The Hindu Business Line : Sensex surges 781 points even as FIIs remain net sellers

Mumbai Oct. 13 Domestic stocks bounced back on Monday aided by heavy short covering as governments worldwide stepped up measures to increase liquidity in the world economy.

Reassurance from the Finance Minister on the country’s financial stability, and his statement that the Government would take measures to improve liquidity initiated the ‘bounce back rally’ today, according to marketmen.

However, the rally was on the back of thin volumes; and despite the world markets trading in the green, FIIs continued to be net sellers in Indian equity. On Monday net equity sales by them amounted to Rs 1,060 crore.

Domestic institutions were net buyers for Rs 582 crore.

The Sensex surged 7.42 per cent from its previous close, gaining 781 points to end the day at 11,309. The Nifty gained 6.42 per cent, closing at 3,490.70.

Cash turnover on NSE was Rs 11,562.62 crore, and on BSE Rs 3,966.25 crore. The F&O volumes too were very low on NSE and were the lowest for October, at Rs 40,624.27 crore, according to the data provided by the exchange.

“There did not seem to be much of genuine buying in the market today. It was a frenzy of short covering which helped the market bounce back,” said Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Markets Ltd.

The rally was more due to the synchronised steps taken to inject liquidity into the system, according to Mr Amitabh Chakraborty, President-Equity, Religare Securities Ltd.

On Monday, FIIs offloaded their holdings in companies such as Educomp Solution (Merrill Lynch), Kalindee Rail Nirman (Morgan Stanley), Prajay Engineers (Citigroup, CLSA Mauritius), bulk deals data on NSE showed. The relief measures announced by governments worldwide and the lifting of restrictions on participatory notes by SEBI, have failed to cut ice with foreign investors who have (net) sold Indian equities worth Rs 6,086 crore in October to date.

All the sectoral indices closed in the green today, led by BSE Bankex which gained 12.30 per cent.

The top gainers on BSE were from among the recent top losers. They include Reliance Communication which was up 18.93 per cent; Reliance Infrastructure, up 16.76 per cent; and ICICI Bank, up 16.75 per cent.

While 1,689 stocks advanced on BSE, 927 stocks declined on Monday.

“Whatever had fallen very drastically had to bounce back,” Mr Sanjeev Patkar, Head of Research, Dolat Capital Markets Ltd, said. “But on the whole globally, the damage is structural so the market will take longer to sustain at higher levels.”

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