Sensex vaults 180 pts on selloff fund cheer

Market was bullish after the smooth rollover in derivatives in the last cycle.

The government's decision to set up a disinvestment fund, strong quarterly results and a smooth rollover in the derivatives segment propelled the equity indices on Friday to the largest single-day rise after May 18, 2004.

The market was bullish after the smooth rollover in derivatives in the last cycle, which ended yesterday.

Opening in positive territory, the Bombay Stock Exchange Sensex hit a high of 6,432.58 in intra-day trades and finally closed at 6,419.09, up 179.66 points (2.88 per cent) from yesterday's close.

Thus, the Sensex has gained 312.66 points in the last three days, and the broader markets have added Rs 78,600 crore in capitalisation.

The traded volume was higher than yesterday's figure in the cash segment. The BSE reported a turnover of Rs 2,528.34 crore and the National Stock Exchange Rs 5,709.72 crore.

Dealers said the government's move to set up a fund from the money raised by the dilution of its equity in public sector undertakings indicated that the Left parties were okay with the disinvestment drive.

The stocks of banks, technology, capital goods, pharmaceuticals and cement companies were among the biggest gainers on Friday as bargain hunting continued for the third day.

The breadth of the market was positive, with gainers outpacing losers in a ratio of 8:3.

In the Sensex basket, 27 of the 30 scrips closed higher. Narayan SA, managing director of Kotak Securities, said, "Strong institutional buying, after the smooth rollover in the derivatives segment yesterday helped the market post smart gains on Friday."

Arun Kejriwal, investment strategist at Angel Broking, said: "A smooth rollover of derivatives contracts and interested buying saw a sharp rally across the board. Going forward, a short correction after the sharp rise is expected, but the undertone is positive."

Lower international crude oil prices provided a strong undertone, analysts added.

Tata Power was the biggest gainer in the Sensex basket, rising 7.32 per cent to close at Rs 376.80, followed by the State Bank of India scrip, up 7.08 per cent to Rs 622.75. The bank announced better than expected quarterly results on Friday.

The Gujarat Ambuja Cements stock gained 6.72 per cent to Rs 447.85, Larsen & Toubro was up 5.84 per cent to Rs 963.45 and Ranbaxy Laboratories gained 4.99 per cent to Rs 1,073.

The three losers in the Sensex basket were the Hero Honda stock, which slipped 1.13 per cent to Rs 531.25, Zee Telefilms (1.03 per cent to Rs 148.95) and HDFC (0.28 per cent to Rs 753.45).

A dealer at a local brokerage house said, "Despite some positive results, the sentiment remains cautious and the next big trigger could be the Budget next month." Brokers said they expected the market to be range bound in the near term but a pre-Budget rally was on the cards.