The Hindu Business Line : Sensex soars 928 points on global cues, goes past 16k

After a grey week when the beleaguered Bear Stearns shed its Indian holdings wholesale, Indian stocks soared on Tuesday, sending the Sensex to its second biggest single-day points gain.

The Sensex rose 928 points; the highest since its all-time high 1,140-points gain on January 25 this year.

The benchmark index closed well above the 16,000-level at 16,217, it had tested the 14,000 levels just a week ago.

Both the Sensex and the Nifty gained close to 6 per cent on the back of heavy institutional buying.

FIIs were net buyers of equities for Rs 1,246 crore and the domestic institutional investors for Rs 400 crore.

“There was institutional buying and some short covering. Whether the rally is sustainable is difficult to say but it will last for a few days as the stocks have been mauled so badly that nobody can think of selling now. There has been some value buying,” Mr S. Ranganathan, Head of Research, LKP Securities said.

The turmoil in the global financial markets seemed to be contained and stocks across the globe rallied from their recent lows on the news of JP Morgan Chase revising upward its offer price for troubled US securities firm Bear Stearns.

“After so much of pessimism, it’s a reaction as investors indulged in bargain hunting,” Mr R. Balakrishnan, Executive Director, Centrum Broking said.

“But I don’t give much credence to it as there is no fundamental change in the US economy; the market has just been moving up and down to the news flows.”

The US Federal Reserve’s 75 basis points rate cut and other measures such as the cut in the discount rate in helping to bail out Bear Stearns from bankruptcy, seemed to bring back investors to the global markets, especially in Europe which opened after the long Easter weekend.

Tuesday’s rally was quite broad based with gains for 475 of the BSE 500 index scrips against losses for 25.

The broad-based rally also witnessed 2 per cent to 9.5 per cent gains in the 13 sectoral indices; the maximum gain was recorded by the BSE Realty (9.48 per cent) and Bankex indices (8.1 per cent).

All the 30 Sensex scrips closed in the black, the top 20 gainers rising by 4 per cent to 16 per cent.

Jaiprakash Associates gained the most — 16.38 per cent; it had dipped sharply in the past two weeks on FII selling.

The other top Sensex gainers were DLF (13.47 per cent), Reliance Energy (12.97 per cent), Infosys (9.64 per cent), ICICI Bank (9.37 per cent) and Reliance Industries (5.16 per cent).

The BSE Mid-cap index, whose constituents had seen heavy selling the past two weeks, outperformed the Sensex with a 6.36 per cent gain.

Reliance Anil Dhirubhai Ambani Group’s total market cap went up by Rs 18,780 crore to Rs 2,65,921 crore as compared to Rs 2,47,140 crore a day earlier. The ADA Group companies had been badly mauled in the recent market dip.