Market stages comeback amid high volatility

In a day of high volatility, the domestic stock market staged a sharp comeback after a steep 3 per cent fall in key benchmark stock prices in the first half of trading.

The market recovered in the second half due to strong buying interest by domestic institutional investors to the tune of Rs 758 crore.

Foreign institutional investors (FIIs) were net sellers of shares worth Rs 1,248 crore, thereby pulling down the indices in early trade.

After recovering from the day's fall of over 600 points, the Sensex of the Bombay Stock Exchange (BSE) closed 52 points or 0.32 per cent down at 15,923 "� the lowest close since last September. The recovery in the index was led by Reliance Industries, which closed with a 1.09 per cent gain at Rs 2,273.

The fall was led by Larsen & Toubro (L&T), which was headed for its biggest decline in about eight years after the Citigroup said a unit of the company incurred commodity-trading losses. L&T accounts for more than 7 per cent weightage in Sensex. The stock was down 8.68 per cent at Rs 2,728.

Madhu Kela, head, equity investments at Reliance Mutual Fund, said, "These levels are quite attractive and we will now look at deploying cash that we have collected through the recently-concluded new fund offer (NFO)."

The broader index S&P CNX Nifty of the National Stock Exchange (NSE) closed in the positive territory. It was up by 0.60 per cent or 28 points at 4,800.

Nifty's positive closing could be mainly attributed to a less weightage of L&T in the index and a spurt in non-Sensex stocks, including Reliance Petroleum and Cairn.

Bharti Airtel was the top gainer among the index. It was up by 6.85 per cent at Rs 802. Other gainers included Tata Steel (up 5.13 per cent at Rs 812), Bajaj Auto (up 5.07 per cent at Rs 1,984) and ACC Ltd (up 4.39 per cent at Rs 767).

The entire Reliance pack stocks witnessed a sharp bounce. The stock of Reliance Energy saw a bounce-back from an intra-day low of Rs 1,121 to close at Rs 1,260, marginally down by 0.75 per cent. Reliance Petroleum was up 7.82 per cent at Rs 165 and Reliance Communication witnessed a 2.78 per cent jump at Rs 558.45. Adlab Ltd also moved up by 1.32 per cent at Rs 615.

The BSE Capital Goods index was the top loser, down 4.88 per cent. The IT index was down 1.86 per cent, Consumer Durables index 2.78 per cent, FMCG index 0.79 per cent, Health Care index 0.74 per cent, Power index 1.36 per cent, Bankex 0.45 per cent and Realty index down 0.98 per cent.

Analysts are of the view that the US Federal Reserve meeting on 18th March could be a crucial event. "It is likely that Fed may act before March 17 as the dollar is trading weak," said Amitabh Chakraborty, head, equity at Religare Securities.