The Bombay Stock Exchange (BSE) Sensex on Tuesday advanced, ending a three-day, 8 per cent slump. ICICI Bank led gains after some investors judged the recent decline excessive.
ICICI Bank, the nation’s second-largest lender, gained 8.6 per cent, the most in more than a week. Tata Consultancy Services, the largest software developer, rose 7.4 per cent, halting a six-day, 19 per cent drop.
“Markets have been oversold, we are seeing some buying emerging at lower levels,’’ said Jayesh Shroff, who helps manage about $3.5 billion at SBI Mutual Fund. “Our market fell much more than other Asian markets yesterday.’’
The Bombay Stock Exchange’s Sensitive Index, or Sensex, led a late rebound in Asia, gaining 2.1 per cent to 12,860.43. That reversed a 3.5 per cent drop earlier on Tuesday and clawed back some of the 3.9 per cent slide yesterday as the regional MSCI Asia Pacific Index retreated 3 per cent. The benchmark posted its third quarterly drop, falling 4.5 per cent. The BSE 200 Index added 1.9 per cent to 1,555.70.
Indian stock dropped earlier on Tuesday after the rejection of the $700 billion bank-rescue plan by US lawmakers deepened concern economies worldwide will slide into recession. Stocks rebounded as US stock-index futures advanced after Judd Gregg, the Senate Banking Committee’s ranking Republican, and Barack Obama said a deal will eventually pass.
ICICI’s 14-day relative strength index, which measures how rapidly prices rose or fell during the period, dropped to 30 yesterday. Some investors regard readings at 30 and below as a signal to buy. Infosys’s RSI was at 29 yesterday, and Jaiprakash Associates, India’s biggest builder of dams, at 24.
ICICI added 8.6 per cent to Rs 535.55. TCS gained 7.4 per cent to Rs 665.60, the most since July 17. Jaiprakash added 3.9 per cent to Rs 111.15.
Stocks also rose after the central bank said in a statement that ICICI Bank has enough liquidity, including in its current account with the Reserve Bank of India, to meet the requirements of its depositors and after the nation’s stock market regulator allayed concerns that institutions are short-selling Indian stocks.
“The volume in the lending-borrowing market is zero and we have no apprehensions that institutions are short-selling,’’ Sebi Chairman CB Bhave said on Tuesday.
