The Hindu Business Line : Stock markets bounce back

The US Federal Reserve’s decision to cut discount rates by 50 bps on Friday had boosted sentiments across the global markets. The BSE-30 Sensex gained 538.57 points intra-day, but settled down considerably lower at 14,427.55, rising 286.03 points or 2.02 per cent in the day.

Asian markets

Asian markets climbed up comparatively higher mirroring the US markets rally on Friday with the Dow Jones Industrial Average rising 1.82 per cent and the S&P 500 index increasing by 2.46 per cent. Japan’s Nikkei gained three per cent while South Korea’s Kospi jumped 5.7 per cent and Hong Kong’s Hang Seng rose 5.9 per cent. The NSE S&P CNX Nifty index closed at 4,209.05, up 2.16 per cent.

Analysts said the domestic markets had not completely discounted the sub-prime crisis in the US which led to the Indian markets losing out on the gains made in the morning and settling down at a lower level. The yen carry trade is also another problem with the yen strengthening against the dollar. However, FIIs did not help in the recovery as they were net sellers yet again to the tune of Rs 648.93 crore, as per the provisional figures on the NSE. Domestic institutions and retail investors were net buyers at Rs 142.03 crore and Rs 84.40 crore respectively.

The upward movement was not supported by fresh buying, said dealers; it was more of short covering. “Investors are not interested in increasing their positions; most of the trading today was short covering of positions. The sentiments in the market still look weak,” said Mr C.A. Prashant Bhansali, Director, Mehta Equities Ltd.

Analysts expect markets to remain volatile and end flat in the coming two-three days as they wait for the turmoil in the global scenario to end.

Related Stories:
Rebound hopes rise as Fed acts to contain sub-prime crisis
Sub-prime spectre shaves 642 points off shaky Sensex
Increasing disconnect between economy and stock market
Stock market and global cues

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