In a dramatic recovery, the equity market on Friday rose like a phoenix from the ashes with the Bombay Stock Exchange benchmark Sensex recording its biggest ever-single day rise in the last 19 months in percentage terms. Sensex gained 1140 points and Nifty by 349.90 points.
While Sensex recorded a growth of 6.62 per cent, the wide-based National Stock Exchange index Nifty posted a growth of 6.95 per cent over the previous close.
The market breadth was positive as out of 2,758 stocks traded, as many as 1,561 scrips advanced, while 1,161 shares declined and 36 remained unchanged during the day.
Even as the rebound was solid coming in the backdrop of carnage on the street witnessed earlier in the week, suffice it to say that rally in global markets had definitely aided the sharp surge. During the day, stocks across the globe were buoyed by several factors including strong corporate sentiment in Germany and a return of some confidence in the US economy after solid employment data and a congressional fiscal package.
Besides, the Bush administration’s fiscal package includes $150 billion of tax rebates and business incentives meant to prevent a slowdown in the country’s economy was another key factor for the surge in equities round the globe including India.
Happy begining
Sensex, which lost over 370 points on Thursday’s trading, opened higher and continued to rise on aggressive buying by funds before closing at 18,361.66, a gain of 1139.92 points. The wide-based Nifty touched the day’s high of 5,399.25 and a low of 5035.05 points.
Traders said the major support to the market came in after the “happy beginning” in Asian bourses, which had been passing through a gloomy patch after the US sub-prime crisis.
Stocks in metal, capital goods, realty, bank and refinery segment gained the most as investors bought fundamentally strong scrip.
Banks and real estate stocks gained as investors rode a rally in global equities on optimism that a US recession might be avoided and hopes the Reserve Bank of India would cut interest rates at a policy review next Tuesday.
However, lower-than-normal volumes due to a bank strike and heavy selling by foreigners this week raised doubts about whether the rise, only the second in the last 10 days, was sustainable.
“I think the next move will depend on the Reserve Bank’s move on rates. If there is any positive signal on that front, my feeling is that we could see a very good bounce-back,” said Dipak Acharya, a fund manager at BoB Mutual Fund.
Shares in ICICI Bank, the largest private bank, gained 11.2 per cent to 1,259.25 rupees, and sector leader State Bank of India was up 2.5 per cent after beating forecasts with a 70 per cent rise in quarterly profit.
Foreign funds, which bought a record $17.4 billion of shares in 2007, sold $3.2 billion of shares in the six sessions to Wednesday, including $620 million on Wednesday.
