44 | 5.29 |
| FTSE 100 | 5,294.05 | 4.02 |
| Asia | ||
| Sensex | 16,524.03 | 2.95 |
| Nifty | 4,971.25 | 2.81 |
| Nikkei 225 | 8,609.95 | 2.82 |
| *Over previous close Data compiled by BS Research Bureau | ||
Experts say a bottom for stock prices seems near and there can not be another sharp fall, unless there is a catastrophic event like a Greek default or the quitting of a senior government leader domestically.
"It's a relief recovery on speculation the euro zone may have a TARP kind of rescue package. However, there is no permanent solution in sight yet," said Nirmal Jain, chairman of Mumbai-based India Infoline Group (IIFL). "Fundamentally speaking, valuations in India are looking more attractive than in the past many years," he added.
TARP (troubled asset relief programme) was launched by the US government in October 2008 to purchase assets and equity from financial institutions to address the sub-prime crisis.
Major Asian markets gained two-six per cent on Tuesday. South Korea's Kospi jumped five per cent, the most since January 2009. Indonesia’s Jakarta Composite index added 4.8 per cent, Hong Kong's Hang Seng rose 4.15 per cent and Japan's Nikkei 225 rose 2.82 per cent.
The MSCI Emerging Markets Index added 4.5 per cent, the best rally since May 2010, after closing at a two-year low yesterday.
In Europe, the FTSE rose 3 per cent. DAX gained 4.47 and CAC 40 was up 4.23 per cen. In the US, futures trading on the Dow Jones Industrial Average and S&P 500 showed the markets would open with two per cent gains.
Reliance Industries, the heaviest-weight scrip on the Sensex, rose 5.01 per cent to Rs 797. The stock, which had slid 9.4 per cent over the previous three days, is down more than 24 per cent year to date on concerns of falling gas output. Infosys rose 3.86 per cent atRs 2,446. Its rival Tata Consultancy Services gained four per cent to Rs 1,038.
Reliance Communications rose 3.7 per cent after chairman Anil Ambani said the company was in advanced talks to sell stake in its telecom tower unit. Shares in group firm Reliance Capital rose 1.4 per cent after Ambani said it was in advanced talks to sell stake in the asset management company to Japan's Nippon Life insurance company. Realty major DLF and trucks and commercial vehicles maker Tata Motors TAMO rose 8.2 and 6.1 per cent, respectively.
Pipavav Defence and Offshore fell 4.3 per cent after the defence ministry put on hold a joint venture between the firm and state-run Mazagon Dock to build warships and submarines.
“We believe a turnaround in investor sentiment will be likely driven by potential easing of inflation or an RBI pause and as and when corporate earnings estimates become more stable,” said Mahesh Nandurkar, executive director of foreign broking firm CLSA, in a strategy note on Tuesday.
