With the bulls adopting a devil may care stance and simply cocking a snook at the Securities & Exchange Board of India’s (Sebi) Thursday move to rein in the foreign funds flow into the bourses, the country’s premier stock exchange’s 30-scrip bellwether index - BSE Sensex, on Friday galloped to scale a new peak at 19,243 points.
The Sensex closed the weekend with a significant gain of 472.28 points, or 2.52 per cent over the Thursday’s close of 18,770.89 points.
Upper hand
Now that the bulls have ensured they have a upper hand in the battle on the bourses and the bears resorted to take cover biding their time on the sidelines, the market has shrugged off any possible concerns arising from FII sales after Sebi brought in restrictions on issue of participatory notes (PN) besides directing some exiting PN positions be wound up within next 18 months. Mimicing the all buoyant mood and mirroring a similar trend in sentiment, the broader based S&P CNX Nifty too spurted by 133.35 or 2.39 per cent to 5,702.30 at. Incidentally, Nifty hit an intra-day high of 5716.90 during the day. The Nifty’s all time high though is at 5736.80, which it had struck on October 18, 2007.
Sebi’s tonic
Both the bourses closed at their new peaks riding on the back of resurgent global cues as also sustained shortcovering that marked the trading on Friday.
In fact, domestic investors turned active amid indications that the PN holders and hedge funds seemed interested in getting registered as Foreign Institutional Investors (FIIs). Eighteen sub-account entities have registered as FIIs in the week.
The BSE barometer touched a low of 18,459.51 in early volatility as an immediate consequence of the Sebi’s announcement of new rules to regulate FII inflows through PNs. The Sensex, however, shrugged off initial hesitancy and bounced back surging to an all-time trading high of 19,276.45 before ending the day 2.52 per cent higher from Thursday’s close. The BSE Mid-cap and Small-cap indices gained around 2 per cent each at 7921 and 9551, respectively. With a significant gain of 2.52 per cent and 472.28 points during the day, Sensex finished the week with a solid gain of 9.6 per cent, which works out to an increase of 1,683 points. The market breadth was fairly positive — out of the 2,833 stocks traded, 1,737 advanced, 1,029 declined and 67 were unchanged during the day.
FIIs also join party
However, with the Reserve Bank of India’s (RBI) mid-term review of annual policy due on October 30, 2007 and US Federal Reserve’s meeting on October 31, 2007 to take a call on interest rates, should be seen as some of the event risks that markets will have to grapple with in the near term.
Contrary to concerns about likely FII pull out after the development, FIIs were seen hectically covering shorts in the Futures and Options prompting domestic investors to join the bandwagon, market players said.
