Sensex bounces back with 134-pt gain

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Our Bureau

Mumbai, Oct 21

STOCK prices rose on Friday reversing a three-day decline as value buying and statement by the Finance Minister, Mr P. Chidambaram, that foreign investors would continue to invest in India, buoyed sentiment.

The relaxation of foreign investment in the telecom sector, a slight rise in the rupee against the dollar, and final approval by shareholders of Reliance Industries for demerger of the company, also resulted in buying interest among the investors.

The BSE Sensex opened firm in the morning, slipped into red, but after a few hours of trading, rose again. The statement of Mr Chidambaram on reforms in the financial sector and that the rupee was still strong fuelled fresh buying. At close, Sensex rose 133.83 points (1.7 per cent) to 8,068.95. The NSE's S&P CNX Nifty ended 48.30 points up (two per cent) at 2,443.75.

The rupee closed at 45.06 after having touched a 11-month low of 45.23 earlier this week.

Dealers said that sentiment was much better than other days. This was also seen from the advance-decline ratio where for every one stock that rose there was one that declined. In the past few days, the advance-decline ratio has been in favour of declines.

"The selling pressure seems to have eased and the markets seem to be on the road to recovery. While results will continue to dominate sentiments and lead to short-term volatility, we recommend a selective valuation-based approach," Motilal Oswal Securities said in a note.

Index heavyweights that supported the move up included Reliance Industries (up 2.95 per cent at Rs 770.45), Maruti Udyog (up five per cent at Rs 563), ITC (up four per cent at Rs 121), and BHEL (up five per cent at Rs 1,175).

Among the telecom stocks that gained following the Government's change in FDI rules were Bharti Tele-Ventures (up five per cent at Rs 330) and VSNL (up seven per cent at Rs 319).

Dealers said that the overall mood has improved, but a lot will depend on rollover of derivatives contract that expires on next Thursday.

(This article was published in the Business Line print edition dated October 22, 2005)
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