Sensex spurts by 615

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Market ends losing streak; strong buying seen in frontline stocks

Our Bureau

Mumbai, June 15

The stock markets ended a three-day losing streak on Thursday, with the benchmark BSE-Sensex clocking its biggest ever single-day gain on global cues such as Bank of Japan's decision to continue with zero interest rate policy, higher Asian indices, and value buying by foreign and domestic funds.

Dealers said that strong buying was also seen in frontline stocks on better-than-expected advanced tax figures by corporates, indicating good earnings numbers for the April-June quarter.

The Sensex gained 615.62 points or 6.89 per cent to close at 9,545.06. The NSE's S&P CNX Nifty Index rose by 116 points or 6.31 per cent to 2,798.80.

All the BSE-30 and Nifty indices ended in the green. The three main gainers on Sensex were BHEL (14.48 per cent to Rs 1,836.95), Bajaj Auto (14.01 per cent to Rs 2,600), and Grasim Industries (13.79 per cent to Rs 1,814.20).

Overall, the market breadth was also positive, with 1,693 stocks ending in the green against 691 stocks in the red.

Dealers said that the recent meltdown in emerging markets including India was triggered by outflow of foreign funds, especially hedge funds, on fears that Bank of Japan may hike rates. "Hedge funds, it seems, had taken interest-free loans heavily to invest in several markets," said a research analyst with a local brokerage outfit. "With no hike in rates in Japan, funds may continue to stay invested."

Among the sectoral indices, BSE Capital Goods (10.30 per cent), BSE IT (7.92 per cent), and BSE TECk (7.60 per cent), were the biggest gainers.

All major markets in the region - Tokyo, Sydney, Singapore, Bangkok, and Jakarta - ended higher after Wall Street gained 1.03 per cent on Wednesday.

"Markets may stabilise at 9,000-9,500 levels. Our advise to investors is to buy into frontline stocks. Avoid mid and small caps for the time being," said Mr Gaurang Shah of Geojit Financial Services.

The BSE Small Cap index rose by a modest 3.91 per cent while the BSE Mid Cap ended higher by 5.47 per cent.

Foreign funds were net buyers for Rs 122.15 crore on Thursday, as per the provisional NSE figures, making their net investment in this month to Rs 608.55 crore.

Mutual funds, on the other hand, were hit by redemption pressure after market corrected by 30 per cent in less than a month. "We were net buyers in June," said Mr U.K. Sinha, Chief of UTI Mutual Fund, the second biggest mutual fund in the country in terms of assets under management.

With the markets swinging in a big way, it is becoming difficult for retail investors to take an investment decision, said a dealer.

(This article was published in the Business Line print edition dated June 16, 2006)
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