The Hindu Business Line : Stock market stages rally as political concerns ease

Stock markets rallied on Friday as political tensions in the country eased. The CPI (M) said it did not want the current crisis over the Indo-US nuclear deal to affect the Government. The fears of a mid-term election were eased as the Left party said it would not withdraw its support to the Congress-led coalition Government.

Markets ended firm after a volatile week with the benchmark index Sensex climbing 260.89 points to close at 14,424.87, up 1.84 per cent, while the broader index S&P CNX Nifty index gained 1.83 per cent at 4,190.15.

Markets were under tremendous pressure throughout the week facing a double whammy from the external sub-prime credit crisis and the political tensions within the country, leading to extreme volatility.

Markets gained today even as major Asian markets ended down and the US markets closed flat on Thursday. Nikkei, Kospi and Hang Seng indices all ended in the red today.

“Our markets were supposed to rebound yesterday, but dropped on the political uncertainties. However, with the Left party softening its stand of withdrawing from the Government, markets soared today in spite of the Asian markets falling,” said Mr Ravindra Kasliwala, Head – Equity, Inventure Growth and Securities. Also, our markets had fallen much higher than other markets and hence, the recovery is faster, he added.

Mid-cap and small-cap stocks also joined in the upward movement, with the BSE Mid-Cap Index increasing 1.4 per cent, while the Small-Cap Index gained 1.32 per cent.

Domestic institutions continued value picking and turned net buyers at Rs 400.71 crore, as per the provisional figures on the NSE, while FIIs were net sellers to the tune of Rs 274.69 crore.

On Thursday, the markets had taken a sudden plunge when the Left had threatened to withdraw support to the coalition government.

“Our markets were still at the bottom when they started out today and the Left party’s stand has helped them to rally as our political situation is getting clearer,” said Mr C.A. Prashant Bhansali, Director, Mehta Equities Ltd.

Metal and auto stocks made maximum gains and all sectoral indices ended in the green.

The top gainers in Sensex were Tata Motors, up 5.71 per cent at Rs 657.65, followed by BHEL up 5.34 per cent at Rs 1,750.40 and Reliance Energy up 4.22 per cent at Rs 735.55.

The market breadth was positive with stocks of 1,563 companies advanced while that of 1,067 companies declined.

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