Strong buying by domestic funds and institutions restores normalcy

Our Bureau

Bull march again

Nifty up

118 points or 3.83 pc to 3199.35 points

Grasim Industries

, Tata Power and Tata Steel biggest gainers on the Sensex

1,424 stocks

end higher compared to 985 declines

BSE Mid-cap

and Small-cap indices recover

Foreign funds

continue to be net sellers for the seventh consecutive session

Mumbai, May 23

Indices gained after three sessions of turbulence as strong buying by domestic funds and institutions restored normalcy to the market on Tuesday.

Dealers said there was also "bottom fishing" by high net worth individuals (HNIs) and mutual funds, with several stocks looking attractive, courtesy the 1736 points lost during the preceding three trading sessions.

The bellwether BSE-30 Sensex gained 341.01 points or 3.25 per cent to close at 10822.78. NSE's Nifty rose 118 points or 3.83 per cent to 3199.35 points.

Grasim Industries (up Rs 159.65 or 9.09 per cent to Rs 1,916.7), Tata Power (up Rs 40.45 or 7.93 per cent to Rs 550.40) and Tata Steel (up Rs 37.20 or 7.87 per cent to Rs 510) were the biggest gainers on the Sensex. Heavyweight Reliance Industries ended in the green on strong institutional buying at Rs 969.10, a gain of Rs 37.50 or 4.03 per cent.

Market breadth was positive with 1,424 stocks ending higher compared to 985 declines. On the Sensex, three stocks ended in the red. BSE Mid-cap and Small-cap indices, which suffered badly in the fall, recovered on Tuesday to gain 2.98 per cent and 2.28 per cent respectively.

Despite positive words on the long-term capital gains issue, foreign funds continued to be net sellers for the seventh consecutive session. According to the Securities and Exchange Board of India , FIIs are now net sellers to the tune of over Rs 2,200 crore ($203 million) in May. This is excluding Tuesday's net sales of Rs 1,132 crore.

With several leading foreign brokerage firms including JP Morgan, Citigroup and Morgan Stanley downgrading Indian equity markets to `underweight', analysts fear that FIIs may persist with their selling spree.

At a news conference, Mr Adrian Mowat, Chief Asian Equity Strategist, JP Morgan, said Indian stocks would need to dip further to be attractive. "We maintain `underweight' on India," he said.

With May series F&O contracts coming up for settlement on Thursday, dealers said they expected some unwinding of cash positions to fund rollovers in derivatives.

"We are stuck in the 9500-12000 levels," Mr Rahul Rege, Senior Vice-President, Sharekhan, said. He expressed confidence that investors would not desert the market. "Investors had felt the pinch when the markets fell in October last year. Of course, the intensity may be severe this time because the levels are higher," he said.

According to the dealers, LIC, UTI Mutual Fund and SBI MF were big buyers on Tuesday. SEBI data showed mutual funds were net buyers for Rs 402.74 crore on Monday. They had bought for Rs 762.69 crore and Rs 848.34 crore respectively on last Thursday and Friday.

SEBI Meeting

SEBI on Tuesday held a meeting with top officials of BSE and NSE to assess the risk containment measures at the exchanges. According to SEBI sources, the exchanges informed that all systems are in place and there is no payment problem in the wake of the steep fall in the stock prices on Monday.

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(This article was published in the Business Line print edition dated May 24, 2006)
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