The Hindu Business Line : Sensex bounces back with 256-pt gain — Volumes remain low; T, Z-group stocks continue to fall

SMILE SAYS IT ALL: A stock dealer at C.D. Equisearch, a broking house in Kolkata, is delighted to see the upward movement of the market on Monday. - A. Roy Chowdhury

Mumbai , Sept 26

WITH the Government clarifying today that there was no scam in the stock markets, share prices bounced back sharply taking the BSE Sensex up by over 250 points, erasing much of last week's losses.

Buying support in stocks was fuelled by a fall in crude oil prices as refineries in the US were untouched by the weekend landfall of Hurricane Rita.

However, the rise in stock prices was on thin volumes indicating low investor interest compared to last week.

Small-cap stocks too recovered on value buying. However, stocks from the T-group and Z of BSE continued to fall as there were no buyers, though the number of stocks falling in this category was lower than last week.

The BSE Sensex opened firm in the morning and moved up to touch the day's high of 8,500. It closed at 8,478.91, a gain of 256.32 points (3.12 per cent).

Today's rise was the highest after May 18, 2004 when it rose 371 points. On the NSE, the S&P CNX Nifty rose 79.6 points (3.21 per cent) to close at 2,577.35.

"The markets have bounced back strongly in today's session. This should certainly restore confidence among participants. However, factors such as expiry of derivatives contracts, due this week, may result in volatility," said a note from Motilal Oswal Securities to its clients. It added that investors must use a selective value-based approach as indices enter uncharted territory.

But the low volume scenario on the BSE and the NSE did not enthuse market participants.

On the NSE, the number of shares traded declined to 31.87 crore from 43.6 crore on Friday, a fall of 26 per cent.

Similarly, on the BSE the volume was down to 27.60 crore shares from 30.57 crore.

Traders said that there was not much institutional investor activity. On Friday, FIIs were net sellers in equity at Rs 325.5 crore and mutual funds were net buyers of equity at Rs 90.54 crore. In the next few trading sessions, the stock market trend would depend on inflows from FIIs and the extent to which traders would carry forward their derivatives position.

The September derivatives contracts expire on Thursday.

Brokers said that the trend could be seen as upbeat if traders rolled over most of their derivatives positions. But if that does not happen, there could be a fall in stock prices after the expiry of contracts.

The markets could see a round of profit booking as the Sensex is near the previous all-time high of 8,520 levels. Such profit booking is expected to find support in the 8,400-8,370 range, said Karvy Stock Broking after the close of trading.

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