Sensex in sight of 12,000

The stock market on Monday cheered the finance ministry's clarification on status quo being maintained on the participatory notes (PNs) issue, with the frontline Bombay Stock Exchange's (BSE's) Sensex ending at touching distance of the psychologically important 12K mark, at 11,914.21 points.

It was feared that the proposal by the Tarapore Committee on fuller rupee convertibility to ban PNs and allow an exit route for existing PNs in India might force a sell-off on the Indian stock market, but the clarification by finance ministry officials early in the day kept the market mood bullish.

PNs are instruments used by foreign funds or investors not registered with the Securities and Exchange Board of India (Sebi) that are interested in taking exposure in the equities market. It is estimated that about 45-50 per cent of foreign investments in the Indian stock market are made through this route.

While the Sensex rose by 136.19 points, or 1.16 per cent, the National Stock Exchange's S&P CNX Nifty index ended higher by 41.4 points, or 1.21 per cent, at 3,476.85.

"The mood is upbeat. It seems that the market is heading for the earlier high levels," said Dalpat C Mehta, a research analyst with Religare Securities.

Tata Motors (up 3.93 per cent to Rs 897.30), Maruti Udyog (up 3.22 per cent to Rs 903.40), Larsen & Toubro (up 2.31 per cent to Rs 2,484.25), and Infosys Technologies (up 2.03 per cent to Rs 1,847.75) were the biggest gainers in the Sensex. Only three of the BSE-30 stocks ended negative (Hero Honda, Dr Reddy's Lab, and Ranbaxy).

The BSE Mid-Cap index, which rose by 1.93 per cent, was the biggest gainer among all indices. Among sectoral indices, the BSE Auto index gained the most, moving up by 1.83 per cent. All the indices ended in positive territory.

The overall market breadth was positive, with 1,627 stocks advancing from the previous close, and 926 stocks declining on the BSE. Foreign funds, which invested close to $1 billion in August, were net buyers to the tune of Rs 342.36 crore on Monday, according to provisional figures released by the NSE.