The Hindu Business Line : Sensex whizzes past 18,000; posts highest intra-day gain

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Sensex whizzes past 18,000; posts highest intra-day gain

As political concerns ease, confidence is back with a bang

Our Bureau

Mumbai, Oct. 9 If political concerns rattled the market on Monday, the prospect of a compromise lifted its spirit in a dramatic fashion on Tuesday. After tanking a little on Monday, the benchmark Sensex soared past the 18,000 level, en route to registering its highest ever intra-day gain of 1,040.60 points.

It touched a low of 17,287.19 and a high of 18,327.42 and closed at 18,280.24, a gain of 788.85 points, or 4.51 per cent, over Monday’s close.

The broader S&P CNX Nifty gained by 242.15 points or 4.8 per cent, to close at 5327.25.

Political play

Market watchers attributed the record vault almost entirely to the political developments of the day.

The Left parties and the Congress, which on Monday appeared to be headed for a showdown over the Indo-US nuclear agreement, said they would meet later this month to resolve their differences.

As the Communist Party of India leader Mr A.B. Bardhan’s comment “there is no crisis” (after a panel meeting on the issue) was broadcast, the markets went into a steeper climb.

“Yesterday’s fear of early elections subsided,” said the head of institutional sales with a leading brokerage. “If elections happen, then one can expect an element of uncertainty, leaving the markets dithering in a narrow range. Investors tend to retreat and adopt a wait and watch approach at the whiff of elections. Now that seems a little further away.”

Those who had held back on Monday for this reason let themselves go on Tuesday, which saw a greater rise than might otherwise have happened, said Mr Jignesh Desai, head of Institutional Sales, SBICAP Securities. “Basically, today’s trade was to do with the political developments,” he said.

Buoyancy in Asia

The Indian markets were also swept up by the liquidity that fuelled several other markets of Asia, said brokers. Markets in Hong Kong, Singapore, South Korea and Australia scaled record highs.

“There was heavy FII buying in frontline stocks,” noted Mr Desai.

However, provisional figures showed net FII buys on BSE and NSE to be Rs 1,416 crore, actually a little less than Monday’s level. Domestic institutions were net sellers for Rs 529 crore and the retail segment net sellers for Rs 377 crore.

The gains were again led by the companies in the Ambani brothers’ fold.

Reliance Energy, the top Sensex gainer, rose by 11 per cent (also fuelled by unconfirmed reports of winning an order), followed by RCom, which gained 10.13 per cent. Reliance Industries gained 7.59 per cent.

Among the BSE indices, Oil and Gas rose 6.51 per cent, Realty 5.03 per cent, and PSU by 4.55 per cent.

NTPC, Maruti, SBI and Tata Steel were also among the frontline gainers.

Sixty four per cent of the BSE stocks advanced, while 33.4 per cent declined. However, high value trading was still concentrated in a few stocks.

“It was a very Reliance-driven rally today. However, we saw the bottom of the pile also picking up. We feel the markets will be more broad-based in the future,” said the head of research at a prominent brokerage.

There was some value buying in the mid-cap stocks too, said Mr Desai.