The Hindu Business Line : Chinese stimulus package buoys markets

Mumbai, Nov. 10 The equity market snapped its four-day losing streak on Monday as world markets surged after China announced a massive economic stimulus package.

The Sensex surged 5.74 per cent or 572 points to close above the 10,000-mark at 10,536.16. The broader Nifty closed up 5.89 per cent at 3,148.25.

FIIs and domestic institutions — which usually take contrarian positions with respect to net purchase or sale of equity — were both net buyers on Monday, though FIIs by a very small amount of Rs 92 crore; domestic institutions were net buyers for Rs 378 crore.

“The positive trend floated in from the Asian region as the Chinese government announced a $586-billion infrastructure and public welfare spending package on Sunday to support the economy….This created an expectation that more actions will be taken by countries world over to rescue the economies from the clutches of the financial crisis ,” said Mr Alex Mathew, Head of Research, Geojit Financial Services.

The Nikkei gained 5.81 per cent, the Hang Seng 3.82 per cent and China’s Shanghai Composite 5.44 per cent.

The European markets opened higher, while US index futures had been trading positive last Friday, further raising confidence levels, added Mr Mathew.

The BSE Metal index gained the most, rising 10.92 per cent, on the expectation that demand from China will rise following the rescue package, said marketmen. The other indices with the highest gains were power, capital goods, and oil and gas. The market breadth was positive as 1,694 scrips advanced and 855 scrips declined.

Sterlite, Tata Steel, Reliance Infrastructure and Hindalco were the top gainers, rising between 10 per cent and 13 per cent today. ITC and Maruti Suzuki were the only two Sensex scrips that ended in the red.

Brokers, however, said Monday’s was just a relief rally as the market was still bearish. “We see a lot of selling at every rise.”