You are on page 1of 3

Markets up after Chidambaram assurance, strong

global cues
Mumbai, Sep 18 (IANS) Despite huge early losses, Indian equities markets Thursday
staged a smart recovery to close with gains on strong buying by domestic institutions
following assurance of adequate liquidity by the Indian finance minister and positive
global cues.

The 30-share benchmark sensitive index (Sensex) of the Bombay Stock Exchange (BSE)
closed at 13,315.60, gaining 52.70 points or 0.40 percent over its previous close of
13,262.90 Wednesday after opening Thursday with a crash of more than 700 points.

The broader based 50-share S&P Nifty of the NSE also ended the day with a gain closing
at 4038.15, up 29.9 points or 0.75 percent against its previous close at 4,008.25
Wednesday.

It too had opened nearly 200 points down.

"There was strong buying with high volumes in Reliance, HDFC Bank, State Bank of
India, Larsen & Toubro and other banking stocks," said portfolio strategist and US-
trained chartered financial analyst Manoj Krishnan of Delhi-based Price Investment
Management and Research Services.

"Central banks of Japan and the US and the European Central Bank decided during the
day to nearly quadruple their liquidity support levels to $247 billion up from $67 billion
normally," said Jagannadham Thunuguntla, head of capital markets of India's fourth
largest securities brokerage firm, the Delhi-based SMC Group.

The additional liquidity helped to ease the credit crunch in the money markets and the
London Interbank Offered Rate (Libor) came down Thursday to 3.84 percent.

The Libor had shot up to 5.03 percent Wednesday, Thunuguntla said.

"Indian call money rates (weighted averages) have also cooled down to around 10 percent
today and yesterday after shooting up Monday to 10.59 percent and to 13.07 percent
Tuesday from the normal 7 percent or so," he said.

The reason was money had been sucked out of the system as Sunday, September 15 was
the last day for filing advance tax for corporates, he said.

"All these factors introduced a feeling of relaxation and there was hope that global central
banks will now help to stabilize the financial system resulting in the smart recovery on
the stock markets," he said.

The BSE opened with the Sensex crashing by more than 700 points on extremely weak
global cues as the Dow Jones industrial average closed Wednesday with a 440-odd points
loss. All other European markets had also finished in the red.

Asian markets also showed losses Thursday morning with the Hang Seng index of the
Hong Kong stock market losing 7.5 percent over its previous close Wednesday.

"This led to punters entering the market with a gloom and doom outlook but with
domestic institutional buying and the finance minister's statement assuring adequate
liquidity together with positive cues from major global central banks, there was
recovery," Krishnan said.

The S&P Nifty too had opened nearly 200 points down but recovered enough to close in
the green zone.

The BSE mid cap index, however, failed to recover enough to wipe out losses completely
and closed at 5,079.13, down 60.50 points or 1.18 percent over its previous close at
5,139.63 points.

The BSE small cap index too failed to recover enough and closed at 6,075.43, losing
139.32 points or 2.24 percent against its previous close at 6,214.75.

"Major buying was restricted to only about 70-odd stocks," Krishnan said explaining the
failure of smaller stocks to recover as much as those in the Sensex basket and other large
cap stocks.

"The underlying sentiment is still weak due to uncertainties about the future,"
Thunuguntla said.

"Another leading financial services firm Washington Mutual of the US has decided to put
itself up for sale while Morgan Stanley is also considering a merger with a commercial
bank," he said.

"All this indicates that the fallout of black Monday is not over yet and punters are still
nervous," he said to explain the lack of full recovery by smaller stocks.

Sectorally, banking, oil and gas, capital goods and power stocks were the top gainers.

Realty, consumer durables, information technology and technology stocks covering


telecommunication, media and technology (TMT) companies were the top losers.
Top gainers were Sterlite Industries, HDFC Bank, Reliance Industries and NTPC Ltd.

Sterlite closed at Rs.454.50, up Rs.15.20 or 3.46 percent from its previous close of
Rs.439.30 Wednesday. HDFC Bank gained Rs.37.60 or 3.17 percent to close at
Rs.1,222.00.

Reliance Industries gained Rs.59.25 or 3.16 percent to close at Rs.1,932.85. NTPC Ltd
closed at Rs.174.00, gaining Rs.5.15 or 3.05 percent.

Among the top losers Ranbaxy Laboratories lost Rs.38.15 or 10.06 percent to close at
Rs.340.95 against its previous close of Rs.379.10 Wednesday.

Jaiprakash Associates closed at Rs.127.40 losing Rs.9.20 or 6.73 percent. Satyam


Computers shed Rs.14.55 or 4.16 percent to close at Rs.335.00.

Infosys Technologies finished at Rs.1,523.50, down Rs.52.50 or 3.33 percent.

Despite the Sensex ending in the green, the underlying sentiment was clearly negative as
reflected in the losses in the mid cap and small cap indices.

Only 676 or 25.13 percent stocks advanced while 1944 or 72.27 percent declined and 70
remained unchanged.